1. Purchase order management process

2. Purchasing Order Management
Business Scenario
Type
Annual Spending < RMB 200K • On-demand project base • New supplier should be validated by purchasing before order management
Order Management
Any Purchasing Amount Purchasing from Existing Supplier with Standard Charge Rate • Low-value purchasing will skip purchasing approval in SRM① • E-catalogue will skip purchasing approval in SRM② ① Low-value purchasing means project spending < RMB 10K ②E-Catalogue items mean supplier and unit price have been pre-determined by Purchasing
Low-value purchasing means project spending < RMB 10K
E-Catalogue items mean supplier and unit price have been pre-determined by Purchasing

3. Shopping Cart Approval
Purchasing Order Management Role & Responsibility
Initiate
Request
Shopping Cart Approval
Goods Receipts
Supplier
Management
Payment
Internal Stakeholder
Purchasing
Controller
Accounting A R A R A R C C I A C I A R C A A R A
Accountable: Decision maker who has the final say. R
Responsible: The process owner who is Responsible to delivery C
Consulted: Other stakeholders who must be consulted before the decision is made I
Informed: Person who must be informed on process output/decision made
Internal stakeholder confirm Goods Receipts for service and 3rd party delivered physical item.
Warehouse confirm Goods Receipts for physical item
Supplier management includes quality issue coordination.

4. Purchasing Order Management Process Overview
Stakeholder
Initiate Shopping Cart (After bidding result & award )
Purchasing
Approve Shopping Cart (Response within 3 working days)
Approve Purchase Order
Goods Receipt
Accounting
Invoicing
Payment

5. General Principles Commitment to a Supplier and PO Approval
All request must be previously approved by: Purchasing (for centralized purchases only), budget manger and Controller.
The list of approvers must be decided in accordance with thresholds, depending on the amounts to be committed. 1
Exemption from PO Approval
PO value ≤10K RMB, NO need for purchasing approval. This amount is valid for all type of purchase. 2
Call for Competition
Threshold: ≥ 200K RMB
Minimum Quotation: 3 (Quotation ≤3, buyer need to get purchasing manager approval.) 3
Purchase Request
No PO No Production
One PO for One Purchase Request; One PO for One Supplier 4
Confirmation (Goods Receipt)
Goods receipt represents the authorization to pay the supplier, and posting of expense to profit and loss account.
It must be undertaken the provided service or goods if need be verified. 5
Invoices
All invoices + PO hard copy + Contract (If applicable) send to accounting department for reconciling the invoice with the PO
PO must be corrected and submitted one more to approval circuit if it exists an upwards discrepancy between invoice and PO. 6
Provisions for invoices not yet received
All orders duly received must be provisioned (goods receipt) as soon as goods have been delivered or services undertaken.
Provisions must be examined systematically at least once a month. 7

6. Shopping Cart Approval Supporting

7. Purchase Order Process
1. Initiate Request
5. Approve APEX ④
0. Receive Bidding Summary & Award
Yes
Internal Stakeholder
1. Initiate Shopping Carts ①
3.Delivery to Suzhou Warehouse? ②
4. APEX Approval ? ③ No No
2.Physical Item Purchase?
6. Existing TP Code?
Yes No
8.Update Shopping Cart
Yes No
Yes
7. Create TP Code
Buyer A
Quotation is MUST for any shopping cart.. Payment Requirement is applied to intro group charge
Goods deliver to Suzhou warehouse, Internal stakeholder needs apply a TP code to purchase if it doesn’t exist.
PLV need to deliver to Suzhou warehouse.
APEX approval refers to PLV delivery guideline.

8. Purchase Order Process
2. Approve Shopping Cart A
11. Requested Value ≥200K RMB?
9.Purchase from Existing Catalogue? No B
Internal Stakeholder
Yes No
10. Requested Value <10K RMB
Yes
13.Upload Contract Link
17. Upload Justification Form No
Yes
15.Upload Project Summary Link C
12.Exist Annual Contract?
Yes
14.Exist Bidding Support Documents?
Buyer
Step 5 and step 8: Customer attached the evidence to shopping carts replaced to buyer uploading evidence to shopping carts. Simplifying process to customer. No
Yes
16.Exist Justification Form?
18. Rejected & Request for Supporting Documents ① No
Yes No
If missing any supporting documents, purchasing will reject shopping cart and request for supporting documents.
Supporting documents: Quotation or Payment Requirement for intro group charge. Contract, Project Summary or Endorsed Justification for >200K RMB Amount. Refer Appendix1 “Project Summary Archive Documents”

9. Purchase Order Process
2. Approve Shopping Cart
Buyer
20. Approve Shopping Cart B
Purchasing Director
21. Approve Shopping Cart if Value > 1M RMB
Budget Manager
22. Approve Purchase Order C
Controller
23. Approve Purchase Order
CFO
24. Approve Purchase Order if
Value > 2M RMB
CEO
25. Approve Purchase Order if
Value > 3M RMB D
3 Working Days

10. Purchase Order Process
4. Goods Receives
5.Invoicing
6. Provisions & Payment
Internal stakeholder
29. Goods/Service Quality is Acceptable?
31 Goods Receipt on SRM ①
Yes
Warehouse No
32. Invoicing and Submit Supporting Document ②
27. Supplier Receive PO * Start Production
28.
Deliver Goods/ Service
Supplier
30. Re-work D
34.
Pay for Goods /Service
Accounting
33. Archiving ③
After Brand get goods/services, Brand will confirm goods receipt on SRM system/ After warehouse receive goods, warehouse will confirm goods receipt on SRM system.
Invoicing and submit supporting documents refers appendix 2 “Payment Supporting Documents”
The invoice and associated documents (the PO, estimates and delivery document) must be kept by the Accounting department according to the period imposed by local legislation but in any event for two years, and must be produced for internal and external auditors at their request.

11. Project Summary Archive Documents
Appendix 1: Project Summary Archive Documents
Project summary should includes documents below;
Project Summary Archive Documents
Business Requirement Brief to Supplier
Proposal / Quotation
RFx Evaluation Summary
Award / Non-award Letter
Justification Form (if applicable)

12. Appendix 2: Payment Supporting Documents
Requested File Status
Details PO
Hard-copy
Company title and amount must be matched in PO, invoice and contract.
Total purchasing amount ≥ RMB 200,000, the contract is request to be signed.
For annual contract, purchasing department will send the original signed contract to Accounting department for reference.
Invoice
Original Invoice
Contract
Hard-copy (if applicable)