AMITHYA HOTELS & RESORTS

POLICIES & PROCEDURES STANDARD OPERATING

PROCEDURE

AREA : Accounting & Finance DATE :

POLICY NO :

SECTION : All Accounting & Finance Staf

SUBJECT : Purchasing

POLICY STATEMENT:

PURPOSE:

Responsible of the purchasing department is to ensure that:

 The best value for money is obtained in term of price, quantity and quality
acceptable to the Hotel.
 Orders are processed in the system based on complete approved requisition
documents.
 Goods are ordered and delivered in accordance with Hotel’s specifications and
delivery schedules.
 Actively assist various departments in the disposal of discarded equipment,
furniture and other Fixed Assets by obtaining best possible prices.
 Monitor and comply with Minimum quality standard by specifying to the vendor of
the said requirements.

PROCEDURE:

1. PAYMENT DOCUMENT
1.1. Up on Requisition process
 Market List
Daily request to purchase fresh F&B kitchen such as meat poultry, fruit, vegetable
etc. Raised either manually or through IMS.
 Urgent Market List
Urgent purchase ordered directly by Kitchen after purchasing office hour. Manual
market list orders are retrospectively passed to receiving and purchasing after
order.
 Purchase Requisition
Request to purchase Non-Food, Non store items as and when required such as
guest supplies, operating equipment, engineering spares etc.
 Recovery Purchase Requisition
Urgent purchase ordered directly by user department.
Recovery PRs are retrospectively passed to receiving and purchasing after order.
 Capital Expenditure Requisition
Request to incur CAPEX based on approved yearly CAPEX budget. Such as Fixed
asset and renovation expenditure
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 Order Request
Request generated from IMS to replenish Par level in Store.

1.2. Up on Tender Process

Process of abstaining competitive quotation from supplier.

1.3. Up on Order process

 Purchase Order
Formal order generated from IMS to order goods from supplier, based on agreed
prices, quantities, quality and credit term.
 Deposit for purchased
Advance payment to supplier before delivery of goods or rendering of service,
based on agreed term and condition. PO is raised for account payable to process
payment.
 Petty Cash Voucher
Urgent purchases of item with specified minimum value such as miscellaneous
item.
 Letter of Award
Agreement to buy purchasing to specified term and conditions as a result of
tender exercise.
 Supplier Contract
Agreement to provide goods or service according to specified term and condition.
Generally maintenance contract, bulk purchase with sponsorship, consignment
item, cleaning service etc.
 Group Contract
Contract negotiated by corporate to obtain benefit of bulk purchase of goods.

1.4. Up on Good delivered & Service rendered process

 Invoice
Billing to hotel of item delivered. Some delivery orders/Note serve as an invoice.

2. STANDARD GUIDELINES
2.1. Original Document
 Purchasing department is to order goods based on only original requisition
document.

2.2. User Right

 IMS User rights for purchasing department staf should be in accordance with
approved guideline.
 Deviation are to be approved by IT Manager.

2.3. Food Safety Management System Requirements

 Purchasing Department is to ensure that Supplier Premises (storage,
temperature, hygiene requirements etc.) and Delivery Vehicles (eg : chiller trucks)
comply with Food Safety Requirements.
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2.4. Purchase Specifications

 User Departments and Purchasing Department are to create Purchasing
Specifications for all items.
 Purchasing Specifications should be created from sample products which have
been inspected, tested and evaluated. Purchasing is to ensure that evaluation of
product samples are documented and include the following:

2.4.1. F&B Items

• Quality and Food safety requirements to be inspected and verified by

User Departments through usage in recipes and Food Tests eg :
Butcher Tests, Yield Tests, Blind Yield Tests.
• Specific, detailed description of the product:

 Physical and functional characteristics of the product eg size, weight, brand,

packaging, delivery condition etc.

 Expiry date, manufacture date or useful life of the product.

2.4.2. Printed Materials

Printed materials include:

 Internal Use eg: Purchase Requisitions, Overtime Forms etc.

 Guest Use eg: F&B Menus, Guest stationary in rooms etc.

 Evaluation and written approval should be obtained from General

Manager based on the following standards:

 Internal User Materials - Wording and format to comply with standards and
Hotel internal requirements.

 Guest Use Materials - Wording on documents to comply with Minimum Quality

Standards.

 Quality and workmanship of Artwork/ Materials in final form, from Designers

and Printers to be inspected.

2.4.3. Non- Technical Maintenance Contracts

 Non-technical maintenance contracts include maintenance of

equipment such as photocopiers, computers, cleaning etc.
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 Terms & Conditions of maintenance agreements to be evaluated from technical

and descriptive contract/ brochures/ catalogues.

2.4.4. Technical Maintenance Contracts

 Technical Maintenance Contracts usually include Labor and materials and require
recommendations from Users Departments eg: Engineering/ IT.

 Terms & Conditions of maintenance agreements should include:

- Basis of charging of Labor, Materials, Spares etc.

- Original Equipment Manufacturer Certificate, if applicable or authority by Original

Equipment Manufacturer to do repairs.

- Minimum safety standards.

2.4.5. Air Tickets

 Panel of approved IATA certified Travel Agents should be evaluated for competitive
pricing, reliability and service to Hotel.

 The Travel Agent contracts should be reviewed on a yearly bases based on feedback
from User Departments.

2.4.6. Purchase Specifications in IMS

• Cost Control to create Item Codes in IMS and include Purchasing Specifications
in the Item Description.

2.5. Quotations from Suppliers - 3 Quotation Rule

To ensure that value for money is obtained through the Tender Process:
 At least 3 comparable, competitive, quotes are to be obtained for each item.

 Exceptions to the 3 Quotation rule are to be justified and documented on

Purchase Documents. Exceptions are to be approved by Financial Controller and
General Manager

 Sole Suppliers

Suppliers may be Sole Suppliers due to unique product requirements and market
conditions, or where no other source is available and no other alternative
arrangement can be made.
- No alternative quotation is necessary for Suppliers who are Sole Suppliers,
provided that selection of such Suppliers was according to an approved
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evaluation process.

- Obtain and retain on file:

 Documented justification why no alternative Suppliers are available.

 Relevant Certificates/ Licenses eg: Certificate of Original equipment

Manufacturer.

2.6. Supplier Base Used To Obtain Quotations

Generally, Suppliers:
• Are sourced by Purchasing Department.
• Are recommended by User Departments, Sister Hotels or Corporate Office.
• Approach Hotel directly.

The following factors are to be documented and evaluated by Purchasing Supervisor

before inviting Suppliers to tender.

2.6.1. Inspection of Supplier Premises

Purchasing supervisor is to carry out Inspection of Supplier Premises. The following items
should be checked and documented:

• Identity & Credentials of Key Staf - Directors and key contact staf.
• Company particulars - Telephone/ fax numbers, addresses
(Suppliers should not be operating from P.O. Box Numbers) etc.
Suppliers operating as Individuals (and not Companies) should not be selected unless it is
industry practice or no alternative Suppliers are available.

 Size Of Company - Size of operating area, number of staf, business volume,

financial stability etc.

 Compliance with:

- Food Safety Requirement production requirements - temperature of chillers/

freezers, storage procedures, chiller trucks, cleanliness of premises and vehicles, staf
personal hygiene and health screening etc.

2.6.2. Supplier Licenses

Purchasing Supervisor is to ensure that Suppliers hold valid Licenses/ Permits/ Hygiene
Certificates etc. in accordance with local regulations:
• Copy of Supplier Licenses and Certificates are to be obtained and filed.
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• Record of Licenses & Certificates is to be maintained, and new copies obtained

upon expiry.

2.6.3. Delivery Requirements by Hotel

Purchasing Supervisor is to ensure that the Supplier is able to:
• Meet Hotel’s delivery schedules (timing of delivery during receiving operating hours)
and order quantities (bulk purchases, weekend/ public holiday requirements).
• Meet Hotel’s product specifications (compliance with purchase specifications and Food
Safety Requirement).

2.6.4. Compliance with Code of Ethics

• Selection of Suppliers is to be in accordance with Code of Ethics Guidelines:

- Business is awarded based on quality and price without personal favoritism.

- Business should not be awarded to ex-staf.

- Gifts should not be solicited and personally accepted. Gifts that cannot be refused or
returned must be donated and documented to Human Resources.

Sponsoring of Hotel Annual Staf Party gifts is acceptable. However, the following
guidelines apply:
 Cash - to be paid directly to General Cashier and Official Receipt raised.

 Goods - Receiving to verify goods delivered and Zero Value Receiving Record to be
raised.

 Reduction of amounts owed to Suppliers - authorization letter from Supplier to

Financial Controller advising amount to be deducted.

- Staf’s and staf’s immediate family should not have interest in, or be an Of a
Supplier (except by way of shares held in a Public Company), unless with the
written approval of the Managing Director.
• Human Resources is to ensure that all Purchasing staf sign the Code of Ethics on a
yearly basis and this is filed in the staf’s Personnel File in Human Resources
Department.

2.6.5. Approval of Suppliers

Suppliers who comply with above requirements are to be approved by Purchasing
Supervisor.
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2.6.6. Approved Supplier List in IMS

Suppliers who comply with the above requirements will be input into IMS as part of the
Approved Supplier List:

Approved Supplier List is to be printed at least every 6 months and reviewed by the
Purchasing Supervisor

• Approved Suppliers who are unable to meet the above requirements should be
blacklisted and excluded from future Tenders.

• Purchasing supervisor should ensure that eforts are made to continually source for
new Suppliers to increase the Approved Supplier List used to call for tenders.

2.7. Controls over Prices Awarded To Suppliers

2.7.1. Market Survey - Market List Items

Market Surveys are to be conducted as a basis to evaluate tender quotations.

• Guidelines to conducting surveys are as follows:

- Frequency - conducted before each Tender exercise, or at least once a month where
item prices are volatile.
- Coverage - high usage items and high value purchases (based on last 6 months
actual consumption).
- Location - diferent markets covering both retail and wholesale markets.
- Conducted By - representatives from Purchasing, Cost Control and Kitchen. Staf
conducting Market Survey should be rotated.

• Items and prices surveyed are to be tabulated and compared against

quotations, and used to negotiate reduction in prices.

• Market Survey Report is to be distributed to Financial Controller, Executive Chef and

relevant Division Heads.

2.7.2. Quotation History in IMS

All quotations received should be input into IMS

• Historical data of Suppliers and quotations is to be used for negotiation of future

tenders.
• Quotation history is to be maintained for at least 6 months, or for a period which will
allow meaningful comparison with current prices.

2.7.3. Price Variance Report from IMS

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Price Variance Report shows changes in prices between last purchase price and current
purchase price.

To ensure no unauthorized overriding of price quotes updated in IMS:

• Variances of more than 5% should be explained and signed of by Purchasing Supervisor
and copied to:
- Cost Controller - for justification in F&B Cost Controller’s Report and for review of
price changes as per Correction Log generated from IMS.
- Financial Controller and relevant Division Heads.

2.7.4. Confidentiality of Price & Other Information

Price and other confidential information should not be shared with competitors.

2.8. Monthly Purchasing Meeting

• A Monthly Purchasing Meeting should be held, attended by General
Manager, Financial Controller, Division Heads and Cost Controller.
• Reports to be discussed include and should not be limited to:
- High usage items and high value purchases (based on last 6 months actual
consumption).
- Contracts awarded.
- Market Survey Reports.
- Price Variance Reports.
- Inspection of Supplier Premises.
- Food Safety Management System Reports.
- Reports on sample products tested.
- Report on Suppliers Performance - Complaints/ rejection by User
Departments/ Blacklisted Suppliers/ Deliveries Before & After Receiving Hours.
- Deviation from Order Report from Receiving/ Cost Control.
- Food & Beverage Cost Controller’s Report.
- Old pending Purchase Orders.
- Stock out situations, if any.
- Slow/ Non Moving Inventory.

3. TENDER PROCESSING
A Tender is a process of obtaining competitive quotations for a particular item, to ensure
selection of a Supplier who is able to deliver the price, quantity and quality which is
acceptable to the Hotel.

Purchasing Department is responsible for carrying out the Tender Exercise. Generally,
Tenders are carried out as follows:

Market List Item:

Fixed contract – Previous period process, quotations and final prices selected are
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documented on a tender summary.

Store item:
Upon Request by user department – previous price, quotation and final price selected are
documented on the PR. Also to review fixed contract – Previous period process, quotations
and final prices selected are documented on a tender summary.

Direct Purchase:
Upon Request by user department – previous price, quotation and final price selected are
documented on the PR.

Capital Expenditure:
Upon Request by user department – previous price, quotation and final price selected are
documented on the PR.

3.1. Invitation to Tender

3.1.1. Frequency of Calling for Tenders

Frequency of calling for Tenders depends on type of item, local market

conditions, volatility of prices and availability of supply. Examples:
Perishables: monthly or Quarterly.
Non Perishables: 6 monthly quotes
Capital Expenditure: as when purchase is made

3.1.2. Suppliers Invited To Tender

• Suppliers invited to submit quotations should be selected from Approved Supplier
List.
Exceptions should be Suppliers of non-recurrent purchases and special projects.
• To ensure that quotations submitted are competitive:
- Suppliers invited to tender should be rotated i.e. The same Supplier should not be
invited to tender for several successive tender exercises.
- Lack of Supplier rotation should be justified and reasons documented on Tender
Summary/ Purchase Requisition (e.g.: limited Suppliers able to meet Hotel’s
specifications).

3.1.3. Terms & Conditions of Tender

Terms & Conditions of Tender are usually referred to as Tender Documents and are
used by Suppliers as a basis to submit quotations. Tender Documents should specify:
• Validity Period of Tender:
- Period during which prices tendered are applicable.
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- Supplier to guarantee fixed prices during period of tender.

• Right to spot check:

- Receiving- quantity and quality of goods delivered by Supplier.

- Purchasing - Supplier premises and equipment.

• Breach of Terms & Conditions

- Right of Hotel to reject substandard quality, excess deliveries and non-compliance
with Food safety requirements.
- Right of Hotel to charge Supplier for extra charges incurred by Hotel where Supplier
is unable to meet Hotel’s quantity requirements.
• Submission of Tender
- Date Tender Documents should be submitted to Hotel.
- Method of submission eg: sealed quotations, fax etc.

3.2. Submission of Quotations

• Quotations submitted are subject to the following guidelines:
 Single Item tender or single purchase requisition from Rp 0 to Rp 50 Million
method of submitting quotations is using facsimile.
 Single Item tender or single purchase requisition above Rp 50 Million method of
submitting quotations is using sealed Quotation.

3.2.1. Sealed Quotations

• Quotations to be signed by Supplier and Company chop affixed on Tender Documents
submitted by Supplier.
• A Tender Committee comprising of the Cost Control, Purchasing Supervisor and User
Division Head is to be formed. Quotations should be in sealed envelopes, addressed
to
Tender Committee.
• Sealed quotations are to be opened in the presence of the Tender
Committee.

3.2.2. Original Copy of Quotation

 Quotations to Purchasing Department should be on Company Letterhead with
Company chop affixed.

 Purchasing Department to stamp Date Received for audit trail.

3.2.3. Fax Quotations

Faxed quotations to Purchasing Department should be on Company Letterhead with

Company Chop affixed. Purchasing Department to stamp Date Received for audit trail.
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3.3. Processing Of Tenders

3.3.1. Documentation of Quotations

Quotations and Previous Period Suppliers/ prices should be documented as

follows:

• Market List/ Store - Tender Summary

• Direct Purchases - Purchase Requisition

Supplier quotations should be attached to Tender Summary/Purchase Requisitions for audit

trail.

3.3.2. Evaluation of Quotations

Quotations should be evaluated as follows:

• Sealed Quotations - by Tender Committee.
• Fax/ telephone quotations - by Purchasing Supervisor.

Evaluation consists of:

a. Price Evaluation

Evaluate price as follows:

• Price Comparison
Compare quotations to:
- Market Surveys.
- Quotation History in IMS.
- Other quotations received.

• Net Price
Calculate Net Price i.e the price after including all relevant costs. For example, Net Price
for imported items should include:
- Transport Charges and Handling which are either:
-Free On Board (FOB) - Hotel bears insurance and freight costs; or
- Cost Insurance & Freight (CIF) - Supplier bears insurance and freight costs.
- Local clearing charges and transportation to Hotel premises.
- Applicable taxes and duties as per local regulations.
- Exchange rate fluctuations.
- Assembly and installation costs.

• Evaluate other factors which afect price such as:

- Advance Payments required before delivery.

- Payment & Credit terms.
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- Refund and Goods Return Policies.

- Discounts for Bulk Purchase
- Sponsorship from Suppliers - Performance Incentives (for minimum quantities
purchased) and/ or Advertising & Promotion Funds (contribution of funds to
Hotel’s marketing & advertising activities/ printed materials).
- Warranties/ Guarantees/ After Sales Service.
- Urgency of delivery.

b. Quality Evaluation
• Product Acceptability
Evaluate compliance with User Department’s requirements:

- F&B Items - quality and Food Safety Requirement inspected and verified by Food Tests eg:
Butcher Tests, Yield Tests, and Blind Yield Tests.

- Other Items - quality or workmanship of samples inspected and tested; or evaluated from
technical and descriptive brochures/ catalogues.
c. Other Factors
• Reliability - Ability to consistently meet Hotel’s standards, specifications, delivery
schedules and volume requirements.

3.3.3. Negotiation with Supplier

• Purchasing Department is to use the tender evaluation to negotiate the best value for
money.
• Revision to original quotations are to be documented as follows:
• Fax / Telephone Quotations - Verbal changes to original quotations should be
documented and signed of by Purchasing Supervisor.

3.3.4. Selection of Final Price

• Generally, the lowest quote should be selected as the Final Price

• If lowest price is not selected, exception should be justified, reasons documented on

the Tender Summary/ Purchase Requisition (example: superior quality, compliance with
specifications etc.) and written approval of Financial Controller obtained.

3.4. Approval of Final Price

• Market List Tender Summary - approved by Financial Controller and

Executive Chef.

• Store Items Tender Summary - approved by Financial Controller and

relevant Division Head.
• Direct Purchases (Purchase Requisitions) - approved by Financial Controller and
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General Manager.

3.5. Awarding Of Tender

• Market List and Store Tenders - issue Letter of Award/ Hotel Contract
authorized as per Delegation of Authority.
• Direct Purchases - issue Purchase Order as authority to purchase.

3.6. Cancelled/ Rejected/ On Hold Purchase Requisitions

Purchasing to inform User Departments of Purchase Requisitions that have been

cancelled/ rejected; and follow-up with explanations and clarifications for Purchase
Requisitions that are On Hold.

3.7. Tender Process - Disposal of Fixed Assets

Purchasing Department is responsible for obtaining quotations for sale of Fixed

Assets:
• Disposal of Fixed Asset Form approved by Financial Controller is to be
used to obtain quotations from either Dealers or staf.
• Dealers/ Staf to submit quotations and Purchasing to evaluate quotations
(as per Tender procedures).

• Generally, highest quotation from Dealer/ highest bid from Staf is to be

selected and documented on the Disposal of Fixed Asset Form.

• If highest price not selected, exception is to be justified and reasons

documented on the Disposal of Fixed Asset Form (eg: price is inclusive of dismantling/
removal/ transport).

4. ORDER PROCESSING
4.1. Requisition Process by User Departments

Requisitions will be raised by User Department and sent to Purchasing as follows:

• Normal Purchasing Procedure

- Market List

Food-Perishables ordered the day before required delivery, using IMS or manual system
input item required and quantity to order. Requisition authorized by executive Chef.
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- Store Order Request

Food, beverage and Nonfood item. Using IMS by inputting balance and order column. Print
hard copy for approval but authorized person. Requisition authorized by executive chef for
food item and F&B manager for beverage item, as for non-food by relevant division head
or Financial Controller.

- Direct Purchases – Purchase Requisition

Nonfood, non-store items. Complete detail in PR; quantity description, date required,
reason for requisition, present quantity on hand, use per month and special instruction.
Requisition is authorized by relevant division head.

- Capital Expenditure

Fixed asset, Renovation expenditure. Complete detail in Capital Expenditure Requisition

i.e. budget reference, budget amount used, quantity, description and special instruction.
Requisition is authorized by division head.

• By Pass Normal Purchasing Procedure

- Urgent Market List

Food perishables items. Complete details in urgent market list order and kitchen order
directly from authorized suppliers. Urgent market list order retrospectively passed to
purchasing and receiving after order. Authorization by executive chef.

- Recovery Purchase Requisition

Nonfood and non-store items. Complete details in PR as above. PR retrospectively passed

to receiving after ordering. Requisition is authorized by relevant division head.

• Purchasing Supervisor to ensure that:

- Orders are processed only on Original Requisition Documents.

- Requisition Documents are checked and approved by designated staf.

- Signatures on Requisition Documents are checked against an updated list of specimen

Authorized Signatories.

- Requisition Documents contain necessary information to generate Purchase Orders; and

for acceptance of delivery by Receiving.

- Purchase Requisitions are Serially Numbered for cross reference to Purchase Orders.
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4.2. Processing Of Purchase Orders in IMS

Orders are created in IMS

4.2.1. Purchase Orders - Key Controls

Purchase Orders are to have the following particulars:
• Serial number.
• Date Purchase Order created.
• Supplier details - name, address, telephone etc.
• Item - description, quantity, unit price, total cost.
• Delivery date.
• Requisitioning Department for delivery and charging of expenditure.
• Cross-reference to Purchase Requisitions.
• Terms & conditions of order:
- Purchase Order number to be quoted on Supplier Delivery Documents/ Invoices.
- Delivery only to Receiving.
• Authorized Signatory.

4.2.2. Market List Orders

To ensure next day delivery:
• Process on daily basis after submission of Market List Orders by Kitchen by 11:00am
cut-of.
• Market List Orders after 11:00am cut-of may have to be processed as Petty Cash
Purchase or Urgent Purchase.
Procedures same as Petty Cash Purchases and Urgent Purchases - Market List Items.

4.2.3. Store Orders

• Orders are to be generated from IMS by Store, taking into account Order processing
cycle and Supplier delivery schedules. Re-order, minimum and maximum levels to be
used when ordering.
• Process after approval of Orders by Authorized Signatories.

4.2.4. Advance Payments

Purchasing to raise Purchase Order to Accounts Payable to process Advance Payment.

4.2.5. Partial Deliveries

Generally relate to high usage Store items where quantity is ordered in
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bulk, to take advantage of discounts for bulk purchase. Quantities

ordered will be delivered in installments, as and when required by User.
Purchasing Department will:
• Raise only 1 Purchase Order for bulk purchase (same as Store Orders).
• Inform Supplier of delivery quantities as and when Order Request is received from
Store.

New Purchase Order need not be raised.

• Receiving will accept Partial deliveries and input delivery into IMS based on copy of
Original Purchase Order. Original Purchase Order will be submitted by Receiving to
Accounts Payable upon final delivery.

4.3. Authorization of Purchase Orders

Purchase Orders are to be authorized in by Financial Controller & General Manager.

4.4. Items/ Deliveries without Purchase Orders

4.4.1. Urgent Purchases - Market List Items

Kitchens should not order directly from Suppliers.
However, Urgent Market List purchases may be made by Kitchen after Purchasing Office
hours. Procedure as follows:
• Sous Chef to raise Urgent Market List Order and order directly from Suppliers from
the Approved Supplier List.
• Urgent Market List Order is to be approved by Executive Chef.
• Urgent Market List Order to be passed to:
- Receiving:
 Verify and accept delivery based on Urgent Market List Order.
 Input Delivery Document/invoice into IMS once Purchase Order has been
retrospectively created by Purchasing.
 Attach Approved Urgent Market List to Delivery Document/Invoice
Receiving Records for audit trail.
- Purchasing:
 Retrospectively create a Purchase Order in IMS for receiving to input Delivery
Document/Invoice.
 Investigate prices that do not match Final Prices awarded to select Suppliers.

4.4.2. Urgent Purchases - Direct Purchases

User Departments should not order directly from Suppliers.

However, Urgent Purchases may be ordered directly by User Departments using

Purchase Requisitions (commonly referred to as “Recovery” Purchase Requisitions):
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a. Goods Already Received

• No Purchase Order required to be raised.
• Receiving to accept delivery based on “Recovery” Purchase Requisitions.

b. Goods Yet To Be Received

• Purchase Order to be raised as per Direct Purchase procedure.
• Receiving to accept delivery based on Purchase Order.
• Prices of goods ordered from Suppliers other than Approved Suppliers, should be
checked and approved by purchasing supervisor.
• Excessive prices or excessive “Recovery” Purchase Requisitions occurrences
from a particular Department are to be passed to Financial Controller.

4.4.3. Petty Cash Purchases

Petty cash purchases are usually for:

• Purchases below Rp 1 Million.
• Urgent purchases where items are purchased without following normal purchasing
procedures, to meet urgent or unexpected requirements.

a. Petty Cash Float

• Purchasing Department to establish Petty Cash Float amount requirement.

• Float amount to be approved by Financial Controller and Receipt of House Fund

Form to be signed by Purchasing Supervisor upon receipt of cash from General
Cashier.

b. Petty Cash Vouchers

• Petty Cash Vouchers to be raised by purchasing detailing:
- Name of Payee/ Supplier.
- Reason for purchase.
- Amount.
• Receiving Department to:
Stamp Invoice upon verification of goods, as evidence of receipt.

• Invoice to be attached to Petty Cash Voucher as proof of purchase.

• Petty Cash Voucher and supporting Invoice to be approved by Financial Controller and
General Manager.
• Approved Petty Cash Voucher and Invoice to be used as basis to obtain reimbursement
of Purchasing Float from General Cashier:
- Float should be reimbursed before cash is completely utilized, taking into
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account the normal reimbursement approval cycle.

- Personal money should not be mixed with Float money.

c. Exceptions - Petty Cash Purchases with Purchase Order

Petty Cash Voucher is also used for payment to Suppliers who do not have billing
arrangements with Hotel.
• Purchase Order to be raised as per normal procedure.
• Accounts Payable to raise Petty Cash Voucher:
- Purchase Order & Petty Cash Voucher to be submitted to General Cashier to obtain
cash for Supplier.
- Acknowledgement of receipt of cash by Supplier to be documented on Delivery
Documents as evidence of payment.
• Receiving to update Delivery Documents/Invoice into IMS.

4.4.4. Third Party Goods

Third Party Goods are items that are similar to Hotel property but are either:
• Given free of charge to the Hotel by Suppliers eg:
- Sponsorship items - as part of Sponsorship agreements.
- Gifts - annual staf party gifts, festive gifts.
- Sample items - for testing by User Departments.
• Belong to Suppliers/ Guests eg:
- Consignment goods - wine, live seafood, cigars.
- Guest items for private functions - wine, alcohol.

Zero Value Receiving records are to be raised to distinguish Supplier/ Guest items from
Hotel items. Procedure as follows:

• Purchasing is to:

Issue written request to Suppliers for items given free of charge to Hotel, as and when
required by User Departments.

• Receiving is to ensure:

- All Suppliers to deliver goods directly to Receiving Bay, or;

- User Department to bring Guest items to Receiving for verification, if
delivered directly to User Department eg: Consignment goods delivered directly
to Lobby Shop or guest wine delivered directly to Catering Sales Department.
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4.5. Deviations between Delivery & Order

• Receiving Department is to accept deliveries based only on Original
Purchase Orders and Delivery Documents/ Invoices.

• Receiving Department should immediately inform Purchasing of all

discrepancies between Purchase Order and Supplier’s Delivery
Documents/ Invoice upon delivery.

Purchasing Department is to investigate discrepancies as follows:

4.5.1. Price

Where Delivery Document/Invoice price is not as per Final Price awarded:

• Investigate discrepancy with Supplier and indicate changes on
Delivery Document for processing of payment by Accounts Payable.

4.5.2. Quantity
Where quantity delivered in not as per Purchase Order:

a. Short Deliveries
• Receiving to document actual quantity accepted on Delivery Document/Invoice and
pass to Purchasing.
• Purchasing to determine if item is still required by Kitchen/ User:
- Not required by Kitchen/ User - cancel Order with Supplier and in IMS.

- Required by Kitchen/ User:

Check with Supplier if item can be delivered as required by Kitchen:

 If order quantity can be delivered, confirm delivery time and inform Receiving and
User Department.

 If order quantity cannot be delivered, order from alternative Supplier.

Additional charges incurred by the Hotel for purchasing from alternative sources, should be
billed to the existing Supplier.

b. Excess Deliveries
Generally, excess deliveries should not be accepted.

However, excess deliveries are acceptable where Supplier is unable to deliver exact
quantity required by Hotel eg: due to standard packaging, where quantity required
can only be approximated i.e live seafood etc.
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• As a guideline, excess deliveries should be rejected when deliveries exceed 5% of order

quantity.
Hotel Policy should be issued for the above guideline, and should be included in the
Terms & Conditions given by Purchasing to Suppliers.
• If quantities in excess of 5% or order are to be accepted, Receiving is to:

- Ensure that excess deliveries are authorized by User Department [and Financial
Controller] before acceptance.

- Document actual quantity accepted on Delivery Document/Invoice.

• Receiving to document actual quantity accepted on Delivery Document/Invoice.

4.5.3. Quality
Generally, items that do not comply with Hotel’s specifications are to be rejected and
returned to Supplier.
However, if substitutes are not readily available or goods are urgently required, Purchasing
to:
• Check if alternate Suppliers available.

• Confirm with User Departments that quality deviation is acceptable.

a. Acceptance by User

If items with quality deviations are to be accepted:

• Deliveries must be checked and authorized by Authorized Signatories in User

Department and Delivery Documents signed as proof of acceptance, where accepted
due to urgency of requirement.
• Receiving to:
- Maintain records of deliveries with quality deviations and pass to Purchasing for
monitoring of Supplier performance.
- Raise Request for Credit Note where Supplier agrees to bear cost of quality
deviations.

b. Rejection by User

If items with quality deviations are not acceptable:

• Receiving to reject items at point of verification and return to Supplier:
- Document quantity returned on Supplier’s copy of Delivery document/Invoice, and
request Supplier to sign as acknowledgement.
- Only actual quantity accepted by Hotel should be reflected on Delivery
Document/Invoice.
• In some situations, User Departments will only establish latent damage or products with
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quality deviations after deliveries have been verified/ accepted and input into IMS.
User Departments are to return items with quality deviations to Receiving Bay. Return
procedure to Supplier as follows:
• Purchasing is to:
- Record details of items returned and obtain written explanations from Suppliers.
Records will be used as a basis to monitor Supplier performance.
- Inform Suppliers to collect items from Receiving Bay.
• Receiving is to raise a Request for Credit Note to Supplier to document the return of
goods and reduction in amount billed to Hotel.

Supplier will issue a Credit Note to the Hotel to be passed to Accounts Payable
for processing.

4.5.4. Expected Delivery Date

Expected Delivery Dates will be specified on Purchase Orders. Orders that are not delivered
on Expected Delivery Date are to be checked as follows:

a. Goods Delivered Before Expected Delivery Date

• Receiving to pass Delivery Document/Invoice to Purchasing.
• Purchasing to determine if item can be accepted by Kitchen/User and document
action taken on Delivery Document/Invoice:

- Not accepted by Kitchen/ User - reject delivery and return to Supplier. Instruct
Supplier to deliver on Expected Delivery Date.
- Accepted by Kitchen/ User - accept as per normal Delivery Processing.

b. Goods Not Delivered On Expected Delivery Date

• Market List Items - Kitchens/ Receiving to inform Purchasing to:
- Follow-up with Suppliers on the status of outstanding deliveries:
 No longer required by Kitchen/ User - cancel Order with Supplier and in IMS.
 Still required by Kitchen/ User - confirm delivery time and inform Receiving and User
Department, or source from alternative Supplier.
 Additional charges incurred by the Hotel for purchasing from alternative sources are
to be communicated and billed to existing Supplier.

• Direct Purchases - Receiving to print Purchase Order Due Report weekly and pass
to Purchasing for:
- Follow-up with Suppliers and User Department on the status of outstanding deliveries.
- Submit a List of Outstanding Purchase Orders on a weekly basis to requisitioning
Departments on the status of the delivery.

c. Goods Delivered After Expected Delivery Date

• Receiving to accept goods only if delayed delivery has been agreed in advance by
Purchasing and User Department.
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4.5.5. Documentation of Action Taken

• All changes to Delivery Documents/Invoice after investigation are to be
documented on Delivery Document/invoice itself.

• Under no circumstance are changes to be made to original Purchase Order.

4.6. Monitoring Supplier Performance

• Receiving is to:
- Maintain records of goods returned to Suppliers based on rejection and complaints by
User Departments (eg; substandard quality or inability to meet delivery schedules);
monitor supplier compliance with Food Safety Requirement and inform Purchasing about
those in violation.
- Document reasons for deviations of more than 5% of quantity ordered on the Daily
Deviation from Order Report printed by Cost Control.

- Maintain records of Suppliers who deliver before/ after receiving operating hours.
Reports are to be passed to Purchasing.
• Purchasing is to use records as a basis to monitor Supplier performance:
- Obtain documented reasons from Suppliers for breach of terms &
conditions and corrective action to be taken for:
 Short/ excessive deliveries.
 Goods that do not conform to Hotel Purchase Specifications.
 Goods not delivered as per specified Delivery Dates.
 Goods delivered before/ after receiving operating hours, without justification.
- Blacklist Suppliers who breach terms & conditions, more than

Consecutive times without acceptable justification, at the same time hold them
responsible for compensating any loss or increased cost to the hotel by reason of such
breach.

4.7. Deleting Purchase Records in IMS

• Orders that have been fully delivered (to Receiving) or cancelled (by
Purchasing) will be reflected in IMS with Zero Value quantities.
• MIS Department is to purge Zero Value records every 6 months.

5. JOB DESCRIPTIONS
TENDER PROCESSING
 Do market surveys of market list prices at retail/wholesale markets with cost control
and kitchen representatives?
 Compiling quotations received for evaluation.
 Input quotations received into system.
 Prepare tender documents for suppliers invited to tender.
 Do evaluation and negotiation of tender quotations received to recommend final price
to Financial Controller/relevant division head.
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 Prepare and issue letters of award to successful suppliers based on approval by

Financial Controller/relevant with division head.
 Prepare and issue consignment contracts for user departments
 Obtain quotations for disposal of used fixed assets

ORDERING PROCESSING
 Check market list orders/order requests in to the system, purchase requisitions, capital
expenditure requisitions against delegation of authority manual and specimen list of
authorized signatories.
 Daily market list orders/order requests in the system, allocate orders in system to
supplier selected as per tender exercise, and print purchase order.
 Purchase requisitions – process purchase orders in the system and print.
 Follow up with suppliers on receiving/accounts payable queries on daily discrepancies
on price, quantity and quality.
 Cancel orders no longer required by user departments.
 Obtain alternative quotations, process orders for deliveries quantities which cannot be
met by selected suppliers.
 Process urgent purchases.
 Purchase items of small value from petty cash float.
 Follow up with suppliers on status of outstanding purchase orders
 Prepare report on status of outstanding purchase orders for user departments, for
feedback to suppliers/cancellation of orders
 Review and explain monthly price change report Maintain records and follow up on
complaints against suppliers by user departments and deviations between delivery
and order

SUPPLIER EVALUATION
 Obtain key supplier information.
 Carry out inspection of supplier premises for compliance with hotel’s specifications
and hygiene requirements.
 Obtain valid supplier licenses/permits/hygiene certificates in accordance with local
regulations.
 Request cost control to carry out yield tests, blind yield test and butcher test on
market list items to evaluate suppliers.
 Request user departments feedback on samples from suppliers
 Update approved supplier list in the system for suppliers complying with Hotel
requirements
 Review approved supplier list on a quarterly basis for changes in supplier particulars;
or blacklisting of suppliers.
 Constantly source for new products and suppliers to increase approved supplier list.