Paradise Bay Resort Co. Ltd.

Standard Operating Procedure

TITLE:
Category: Purchasing Procedure
Doc No: FIN-01 Prepared By: Date Prepare:
Name/Title Dd/mm/yy
Revision No: 1.0 Reviewed By: Date Reviewed:
Name/Title Dd/mm/yy
Effective Date: Approved By: DOF/GM Date Approved:
Dd/mm/yy Name/Title Dd/mm/yy
Applied to: All Departments

VERSION HISTORY

REVISION DESCRIPTION OF
VERSION APPROVED BY AUTHOR
DATE CHANGE
1.0 DOF/GM DOF

POLICY DETAILS

Purpose To guarantee that the purchase of all goods and services for resort are properly
authorized.
Policy statement - The Purchasing department is responsible for using appropriate
purchasing methods; optimizing price savings, quality or value of
products, vendor working relationships; placing orders with
approved suppliers and negotiating pricing with suppliers.
- This procedure covers all goods and services required for resort
operations, including:
 Non-Perishable items.
 Market list items.
 Capital Assets.
 Contracts for supply of goods and services.
- Quotes must be obtained for goods and services from prospective
vendors by implementing a competitive bidding process to minimize
the cost without affecting quality, quantity and delivery date.
- All purchase order must be formally authorized by management, no
verbal order placement or commitment to any third party is permitted.
All purchase requests and purchase orders that are cancelled or
refused by Management before being placed shall be clearly marked
as such and retained to ensure that these are not later placed by
accident or followed up on the mistaken assumption that goods or
services were requested but not yet provided.

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 Paradise Bay Resort Co. Ltd.

Scope All employees and departments are required to comply.

Terms & Definition

Exceptions Project OS&E

Related Policies or Receiving & Store Control

References
Roles & Roles Responsibilities
Responsibilities The main - To collect information on items such as method
functions of purchase, product information, price
performed by the changes, etc.….
purchasing - To select potential vendors.
department - To receive and proceed with purchase
requisitions received from all resort's
departments, obtaining quotes from vendors,
designating vendors for particular purchases
and bidding.
- To prepare purchase orders and place orders
once approved.
- To follow up on orders up to the final delivery
of the merchandises
Items purchased - The Purchasing department is responsible for
at resorts the procurement of all items needed in a resort's
operation as well as the services necessary in
installing and maintaining these items.
Centralization of - All purchases should be centralized in the
the purchasing purchasing department allowing better
function efficiency in ordering process and effective
inventory management.
- The purchasing department should be
independent of other departments and follow
fair procedures in selecting vendors and placing
orders.
General - All purchases (including service contracts) are to
principles for be based on the following criteria:
purchasing  Competitive quotation basis except for
operations those from pre-selected suppliers.

 The lowest possible price provided that

the best quality products or services for
a specific purpose are obtained and the
delivery schedule meets the resort's
need

- Orders should be placed in quantities that reflect

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past consumption patterns and the latest operating

forecast in order to ensure that adequate but not
excessive supplies of all required products are on
hand at all times. This will minimize or eliminate
any disruption to resort operation and keep
inventory levels as low as possible.

- With the large variety of items to be requested,

purchasing staff must develop a wide and
thorough knowledge of resort operations.
Developing and maintaining good external
relationship with suppliers will allow them to
obtain valuable technical assistance and to
secure smooth operation of the purchasing
cycle (shorter delivery times, stable price and
quality of product).

- When placing an order, authorization rules

must be clearly defined for the items to be
purchased, purchasing amount and the effective
period of the service contracts. When staffing
levels allow it, internal control procedures must
include the segregation of the purchasing
function from receiving and stores functions.

- The purchasing department is responsible for

monitoring delivery to ensure that suppliers
deliver the goods according to the schedule
stated in the purchase order.

- The most important principle for purchasing is

no commission from supplier and the honesty
of the purchaser is highly required.
Maintaining - The purchasing department is responsible for
purchase maintaining relevant purchasing information in
information order to assist other department in purchasing
goods or services efficiently.

- Information research: to respond to the needs of

the Requesting department and to be recognized
by the vendors as an educated buyer, the
purchasing department should always research
information such as:

 Distribution channel, buying method

and dealer names for each item to be

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purchased
 Market price and product information.
 Price and product information from
purchasing department of other resorts
 Availability of new products that may
be beneficial to the departments

- As Purchasing database: to develop an adequate

purchasing database on all supplies required for
resort operations, the following records should
be kept:
 Purchase, stock and consumption
records
 Good specification files / price records /
contract files
 Suppliers records, manufactures'
catalogues
Purchase - A purchase meeting should be organized
meeting monthly with the participation of the
Purchasing Manager, the General Manager, the
Director of Finance and all relevant head of
department to review and discuss the following:
 Pending purchase requisitions,
undelivered and/or partially delivered
orders
 Procurement plan for capital
expenditures and new projects
 Change of major vendors
 Change in specification or design of
major purchase items
 Exchange of information regarding
market conditions and new products, etc
Procedures I. Purchase Requisition

1. The requesting department (including stores) raises a purchase

requisition ensuring that all fields are completed.
Refer to the attached sample purchase requisition form
2. After formal approval by the relevant Head of Department, the
purchase requisition will be routed to purchasing department.
3. Purchasing should clarify any queries with the requesting departments
as soon as possible and verify that products specifications and
quantities are appropriate. Coordinate with Cost Controller to verify
the quantity of the order, the stock on hand, consumption pattern, and
expected consumption rate should be considered.
4. Purchasing will call for a written quotation from at least 3 suppliers
and sample checking. The Department Head will then be invited to

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check and comment. Any material variances must be notified to the

requester prior to the placement of an order.
5. Quotes should be compared to specifications, price and date of
delivery. Competitive pricing is one component of the evaluation and
may be outweighed by other factors. When more than one vendor
submits a quote with the same price, the volume of business that is
done with the respective vendors should be considered to select the
vendor. To encourage competition among vendors, orders should not
be placed with only one supplier.
6. The purchase request attached with quotations from the suppliers and
proposed selected supplier will be send to the Director of Finance and
the General Manager for approval before purchase orders are
prepared. For items with exclusive distributor and/or regular order.
purchase orders should be prepared and sent to management for
approval at the same time as the purchase request.

7. For the daily market list, the sole signature of the Director of
Culinary is sufficient to initiate the order. When a fixed price system
applies, only quantity will be stated and approved; when daily market
price is applied, the Director of Culinary must approve the market list
after the quote given by the purchasing staff.

8. Where a manual system is used. The distribution of the purchase

requisition is as follow:
Original → Purchasing department (to activate order)
1st copy → Purchasing, Receiving & Accounting
2nd copy → Purchase requesting department

9. For items, projects which are requested to make by internal staff, the
cost estimation should be calculated by Cost Controller for review and
approval before proceeding the PR/ PO.

II. Purchase order

1. Based on approved purchase requisition, a purchase order is prepared

and forwarded with attached initial purchase request and all
supporting documents, to the Director of Finance and then to the
General Manager to obtain approval to place the order. The purchase
order form must be numbered, and the number posted to the purchase
requisition.

2. Orders can be placed with the vendor either by telephone, fax,

internet or mail. When placing orders by telephone, the vendor
contact and date of order should be noted and a confirming copy of the
order sent to the vendor.

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III. Purchase Authorization

Finalized
Issuing PR Approval PR Approval PO
PR

Non- Department Purchasing

DOF & GM DOF & GM
perishable Head Manager
Director of Director of Director of
Market list
Culinary Culinary Culinary
Capital Department Purchasing
DOF & GM DOF & GM
assets Head Manager
Contract of
supply of
good & Department Purchasing
DOF & GM DOF & GM
services Head Manager

1. Purchase requisition and order forms should be authorized by both

Director of Finance and General Manager. In some cases, depending
on the purchase amount and contract period, the authority may be
delegated to the Director of Finance alone. Where there are particular
arrangements for approval for purchases between owners and the
resort, such arrangements should be followed.
2. Purchases exceeding the certain amounts or contract periods must be
approved by Director of Finance & the General Manager.
3. All contracts which have a term of more than one year, all contracts
and leases that will be paid by instalment must be approved by the
Director of Finance and General Manager.

IV. Supervision of deliveries

1. The Purchasing department is responsible for communicating with

receiving staff following-up on the delivery. When the requested
delivery date cannot be met, the Purchasing Department should
immediately notify the relevant department.

2. The Purchasing department should monitor all undelivered and

partially delivered items. When purchase orders are issued. At
month-end, a list per department of all outstanding purchase
requisitions and purchase orders (undelivered and/or partially
delivered) should be prepared by purchasing department and
reviewed by resort management during a formal purchasing meeting.

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VI. Cancellation of purchase orders

1. The Purchasing department will contact the vendors immediately to

cancel the order. If the vendor insists on a penalty, purchasing staff
should contact Director of Finance and take appropriate measures to
rectify the situation.
2. When a vendor reports to the resort the cancellation of a previously
accepted order, the Purchasing department will place a new order
with another vendor immediately and advise the requesting
department. The initial purchase order should be cancelled. A new
purchase order will be issued and sent to management for approval
with the original purchase order attached.

Contact points DOF

Forms & Templates

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