Purchasing Procedure (for items required to provide services)

Purchasing Procedure is a disciplined & prudent method of spending money for Capex, travel, hiring, contracting, supplies, hazardous materials.

  1. Directors & Managers maintain Approved Suppliers Log & Approved Purchased Products Log, especially for those that are critical. Store the logs in ABC’s DCS with the name shown verbatim. The Approved Supplies Log should list sources for medical tests, background checks, travel agents, etc. The Approved Purchased Products Log should list sources for hand tools, safety glasses, safety shoes, respirators, etc. purchasing procedure, hiring-procedure
    • As stated in the “Monitoring, Auditing, & Measuring Quality” Procedure, Site Managers create an evaluation report for each of their critical suppliers prior to doing business and each year thereafter using the standard Supplier Evaluation Report and store in ABC’s DCS. These evaluations determine whether the critical supplier is included in the Approved Suppliers Log.
    • As stated in the “Monitoring, Auditing, & Measuring Quality” Procedure, Site Managers store supplier action plans (including their nonconforming purchased product action plans) in ABC’s DCS. Initial product evaluation, nonconformances, & this associated nonconforming purchased product action plan determine whether the purchased product is included in the Approved Purchased Products Log.
  2. For future reference by all ABC employees, add new supplier contacts, including independent contractors & potential employees, to ABC’s Contact Management System.
  3. Take proper care of purchased items. Manager will address loss or damage on a case-by-case basis. The worker will be responsible for loss or damage due to personal negligence.
  4. Directors & Managers keep track of inventory & staff levels to ensure services can be provided per customer requirements.
  5. Purchasing in GENERAL: purchasing procedure, hiring-procedure
    • Thoroughly analyze the situation. Then describe the priority (barebones, practical, perfect world), justification, ~ cost, & ROI as appropriate.
    • Get proper approval in advance of purchase. Failure to do so could result in ABC not covering the costs.
    • Thoroughly describe what is to be purchased. If applicable, write a Job description, Service Contract (a.k.a., SOW Agreement), Requirement/Config Form, etc. Provide a sample to supplier if applicable.
    • Shop around & negotiate for the best value, price, & lead-time. Review the Approved Suppliers Log & the Approved Purchased Products Log because ABC may already have suppliers arranged.
    • Thoroughly analyze the purchased product, person, Qual Report (showing test results), Service Contract, etc before purchase. purchasing procedure, hiring-procedure
    • Work with the supplier to prepare, track approval & revision, and store the appropriate purchasing documentation. Store in ABC’s DCS with the keywords shown below in the name:
      • Supplier Service Contract SOW (e.g., “Smarsh Email Service Contract SOW 091203”)
      • Supplier General Agreement (e.g., “Praxair Supplier General Agreement 081203”)
      • Supplier Requirements (e.g., “Praxair HF Supplier Requirements”)
      • Supplier Config Form (e.g., “Praxair Wet Bench Supplier Config Form”)
      • Supplier RFQ (e.g., “Praxair HF Supplier RFQ”)
      • Supplier Qual Report (e.g., “Praxair Wet Bench Supplier Qual Report”)
      • Supplier PO (e.g., “Smarsh Email Supplier PO 43554”)
    • Upon receipt, inspect incoming purchased product, samples of the incoming purchased product, packing slip, service report, delivery ticket, labels, invoice, etc. Do this & resolve any nonconformances with the supplier (before payment if possible). Be more thorough with process-critical supplies since they can adversely affect the final product.
    • Pay with the appropriate Payment method (e.g., ABC Purchase Order (PO), ABC debit card). If you purchase out of pocket or with ABC debit card, then complete an Expense Report. Don’t publish in ABC’s DCS. purchasing procedure, hiring-procedure
  6. Purchasing CAPITAL EQUIPMENT (including Tools):
    • Complete a Capex Requisition Form & store in ABC’s DCS with Capex Requisition keywords in the name (e.g., “Capex Requisitions for IT 2007 Q4”).
    • Get requisition approved by your manager & then the Director of Finance. purchasing procedure, hiring-procedure
    • The Director of Finance will often directly pay for capital.
  7. TRAVEL: purchasing procedure, hiring-procedure
    • Get your manager’s approval to travel in advance.
    • Travel expenses often include the following. Note that Individual Contractor Agreement’s supersede.
      • Lodging
      • Transportation:
        • airfare purchasing procedure, hiring-procedure
        • personal car mileage at the current IRS standard mileage rate for business miles driven
        • train
        • taxi purchasing procedure, hiring-procedure
        • tolls purchasing procedure, hiring-procedure
        • parking
        • rental car
        • rental car gas
        • rental car insurance (not necessary if renting with company debit card because the card provides it).
      • Airfare for visits home during long business trips may be covered on a case-by-case basis when specifically approved by supervisor.
      • Meals: purchasing procedure, hiring-procedure
        • Include a receipt for every meal.
        • Alternatively, in the US, you can simply enter $6 for breakfast, $9 for lunch, & $20 for dinner and not attach any meal receipts.
        • You cannot mix the 2 methods.
      • Reasonable customer entertainment
      • Occasional & reasonable staff entertainment by managers
    • If you don’t have a company debit card and need a cash advance, itemize the purpose of the advance & corresponding amounts and provide document to supervisor. If supervisor agrees, supervisor forwards document to Director of Finance. If approved, Director of Finance will provide the advance. It can be direct deposited if direct deposit is established. The advance is deducted from the expense reimbursement.
  8. HIRING Employees & CONTRACTING Independent Contractors:
    • This is one of the larger decisions a manager makes because significant company money is spent. Therefore, to make it easy to get approval, consider showing full context by submitting an updated Staffing Plan for your entire group that lists the following. Don’t publish in ABC’s DCS.
      • each current job (e.g., Freescale Etch Field Service Engineer 2), its duration, its annual revenue (e.g., $120K), the employee/contractor filling the position (e.g., Joe Smith), & his/her annual salary (e.g., $66K)
      • each future job (e.g., Freescale Implant Field Service Engineer 3), its duration, its annual revenue (e.g., $140K), the employee/contractor expected to fill the position (e.g., New Hire 2), & his/her expected annual salary (e.g., $72K).
    • If increasing the supporting cast (overhead such as floaters, backfills, managers, etc), consider including a quantitative decision analysis with the Staffing Plan. Refer to the Decision Making Work Instruction.
    • Get written (email) approval to proceed from your manager & then the Director of Finance. Sometimes an Employee Requisition Form will suffice in lieu of a Staffing Plan. Don’t publish in ABC’s DCS.
    • If no Job description is documented (e.g., Technician, Site Manager, Safety Manager, Director of QMS), work with recruiting personnel & Director of Operations to create a new Job description & publish in ABC’s DCS with Job Description keywords in the name (e.g., “ABC Technician Job Description”). Similar to a SOW, the job description will likely cover:
      • Customer Machines / Parts to be serviced
      • Service/job/task descriptions (roles, responsibilities, & authority)
      • Travel requirements
      • Technical expertise & skills pre-requisites (experience)
      • Training & certification pre-requisites (education)
      • Coverage (e.g., shifts)
      • Communication requirements (e.g., does staff need to attend customer meetings?)
      • Customer purchasing procedure, hiring-procedure
    • Work with the recruiting personnel to find candidates to interview, based on the Job description. Typical sources are Monster.com, ITT, IHCC, & DeVry. If need to hire someone quickly from ITT, visit campus on Thursdays, set up a table, and wait for interested students to interview.
    • Potential employees must complete Application Form. Don’t publish in ABC’s DCS.
    • Interview candidate using the standard Interview Questionnaire, review his/her Resume, & complete the Candidate Evaluation Form. Make sure to ask whether s/he is a US citizen & whether s/he has a criminal record.
    • Recruiting personnel check background (e.g., Datatraceonline.com), check 2 references using the standard Reference Checklist, & schedules physicals to ensure candidate is fit to do the job & drug-free. They may also determine if candidate can wear a respirator or baseline heavy metal & arsenic-level.
    • Candidate takes physical.
    • If candidate passes background check, reference check, & physical; and is going to work at customer site, provide name to customer so they can check background & reserve slots in their new contractor orientation class (e.g., NCO class).
    • If candidate passes customer’s background check as necessary, negotiate compensation (wage, shift premium, per diem, etc) with candidate, Director of Operations, & Director of Finance. purchasing procedure, hiring-procedure
    • If employee, provide:
    • If independent contractor, provide:
    • If candidate accepts the job, s/he completes all forms & returns. The candidate also provides a copy of his/her Drivers License. If the candidate authorized direct deposit, s/he provides a voided check or deposit slip as well. If applicable, the candidate (or supervisor) gives customer’s badge request form to customer’s badging personnel. If the individual refuses to complete the Equal Employment Opportunity Form, supervisor completes the form and adds the comment “visual, employee refused to sign”.
    • Provide the forms, Drivers License copy, & voided check/deposit slip to Payroll. Maintain copies in your file. Don’t publish in ABC’s DCS.
    • Payroll checks the validity of the social security number through the Social Security Administration. If invalid, payroll will tell the supervisor to direct the employee to contact the Social Security Administration for assistance. No one may be hired until their social security number is verified.
    • Payroll provides User ID & Password to ABC’s Benefits Election website so new employee can select benefits (medical, dental, etc). purchasing procedure, hiring-procedure
    • If applicable, complete customer’s access forms (e.g., CAF) & submit to customer.
    • Plan training per worker’s current status and applicable training & certification requirements. Refer to Technician Training & Certification Requirements
    • New worker completes respirator fit test (if s/he is required to use a respirator). purchasing procedure, hiring-procedure
    • If applicable, new worker completes customer’s new contractor orientation class & any other items required to work at customer site (e.g., read & understand, cleanroom protocol, site safety, copper segregation specs).
    • If applicable, new worker gives customer’s badging personnel the customer’s signoff sheets as required (e.g., NCO class signoff).
    • If applicable, customer’s badging personnel gives customer’s badge to new worker.
    • Add new worker to ABC’s Employee Database.
    • Purchase (or assist new worker in purchasing) necessary tools (e.g., PPE, hand tools) & supplies (e.g., business cards, laptops) for the new worker.
    • Email Director of IT to get new worker an email account if necessary. Sometimes the customer provides & this may suffice. Sometimes the worker’s personal email box may suffice.
  9. CONTRACTING Supplier Services (a.k.a., Service Contracts, SOW Agreements): purchasing procedure, hiring-procedure
    • Complete a Mutual Non-Disclosure Agreement with the supplier & store in ABC’s DCS with Non-Disclosure NDA keywords in the name (e.g., “Praxair Non-Disclosure Agreement (NDA) (090412)”).
    • Consider covering these items:
      • Backfill requirements
      • Customer Machines / Parts to be serviced
      • Service/job/task descriptions
      • Parts requirements (i.e., who provides parts?)
      • Part ordering/management procedures
      • Tools & supplies requirements (i.e., who provides what?)
      • Travel requirements
      • Technical documentation requirements (i.e., who provides service procedures & drawings)
      • Technical expertise & skills requirements
      • Training & certification requirements
      • Coverage (e.g., shifts)
      • Labor requirements (e.g., qty & type of staff)
      • Billing procedure (possibly including a monthly billing matrix)
      • Billing ramp up definition (e.g., charge 50% until a certain training milestone is met)
      • Performance appraisal system (possibly including report cards from the customer & list of KPI’s)
      • Communication requirements (e.g., does staff need to attend customer meetings?)
      • Issue handling procedure (possibly including information form the Problem Solving Work Instruction)
      • Escalation Procedure
      • Absence reporting & handling procedure
      • Holiday handling procedure
      • Cancellation rules
      • Payment terms (including that work will stop if not paid & still get paid what is due)
      • Non-solicitation rules (i.e., strategic partnerships that keep supplier from working directly with our customers).
      • Start date & duration
      • Customer
      • Data sharing commitments
  10. Purchasing SUPPLIES (production & office):
    • Monitor inventory stock levels on a regular basis to prevent over-stocking & shortages. Ensure supplies are properly labeled & stored.
    • Don’t exceed 70% of the TPQ documented on the EPA List of Lists or 8 Gallons, whichever is smallest.
    • Site Manager completes a Hazardous Material Requisition Form & stores in ABC’s DCS with Hazardous Material Requisition keywords in the name (e.g., “HF Hazardous Material Requisition for ABC Austin (090522)”).
    • Site Manager gets requisition approved by Director of Applications Development and Safety Manager.
  12. Purchasing REPLACEMENT HAZARDOUS MATERIALS (ABC Core Chemicals):
    • Site Manager completes a Hazardous Material Requisition Form & stores in ABC’s DCS with Hazardous Material Requisition keywords in the name (e.g., “HF Hazardous Material Requisition for ABC Austin (090522)”).
    • Site Manager approves requisition.


  • ABC = Fake name of company used in our procedures.
  • CAF = customer’s access forms
  • Capex = Capital Expenditure
  • DCS = Document Control System for users to write, approve, publish, find, & read controlled documents.
  • EPA = Environmental Protection Agency
  • IHCC = Indian Hills Community College (high tech trade school)
  • ITT = ITT Technical Institute
  • NCO = New Contractor Orientation
  • PAF = Payroll Action Form
  • PO = Purchase Order
  • PPE = Personal Protective Equipment
  • Qual = Qualify
  • ROI = Return On Investment
  • SOW = Scope Of Work
  • TPQ = Threshold Planning Quantities