NNPC Limited Stock Review Process PDF

NNPC Limited SCM Processes and Procedures 20.0 Stock Review This process details how stocks shall be reviewed systematically to ensure that materials which are no longer required for NNPC Limited operations are identified, written-off and disposed. This process shall be a multi-functional approach,...

NNPC Limited SCM Processes and Procedures 20.0 Stock Review This process details how stocks shall be reviewed systematically to ensure that materials which are no longer required for NNPC Limited operations are identified, written-off and disposed. This process shall be a multi-functional approach, which shall ensure that the user departments are fully involved in any write-off and disposal decisions. Objectives The objective of the Stock Review process is to: • • • • • • • • Release frozen capital. Allow for effective inventory management. Enhance investment recovery. Uncover theft and identify stock shrinkage issues. Identify damaged goods. Determine product performance. Maximize stock ordering process. Monitor seasonal stock and stock with expiry dates in a timely manner. 20.1 S/N 1. Stock Review Policies Description Stocking/Inventory Management Policy a. Stock holding shall be optimised at the most economic cost, taking into consideration the criticality of the equipment, maintenance option, lead-time, and sourcing strategy without compromising plant availability, health, safety, and environment. b. The type and quantum of stock to be held shall be decided by Supply Chain Management (SCM) in consultation with the User Department. c. Inventory Management shall be based on pre-set min/max re­order level. The strategy shall ensure optimal availability of critical materials with focus on plant availability. d. Project materials are restricted for use by the specific project only. e. The Project Manager, at the completion of the project, shall review any residual/surplus material together with the Supply Chain Manager, to consider materials that are suitable for return to operating inventory or for disposal. f. SCM shall make Users aware of warehouse stock balances and consumption pattern while purchasing project materials. 151 NNPC Limited SCM Processes and Procedures 20.1 S/N Stock Review Policies Description g. The parameters for stocking office consumables and household goods shall be as lean as possible (Just-In-Time). h. The decision to return project spare parts into operational inventory shall be as follows: i. If stock already exists, materials shall be taken into stock if consumption pattern, current stock level and on-order situation permits (i.e., stock levels shall not exceed normal maximum levels). ii. For non-stock materials, they shall be coded and taken into stock on a "do not re-order basis" where there is a foreseeable use in the next three (3) years or next Turnaround-Maintenance (TAM). 2. Warehousing Policy a. SCM shall carry out cyclic and perpetual inventory checks for all NNPC Limited stock of materials. b. SCM shall, in close collaboration with Finance and Accounts, organize and carried out annual Physical Stock Taking (PST) exercise for all materials held in stock (one hundred percent (100%). 20.2 S/N 1. Stock Review Procedures Responsible Party Description Job Aid Supt., Inventory Planning (N4/5) Generate a list of excess unmoved stock from the ERP MM System on a quarterly basis. ERP Note: The list shall be produced for all items not moved within the last five years or at SCM(N3/4) discretion. 2. Supt., Inventory Planning (N4/5) Review the items according to value, starting with the high value items using the Excess & Unmoved Stock Report 152 NNPC Limited SCM Processes and Procedures 20.2 S/N Stock Review Procedures Responsible Party Description Job Aid excess and unmoved reports which shall be sorted according to materials groups. 3. Supt., Inventory Planning (N4/5) Review excess stock in line with management parameters (i.e., Min/Max stock) in line with NNPC Limited's Stocking Policy. Stocking Policy 4. Supt., Inventory Planning (N4/5) Request the Stock Checker (N-5/6) to verify the conditions and quantity of all the items. Email 5. Stock Checker (N5/6) Produce a report on his findings and forward same to Supt., Inventory Planning (N-4/5). Stock Verification Report 6. Supt., Inventory Planning (N4/5) Forward the report to the relevant user department (N-3/4) for review and advice. Email 7. User Department (N-3/4) Receive report and review. Email User Department (N-3/4) If the items are still required Supt., Inventory Planning (N4/5) Based on advice from the User Department (N-3/4) on future anticipated usage, collate the requirements for each material and identify the materials to determine whether the present stock level is adequate or exceeded. 8. 9. If the items are still required, go to step 8. If the items are not required, go to step 11. Provide a justification for retaining them in stock within a week of receipt of report and details of expected future consumption. Stock Justification Template Stock Justification Template & Stock Verification Report If the stock is adequate, go to step 10. If the stock is in excess, go to step 11. 10. Supt., Inventory If the stock is adequate Stocking Policy 153 NNPC Limited SCM Processes and Procedures 20.2 S/N 11. 12. 13. Stock Review Procedures Responsible Party Planning (N4/5) Description Supt., Inventory Planning (N4/5) If the stock is excess or not needed by User Department SBU/CSU User Department (N-4/5) Receive report and confirm if items are needed. Supt., Inventory Planning (N4/5) If required by SBUs/CSUs Job Aid Update management parameters (i.e., min/max stock) to accommodate the quantity required by the user department if the required stock level is not exceeded. Email Communicate to SBUs/CSUs of unrequired, excess quantity or unmoved items and request them to confirm need. Email If required by SBUs/CSUs, go to step 13. If not, got to step 14. ERP Process movement of materials via materials transfer procedure to relevant SBU/CSU. Note: Details are listed in the Stock Transfer Process. 14. Supt., Inventory Planning (N4/5) If not required by SBUs/CSUs ERP Process for partial or complete write-off and disposal if the stock quantity is more than anticipated consumption. Note: Details are listed in the Asset Write-off and Disposal Process. 15. Supt., Inventory Planning (N4/5) Where partial disposal is impossible Make a list of the inventory materials in the excess and unmoved stock report for which the required quantities are exceeded, future usage is anticipated, and partial disposal is Stock/ Inventory Review File 154 NNPC Limited SCM Processes and Procedures 20.2 S/N Stock Review Procedures Responsible Party Description Job Aid impossible. The list with a note shall be kept in the inventory review file. 16. 20.3 Supt., Inventory Planning (N4/5) Maintain records of each stock review exercise including Users' advice and copies of any write-off documents. Stock Review Input Output Documents Document Description Excess or Unmoved Stock Report Type 2. Stock Verification Report 3. S/N 1. 4. Stock/ Inventory Review File & Frequency Source Recipient As required Supt., Inventory Planning (N4/5) Stock Checker (N-5/6) Input/Output As required Stock Checker (N5/6) Supt., Inventory Planning (N4/5) Stock Justification Template Input/Output As required User Department (N-3/4) Supt., Inventory Planning 4/5) Stock/Invent ory Review File Output Supt., Inventory Planning (N4/5) Head Warehouse Input/Output As required (N- 155 NNPC Limited SCM Processes and Procedures 20.4 Stock Review Key Performance Indicators S/N Performance Measure Stock Basis of Measurement Timefra me Target Compliance with stock review targets. 3 weeks Quarterly 1. Frequency of review process 2. Timely preparation of the stock verification report Frequency of report submission to User Department (N-3/4). 1 week Quarterly 3. Accuracy of the excess and unmoved stock report Number of material errors, omissions, and misrepresentations in the template. As required zero 4. Timely preparation of the stock justification template Frequency of report submission to User Department (N-3/4). 1 week Quarterly 5. Completeness of the Routine inventory checking exercise Compliance Stocking Policy. Yearly 100% with 156 NNPC Limited SCM Processes and Procedures 157