Question

Choose a company and research their purchasing practices. Use the following to formulate your ideas:

Brief summary: what do they purchase, how do they purchase, etc

Do they use global sourcing?

Who are their suppliers?

Do they use sole supplier or multi suppliers?

Answer 1

1. COMPANY PROFILE

AL SHAHIN Company For Metal Industries was established in 1978 located in 2nd Industrial City-Riyadh Saudi Arabia. The company was established to supply state-of-the-art fabricated structural steel structures in the industry and today we are proud to introduce ourselves as one of the very reputed and well-known company, executing very prominent projects for supplying of Multi-Purpose Pre-Engineered buildings and Structural steel buildings which includes Malls, High Rise Buildings, Bridges, Towers and others which can be used for commercial, industrial, petrochemical and any other purposes with a wide range of industrial applications within International Standards.

AL SHAHIN Company manned by professionals of Engineering, Manufacturing, Sales, and Management to provide diversified services that highlight mainly on engineering services and almost all imaginable steel structures. The company is also maintaining a Quality, Health & Safety assurance program for the operational efficiency and overall company profitability and to avoid production errors and to ensure the quality of its delivered products.

AL SHAHIN Company is equipped latest design and detailing software to ensure the accuracy of its engineering outputs and providing complete solutions through design and build, to engineering procurement and construction. Our company has the expertise to execute any challenging task profoundly, which consists of a qualified skilled team along with a very senior engineering team that checks the progress stage by stage maintaining the quality and keeping it on the top of their agenda.

       2- MISSION & VISION :

To supply high-quality steel products, utilizing innovative technologies in a highly motivated environment, leading to added value to our customers and our vision To invest and to grow in relationships with developers, investors and service providers alike to provide best-fit solutions to mutually benefit and to sustain productivity and growth.

     3 - FACILITIES & INFRASTRUCTURE

Al Shahin Facilities spread over the area of 250,000 m2 covered area with overhead traveling cranes. Raw steel and manufactured members are handled efficiently through the use of numerous huge cranes. Completed structures are shipped to job sites through a combination of commercial haulers and Al Shahin fleet trucks equipped with cranes. The engineering team has twelve work stations using Steel computer drafting from the engineered design drawings supplied by project engineers and architects, the Al Shahin Drafting Team creates connection design drawings, and working drawings and the electronic files created are then fed directly

Al shahin company is having different departments such as production, purchase, sales, marketing, finance, engineering, store, QC and finance departments. All the departments are working as per the international standards. The entire company is working as per the standards of SASO, ISO and special standards prescribed by Saudi Aramco- The world number one oil company. The company has mainly two divisions, one is steel fabrication division and the other one is commercial division. The fabrication division undertakes different projects inside and outside Saudi Arabia. This division needs a lot of products such as black steel, Galvanised steel. The steel includes different structures such as U- channel, C-channel, etc.

        4- Purchase Department of the Company:

The company has a well and professionally managed purchasing department. This department is procuring its required materials from both local and international suppliers. The company has several approval suppliers for their materials supplying. As per 2018, the company procured its steel materials from global steel giants such as Arcelor Mittal, Corus steel, Hyundai steel, Yieh corporation, etc. from the domestic market they procure the required steel from Hadeed Sabic, and some other suppliers. The company procures materials for its two divisions. The products such as nails, rivets, cutting and grinding wheels, welding machines, industrial paints, deformed steel bars, big and small machines, its spare parts, etc are also bulkily purchased for the company.

       5- Purchasing procedure:

The steel fabrication sales professional gets some projects from some reputed customers. To provide the best quotations, they also seek help from the purchase and engineering department as well as the operation department. After the order is confirmed they transfer this to the engineering department. The engineering department is preparing a detailed project report with complete details of material requirements. After this, the engineering department transfers these details to operation and store departments to check the availability of materials both physically and in the system. So they list out all the required materials which have a shortage in the store. After rechecking they confirm that they need these materials. So they prepare a purchase request and send it to the purchasing department with the proper signature from top-level authority.

After getting the purchase requirement, the purchasing department decides whether the materials have to be purchased from local or international markets based on urgency, quantity, price, and quality. The department sends a request for quotation form to different approval suppliers. So they get quotations from different suppliers. After getting the quotations, they tabulate the quotes and decides who quoted them well. but they will consult with some other suppliers, even though they quoted a little bit high. So they negotiate with these suppliers once again and reduce the price as per the company purchasing policies. Prepare purchase order, duly signed from General manager, finance manager, and MD. Then this purchase order will be sent to the concerned party. If the purchase amount is big and the supplier is an international player, normally the payment method is LC- Letter of Credit. Otherwise, it will be cash or credit purchase.

After placing the order, the department people will regularly do the follow up to get the materials delivered on time to the company’s store premises. The QC engineers will check the quality of materials, then only that can be accepted by the store. After the delivery, the sales bill of suppliers will be sent to the finance department for payment as per the terms and agreement with suppliers.

70% of materials are procured from the international market. This may be for the following reasons:

1. To get the best price
2. To get quality products.
3. As per the requirements of clients. They have some demand regarding the suppliers.
4. To meet the demands of SASO, ISO and ARAMCO standards.

The company procures materials from several suppliers to avoid the monopoly, and receive the best quotations, to have experience with different suppliers, etc.

The main suppliers of steel products are:

5. Arcelor Mittal steel
6. Tata Corus steel.
7. Hyundai steel- Korea
8. POSCO steel- Korea
9. Hadeed Sabic
10. Yieh Corporation , Taiwan