NNPCL SCM_Stock Write-Off.pdf

NNPC Limited SCM Processes and Procedures 22.0 Stock Write-Off & Disposal This process describes the framework by which Assets including stock shall be written-off and disposed, in accordance with NNPC Stocking Policy, Asset Management and Accounting Principles. Objectives The objective of the Sto...

NNPC Limited SCM Processes and Procedures 22.0 Stock Write-Off & Disposal This process describes the framework by which Assets including stock shall be written-off and disposed, in accordance with NNPC Stocking Policy, Asset Management and Accounting Principles. Objectives The objective of the Stock Write-Off & Disposal process is to ensure: • • • • • • • That all identified moribund (dead/redundant) materials which cannot be used elsewhere are written-off for disposal. Removal of non-moving items for which full justification has been approved, based on risk analysis conducted with engineering, maintenance and/or operations departments. Removal of moveable assets for which full justification has been approved. Reduced cost of storage and avoidance of wastage. Improved warehouse efficiency. Sustainable environmental development. Operational excellence. 22.1 S/N 1. Stock Write-Off & Disposal Policies Description Stock Write-off and Disposal Policy It is mandatory that no item shall be disposed from inventory, for any reason, until the primary user department has confirmed that there is no further use for the item and the disposal procedure is complied with. The processing of excess, obsolete or damaged stock, once approved, shall be treated as disposal stock and in compliance with NNPC Asset Write-off and Disposal procedures. Subsequent to the disposal process being completed, disposal of goods shall conclude by means of SAP issue movement type transaction 551 (withdrawal for scrapping). 2. Compliance with Inventory Management & Stock Establishment Policy Upon completion of every project, the Project Manager shall review any residual/surplus material together with the Supply Chain Manager, to 164 NNPC Limited SCM Processes and Procedures consider materials that are suitable for return to operating inventory or for disposal. 3. Guidelines Materials shall be proposed for write-off and disposal when they are: a. b. c. d. No longer fit for use In excess of requirements Obsolete Damaged. All materials for write-off and disposal shall take cognisance of NNPC policies, procedures and approving authorities to forestall indiscriminate disposal of valuable company asset to the benefit of third parties. All disposal requests are required to be executed in a controlled, detailed, and transparent manner. The Disposal Request Form (DRF) is the document that shall be used to initiate a disposal process and track the progression through the approval. The DRF has two parts: Part A documents the trail of approval, notification, and advice that each disposal must have. Part B documents the key characteristics and background information on the materials that are contained in the request. 22.2 Stock Write-Off & Disposal Procedures S/N Responsible Party Description Job Aid Asset holder (User Department (N4/5)) Identify materials to be written-off for disposal and complete DRF. Stock Report, DRF 1. Note: Manager, Supply Chain Management (SCM) is the asset holder for stock materials. 2. Asset (User holder Obtain approval from asset owners (User Email Department (N-3)) to dispose materials and 165 NNPC Limited SCM Processes and Procedures Department 4/5)) (N- forward approved DRF to SCM (Materials Requirements Planning (MRP) Controller). 3. SCM Controller MRP Register DRF details and assign reference ERP number for tracking purposes. 4. SCM Controller MRP Circulate list of materials to other Email departments to indicate interest or otherwise and respond within four (4) weeks. 5. SCM Controller MRP For stock items that elsewhere in NNPC CAN be used ERP Arrange for the transfer of materials in accordance with Stock Transfer Procedure. 6. SCM Controller MRP For moveable assets that CAN be used elsewhere in NNPC Email Forward DRF and all documentation to Finance & Accounts (F&A) to adjust stock records. 7. SCM Controller MRP For assets (excluding direct expense materials) that CANNOT be used elsewhere in NNPC Email Forward DRF and all backing documentations to Finance & Accounts (F&A) for insertion of book value and removal from asset register. 8. F&A (N-4) Endorse relevant portions of DRF and return same with net book value to MRP Controller. 9. SCM Controller MRP Review DRF to ascertain if a potential hazard exists and where it exists, contact HSE department; or Engineering and Technical Services Department (ETSD) where technical input is required. 10. SCM Controller MRP Make appropriate recommendation based on review, including methods of disposal. Email Methods of disposal include: • Sales to third party (open bidding) 166 NNPC Limited SCM Processes and Procedures • • Sales by auction Destruction 11. SCM (N-4) Review recommendation for disposal and seek approval of approving authority. 12. Asset Owner (User Department (N2/3)) Approve recommendation or endorse for higher approval depending on asset book value in line with DOA/DFA policy and forward to SCM (N-4). 13. SCM (N-4) If DRF is not approved Return proposal to Disposal Originator for re-work or cancellation. 14. SCM (N-4) If DRF is approved Forward DRF Warehouse. 15. Asset Holder to Email MRP Controller and If materials are moveable assets Move materials to a quarantine area and inform Assets Disposal Committee (ADC) to commence disposal process. 16. SCM Controller MRP If materials are stock items MIV Raise Materials Issue Vouchers (MIV) for stock write-off and forward MIV to SCM (N4) for approval. 17. SCM (N-4) Approve and forward MIV to Warehouse. Email 18. Warehouse 5/6) 19. F&A (N-4/5) Adjust financial records accordingly. ERP 20. SCM (N-4) Forward approved DRF with all relevant documents including MIV to ADC to commence disposal process. Email (N- Issue materials from stock and transfer to Email disposal location, post transactions and distribute MIV copies to MRP Controller, Disposal Originator and F&A. 167 NNPC Limited SCM Processes and Procedures 22.3 S/N Stock Write-Off & Disposal Input & Output Documents Document Type Description Frequency Source Recipient SCM MRP Controller 1. Approved Disposal Request Form (DRF) Input/Output As required Asset Holder (N-4/5) 2. Approved Materials Issue Voucher (MIV) Input/Output As required SCM (N- Warehouse (N-5/6) 4) 22.4 S/N Stock Write-Off & Disposal Key Performance Indicators Performance Basis of Measurement Measure Timeframe Target 1. Timeliness of the circulation and response to list of materials to be disposed Latest date for completion of circulation and response to list of materials to be disposed. As required 4 weeks 2. Accuracy of the DRF Number of material errors, omissions, and misrepresentations in the form. As required Zero error 3. Accuracy of the MIV Number of material As required errors, omissions, and Zero error 168 NNPC Limited SCM Processes and Procedures misrepresentations the voucher. in 169 NNPC Limited SCM Processes and Procedures 170