If applicable, a supplier selection according gSOP-MM-010 needs to be passed before

the supplier can be awarded.

All parties involved (stakeholders and suppliers) shall be informed by the Authorized
Procurer appropriately about the final award decision.

7.1.6 Contract Implementation

Contract Creation

For suppliers of strategic importance (e.g. supplying to more than one plant, strategic
materials supplier , supplier xxx has a high dependency on , suppliers with a
considerable spend), individually negotiated and mutually signed contracts shall be
considered . n the absence of regional /divisional criteria , local management shall
decide when this is required.

The Authorized Procurer shall decide, in accordance with internal policies, when to
include other functional experts such as Legal or Treasury into the contract creation
process.

Contract authorization shall be conducted according to approved signature rules.

Proper legal protection in the form of non-disclosure/confidentiality agreements must

be in place before exchanging confidential information with suppliers. The Legal
Department shall be consulted if required.

All contracts should be physically and digitally stored according to the respective
regulations.

Contract Management

Contract management defines a process of efficiently and systematically managing

contracts and conducting contract analysis to maximize financial and operational
performance while minimizing risks.

The Authorized Procurer shall ensure that the correct terms such as price and
payment terms are implemented and should monitor the contract terms over time:

• First available re-negotiation or cancelation date,

• Contract duration/termination date,
• Volume of contract and terms & conditions,
Rebates, obligations, penalties and warranties,
Supplier performance with regards to the contract.

Monitoring responsibility can be delegated to the Business Owner.

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 Based on the underlying sourcing strategy and the current market situation the
Authorized Procurer shall initiate actions ahead of cancelation dates, termination dates
and the first possible renegotiation dates. Any amendment to the contract shall be
duly signed by both parties.

7.1.7 Documentation
Documentation must fulfill legal, tax and regulatory requirements .

The Authorized Procurer shall maintain correct and complete documentation of the
procurement process. Following documents should be retained in addition to the
contract:

Requisitions / demands with specification including track of changes (e.g.

value),
RfQ/RfP documents and supplier replies,
• Single source justification,
• Award decision,
Final quote of awarded suppliers,
Relevant correspondence related to contract (e.g. emails, meeting minutes
etc.), POs and order confirmations.

7.1.8 Master Data Management

Master Data (MD) is the leading set of data which is commonly used across the local
xxx organizations and all business processes . The MD is stored within central leading
Master Data Systems and distributed to all relevant business systems.

Relevant MD within the procurement process are the Vendor Master Data (VMD) and
the Material Master Data (MMD). VMD must be established for all external spend and
MMD must be established for direct spend.

• Approval, quality check and maintenance of VMD and MMD is done by central
organisations or employees authorized by local organisationa l management.
• A four-eyes-principle with active participation of the Authorized Procurer during
the verification of critical data VMD and MMD must be ensured.
• Avoidance of duplicate or outdated MD shall always be ensured.

1. VMD must be established prior to issuing any PO and should consider:

a. Provide supporting documents for creation of new VMD and for changes
of critical fields (e.g. bank account data, name, address, contact details, tax
number, alternate payee etc.).

b. Avoidance of immediate payment terms if VMD is defined locally.

2. MMD change request/maintenance should consider:

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 a. Comply with supporting documents for creation or changes of MMD
(e.g. material name, unit of measure).

b. Comply with the mandatory "Golden Rules" for handling MMD. For the
up-to-date and binding version please refer

For general questions regarding MD, the Global Master Data Manager shall be
contacted at: .

In case there is no ERP-System in place the local processes shall be documented as

well as be compliant to the described requirements for Master Data Management.

7.2 Purchase-2-Pay
The purchase-2-pay process starts with the requisition of a good or service and ends
with the payment of the supplier.

7.2.1 Purchase Requisition

A PR must always be placed and authorized before goods or services are ordered.
Placing a PR should be done electronically. There are different ways to place a PR,
depending on whether the PR is targeting direct or indirect spend and the related
good or service that is needed.

Requisitioners should ensure that they follow the defined demand channels and local
regulations established by Authorized Procurer. Demand channels at xxx include the
following:

Direct spend demand channels

ERP/SAP based purchase requisition (e.g. out of MRP),

• Manual PR's in ERP/SAP systems.

Often PRs are automatically generated by a system-based material requirements

planning run. n the case that no system is available, manual PR generation must
follow locally defined processes.

Purchase requisitions for direct spend have a reference to an ERP material number.In
addition, the Requisitioner should provide in the PR information on:

• known and approved suppliers, if available, as well as alternative suppliers,

delivery location, realistic expected lead time etc.

Indirect spend demand channels

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 • Purchasing Card: to be used in accordance with Treasury Guideline G 17.3,
eCatalog/Self-Service eProcurement system (e.g.Instore): Free Text purchase
requisition and catalog ordering of goods and services (incl. CAPEX). See also
gWl-MM-002 "Instore: Purchase Requisition & Catalog Order",
All other indirect spend is handled via processes defined in gSOP-MM-012
Appendix 1. gSOP-MM-012 "Global Approval Procedures for Purchase
Requisitions and Catalog Orders".

If PRs cannot be placed electronically (e.g. eCatalog is not available), alternative

processes must be established to ensure that the requirements are fulfilled.

7.2.2 Purchase Order

The Authorized Procurer shall choose the most efficient order process (channel) for
the PR and must ensure that PRs are approved, complete and accurate before placing
the order. Purchase orders must always be documented . PO should match valid
supplier offers or contracts.In the case of deviations an order confirmation in written
form needs to be received.

The following order channels can be used by the Authorized Procurer:

eCatalog/Self-Service eProcurement system: Order placement out of a pre-

negotiated catalog. The Authorized Procurer setting up a catalog shall keep the
contents up-to-date and ensure business requirements are reflected.

Frame Contract: Order placement referring to an existing frame contract.

Scheduling Agreement: Order for goods/services with predefined conditions and

where multiple invoices/deliveries will be received. Scheduling Agreements are based
on a defined quantity or value. The Authorized Procurer and Business Owner should
ensure that the Scheduling Agreement is used as initially planned.

PO (without contract): Order placement when no other order channel is available.

Limit PO: A purchase order for indirect spend with a validity period and limits for
simplified procurement.

For recurring demands, the Authorized Procurer should ensure that automated
procurement processes can be used. The creation of a new catalog item should be
evaluated by the Authorized Procurer.

Furthermore, for all order channels, the Authorized Procurer shall ensure adequate
processing and maintenance of order confirmations, price and quantity changes, and
delivery dates related to the purchase order.

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7.2.3 Goods/ Service Receipt
As soon as the goods or services are received, the Requisitioner or persons authorized
following the SoD principle shall examine it to confirm that they match the requested
and ordered goods or services. The receipt shall be posted to confirm that the delivery
meets the order e.g. quantity, quality, time. Where quality or other issues (e.g. visible
damages, wrong shipment) are detected during examination, payment shall not be
initiated and the complaint process shall be initiated without delay. Adequate
documentation during the complaint process must be maintained. Delivery notes shall
be retained according to the legally required periods.

A goods/service receipt posting shall be mandatory for all external spend (see
exceptions in chapter 8 under gSOP-MM-012 Appendix! ).

The Authorized Procurer shall consider delivery reliability and quality in the supplier
maintenance process as defined within gSOP-MM-010 which includes supplier
development.

7.2.4 Invoicing
Preferred invoice submission channels are: elnvoicing, EDI, and PDF.

In order to ensure an efficient process, invoices should be received by a central

location (electronically, manual) and in line with the commercial and regulatory
invoice requirements. For external spend that is processed without a purchase order
(as defined in Appendix 1 of gSOP-MM-012), invoices sha ll require approval by the
Requisitioner.

In all cases, validation shall consider that the invoice is correct - meaning that the
goods/services were received, and quantities, prices and agreed terms and conditions
are in line with PO or order confirmat ion. Such validation should be conducted via a
three-way-match of purchase order, goods receipt and invoice. Where no system
supports the invoice verification process, it shall be conducted manually and
documented by accounting personnel. Deviations to the invoice verification process
(not regulated in Appendix 1 of gSoP-MM-012) shall be subject to clearance by the
Authorized Procurer.

Suppliers should adhere to the general invoice requirements:

One PO per invoice,

Reference on first page to: PO number, total amount due, correct company
data (incl. VAT where applicable) as agreed in the contract/PO,
Reference of PO line item on each invoice line item,

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 •n I voice payment term equals agreed payment term,
Invoice sum should match the PO,
• In the case there is no PO (as defined in gSOP-MM-012 Appendix 1), the
invoice must indicate the Requisitioners/Business Owners name and email-
address,
In the case of invoices sent per email as PDF, only one invoice should be
included per email,
In case of electronic invoices they should be provided in a system-readable
and legally compliant format such as EDI or e-invoice.

In the case of discrepancies, invoices shall be blocked for payment until they are
reconciled. For price or quantity related discrepancies, the Authorized Procurer shall
consult with the Business Owner to clarify the discrepancy according to valid
regulations.

7.2.5 Payment and Reconciliation

The Finance/Accounting shall ensure that invoices are approved before payment is
released. In case of missing approvals the Authorized Procurer must clarify any
deviations with the Business Owner.

Advanced payment should be avoided in order to prevent negatively impacting

xxx's working capital position . f an advanced payment is required, it shall be secured
against supplier default risk.

8 Exception List
Following document describes the existing exceptions from the standard source-2-pay
process that need to be followed:

• "Global Approval Procedures for Purchase Requisitions and Catalog Orders"

(gSOP-MM-012 Appendix! )

Moreover, all exceptions from this policy and to the Segregation of Duties principle
must be documented in written form and authorized by the respective region or
division.

9 References
gSOP-MM-005 Lead Buying
gSOP-MM-010 Supplier Management
gSOP-MM-012 Global Approval Procedures for Purchase Requisitions and Catalog Orders
gWI-MM-002 Instore: Purchase Requisition & Catalog Order

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10 Document Change History
this Policy replaces: [none] or [Policy K x, version xx, dated DD Month YYYY]
Version Reason for Change & Change Description
00

11 Publication & Distribution

Publication:

• GQM database : by GQM

• n
I tranet: by Owner

Distribution:

By Owner

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