1. Procurement Policy Monthly Report
CONFIDENTIAL
Procurement Policy Monthly Report
HYUNDAI MERCHANT MARINE Co. Ltd.
October 2011
Purchasing Team / Strategic Purchasing Part
Jan.~Sep Based Data

2. Table of Contents Ⅰ. The Purpose of the Procurement Policy
Ⅱ. The Summary of Key Indicator
Ⅲ. The Summary of Monitoring
A. Spend Ratio Summary (Sum up from Jan. to Sep.)
B. Spend Analysis
C. Supplier Evaluation
D. Contract Management
Ⅳ. Procurement Policy Monitoring
※ Appendix
- Supplier Evaluation Manual
- Vendor information Manual
- Contract Management Manual 1

3. Ⅰ. The Purpose of the Procurement Policy
CPO
CPO [Chief Procurement Office]
An organization which carries out the monitoring and guiding on the company-wide cost management and procurement processes
in relation to procurement of all goods and services at HMM
Contract Service Provider
Helper
Watcher
Carrying out entire procurement operation
from establishing a procurement strategy to making
decisions and concluding contracts
Establishing a procurement strategy,
Monitoring, managing and controlling the overall procurement procedure
Monitoring, managing and controlling
the overall procedure of procurement
Acquiring visibility on all procurement activities carried out at HMM

4. Ⅰ. The Purpose of the Procurement Policy
CPO Policy
Monitoring
* Acquiring visibility on all procurement activities carried out at HMM : Total 19 Services
* Through diversification of the supplier base, should promote price competition among suppliers
* Differentiating each supplier according to the supplier evaluation result and strategic importance
* Minimizing the potential internal and external risk
☞ Sending Procurement Policy Monitoring Report every month
Indicators
Definition
Unit
Formula
Remarks
Supplier Evaluation
Evaluating Major Suppliers
on a Regular Basis
(Target Suppliers: Upper 80% of
Total Purchasing Amount)
Evaluated Suppliers
∑(Evaluated Suppliers)
∑(CPO Target Suppliers)
* Evaluate the target suppliers
at least once a year
* More than 3 people should
evaluate one supplier.
Contract
Management
Acquiring Visibility
on Procurement Operation
New & Updated
Contract
Check the Contract
Uploaded in ELMS system
* Check the contract
effective date
* Check the contract amount of
new & updated contract
Spend Ratio
Checking Spend Ratio of
CPO Target Suppliers’
purchasing amount
Total amount of
CPO Target suppliers
∑(CPO Target Supplier’s Amount)
∑(Total Purchasing Amount)
* Keep 80% Spend Ratio

5. Ⅱ. The Summary of Key Indicator
Supplier Evaluation (Sep.)
Contract Management (Sep.)
Spend Ratio (Sep.)
[No. of Suppliers]
[No. of Contract]
[Unit: Billion U$] 1 3 17 14
신조기기
Feeder
2.23
1.77 15 16 10
장기임차
0.46 55 45 연료 15
Target Supplier
incomplete
complete
Total Amount
Non-Target
Amount
Target
Amount
45 target suppliers (September) are
evaluated among 55 suppliers.
195 suppliers are the target of October
Evaluation.
(Already 119 suppliers were evaluated.)
The number of the contract from Jan to Sep.
CPO Target Suppliers
- Spend Ratio (Jan~Sep): 80%
- USD1.77billion (Total USD2.23billion)
HMM Minimum standard 80% is passed.
Service
No. of Contract
Feeder 17
Fuel&Lubricant 16
New van&Reefer 15
Long term Container
GTO Terminal 14
KHT 3
Bulk Agent 1
Total 81

6. Ⅲ. The Summary of Monitoring
A. Spend Ratio Summary (Sum up from Jan. to Sep.)
[Unit: USD]
No.
Service
Total Purchase Amount
CPO Target Amount
Spend
Ratio 1
Long term container
26,283,333
23,321,217
89% 2
Docking Repair
10,733,445
7,777,469
72% 3
Fuel&Lubricant
1,119,150,195
968,909,176
87% 4
New van&Reefer
64,826,000
62,782,500
97% 5
Short term container
17,088,694
16,790,205
98% 6
General Repair
2,071,999
1,452,789
70% 7
Spare parts
31,052,404
13,631,536
44% 8
Legal Insurance
20,153,842
19,773,967 9
General
Administration
5,018,411
2,238,734
45% 10
C. Feeder
99,685,630
79,195,627
79% 11
Trucking
137,325,603
79,796,030
58%
No.
Service
Total Purchase Amount
CPO Target Amount
Spend
Ratio 12
Bulk Agent
3,566,953
924,755
26% 13
Terminal
490,869,609
358,219,127
73% 14
Depot / CY
28,346,283
9,903,654
35% 15
M&R
32,289,660
24,793,191
77% 16
Barge
21,606,671
16,250,280
75% 17
Bulk Stevedore
18,719,870
7,341,507
39% 18
Container Agent
23,143,960
8,677,689
38% 19
CUT
55,324,524
52,541,350
95% 20
WUT
21,291,560
18,609,493
87% 21
KHT
3,840,980
2,917,585
76%
* HMM Local brach cost will be excepted in Container agent service.
Total Amount
Total Target
Amount
Spend Ratio
2,232,389,626
1,775,847,898
80%

7. Procurement Policy 19 Services Total Purchasing Amount (Monthly)
Ⅲ. The Summary of Monitoring
B. Spend Analysis
Procurement Policy 19 Services Total Purchasing Amount (Monthly)
[Million U$]
Total
Purchasing Amount
CPO Target Amount
[Unit: millionU$]
Item　
Total Purchasing Amount
249
210
207
239
262
231
285
350
268
178
CPO Target Amount
217
186
176
222
219
200
206
246
185
133
Spend Ratio
87%
89%
85%
93%
84%
72%
70%
75%
The average of Total Purchasing Amount per month is USD 223million, the average of CPO Target Amount per month is USD 177million. (for 2011)
The average of Spend Ratio for 2011 is 80% (Jan.~Sep Based Data)

8. Ⅲ. The Summary of Monitoring
C. Supplier Evaluation
Service
Supplier name
Grade
Details
Note
KHT
Yun Dai Tire 74
There is a manager in charge of HMM, but they are consist of non-specialist.
They offer the best follow up service. It means that sight visiting and supplying
new products are very immediate.
Their deadline management is well-established, and working process is very clear.
Sheng Feng Enterprise Co. 80
Their sales growing is over than 20% comparing than last year.
The frequency of claim is more than 1% less than 3%, and quality management
and condition is good.
M&R
Supplier
J. Lynch Co., Ltd 84
Error in document management(RFQ, PO) is less than 1%.
The frequency of claim is very rare, and quality management is very good.
They have no ISO Certification.
GTO Terminal
DP World Southampton 69
Their cargo management & service is very satisfying without any problem.
However, the person in charge stated that they don’t provide differentiated
service comparing than other competitors (in service cooperation & cost area)
Chiwan Container Terminal 75
Customer prefer to use Chiwan Container Terminal to other terminals.
They are comparatively cooperative in case of Cut off, T/S failure.
HK International Terminal 77
Securing space on time is easier compare to other terminal in case of congestion.
In over storage case, 3 ~ 7 days of free time is provided. If more than 7 days of
free time is provided, they can get better reputation than now.
Dubai Port Authority 90
Strike & cargo accident hardly occurs in Dubai Port Authority.
The information about Port & Terminal is very cooperatively provided.
In addition, their RF Monitoring, CY Handling is satisfying even though several
problems were occurred.

9. Evaluation status of CPO Target in September
Ⅲ. The Summary of Monitoring
C. Supplier Evaluation
Evaluation status of CPO Target in September
* GTO Terminal Target supplier’s grade
No.
Country
Supplier's name 1
Pakistan
KARACHI INTERNATIONAL CONTAINER 2
UAE
DUBAI PORT AUTHORITY 3
Belgium
PSA CORPORATION LIMITED 4
Malaysia
WESTPORTS MALAYSIA SDN BHD. 5
HongKong
HK INT'L TERMINALS LTD 6
China
YANTIAN INT'L CONTAINER TERMINALS L 7
CHIWAN CONTAINER TERMINAL CO.LTD. 8
German
HHLA CONTAINER TERMINAL 9
PSA ANTWERP 10
U.K
MARITIME TRANSPORT SERVICES 11
Netherlands
ECT EUROPE COMBINED TERMINALS B.V. 12
DP WORLD SOUTHAMPTON 13
Italy
VOLTRI TERMINAL EUROPA SPA 14
Thailand
LAEM CHABANG INTERNATIONAL TERMINAL 15
Australia
DP WORLD AUSTRALIA LIMITED 16
PATRICKS THE AUSTRALIAN STEVEDORE 17
Slovenia
LUKA KOPER D.D. 18
India
GATEWAY TERMINALS INDIA PRIVATE LIM 19
France
TERMINAUX DE NORMANDIE 20
CHENNAI CONTAINER TERMINAL LTD
Average: 71
* Average grade is 70, and 10 suppliers are above average.
They have two things in common.
Firstly, space is secured on time.
Secondly, strike & cargo hardly occurs.
Top 1,2,3 has strong competitiveness in terms of financial structure,
business capacity, internal environment conditions.
The suppliers whose grade is below average should improve their
service quality and share information regularly.
※ Refer to the supplier’s name with No. 1~20

10. Evaluation status of CPO Target in September
Ⅲ. The Summary of Monitoring
C. Supplier Evaluation
Evaluation status of CPO Target in September
* Depot Target supplier’s grade
No.
Country
Supplier's name 1
German
CDR CONTAINER DEPOT UND REPARATUR 2
Netherlands
VAN DOORN CONTAINER DEPOT 3
CETEM CONTAINERS B.V. 4
Austria
SBL-STADTBETRIEBE LINZ GESMBH 5
ROLAND UMSCHLAGSGESELLSCHAFT 6
Hungary
BILK KOMBITERMINAL ZRT. 7
METRANS AG 8
U.K
DP WORLD SOUTHAMPTON 9
LEERCONTAINER ZENTRUM UNIKAI GMBH 10
Denmark
APM TERMINALS - CARGO SERVICE A/S 11
TRANSFRACHT INTERNATIONAL GES. FUER 12
WIENCONT CONTAINERTERMINAL GES.M.B. 13
Sweden
LUNDBY CONTAINER SERVICE 14
Finland
CONTAINERSTEVE OY AB (DEPO) 15
CDN CONTAINER DEPOT NUENBERG GMBH 16
Belgium
PSA HESSE-NOORD NATIE NV 17
Russia
MODUL CO.LTD 18
Slovakia
GREEEN INTEGRATED LOGISTICS 19
Italy
ERZELLI SRL 20
Slovenia
LUKA KOPER D.D.
Average: 76
* The suppliers who have high grades serve EDI data timely &
correctly. In addition, they are in competitive position in terms of
free day & free pool.
* 5 suppliers in low rank are needed to issue EIR timely.
They rarely use EDI on their invoicing also.
It should be upgraded for both of companies.
※ Refer to the supplier’s name with No. 1~20
※ EDI - Electronic Data Interchange., EIR - Equipment Interchange Receipt

11. New & Updated Contract (Jan~Sep)
Ⅲ. The Summary of Monitoring
D. Contract Management
New & Updated Contract (Jan~Sep)
* Contract Amount & Number of Contract (Jan~Sep)
* Contract Status for Each Month 30
Kaosiung Hyundai Terminal
New van & Reefer
Feeder
Long term Container
Bulk Agent
Fuel & Lubricant
(94.15%) 12 12 10 8 7
Service
Contract
Amount (U$)
Amount Ratio
No. of
Contract Ratio
Fuel&Lubricant
16,137,000,000
94.15% 16
19.75%
New van&Reefer
666,330,000
3.89% 15
18.52%
Feeder
225,932,360
1.32% 17
20.99%
KHT
58,132,500
0.34% 3
3.70%
Long term
Container
49,913,750
0.29%
19.52%
Bulk Agent
2,203,400
0.01% 1
1.23%
GTO Terminal - 14
17.28%
Total
17,139,512,010
100% 81 2
• 30 contracts was made in January among total 81 contracts. (37%)
Most of the contracts are Feeder service.
• 77 suppliers are selected by competitive bidding among 81 suppliers.
→ Competitive Bidding Ratio 95%
※ Feeder Contract amount is estimated by purchasing amount of last year.
※ GTO Terminal cost will be calculated as it occurs.

12. Ⅳ. Procurement Policy Monitoring
Spend Ratio
 Collect the Total Purchasing Amount of 19 Services Using CPO System
Supplier Evaluation
 Evaluate the CPO Target Suppliers at least once a year
☞ Flash Manual : P. Pak ( Web page
(Check the ※Appendix for simple Ver. Manual)
☞ Follow the link Evaluation → Evaluation Plan → Vendor List
☞ Give a Total Feedback After Complete Every Evaluation of Service Suppliers
Contract Management
 Figure out the contents of the contract, and it will be used as evidence if the trouble is occurred with suppliers.
☞ Acquiring visibility on procurement operation: Contents of the contract
(Contract Amount, General Terms and Conditions, Contract Period, etc.)
☞ Portal log on → ELMS → Contract Review → Contract Management)
Related Mail (KOR)

13. ※ Appendix Supplier Evaluation Manual 1) Visit CPO home page,
The URL is
2) Click ‘Evaluation Plan’ under the
‘Evaluation’ menu.
3) Click the period and the service on the
Drop-down list for searching the supplier.
(Ex. October, Feeder)

14. ※ Appendix Supplier Evaluation Manual
Click the Checklist button for Evaluation.
2) Click the position and working period
on the Drop-down list.
3) Start to answer about the question.
4) Click ‘Evaluation’ tab for next step
after you complete the answer and save it.
5) After you complete the evaluation sheet,
please move on to next supplier.

15. ※ Appendix Vendor Information Manual
1) Click ‘Vendor Information’ under the
‘Evaluation’ menu.
2) Click the service name which you want to
put the information on the Drop-down list.
3) You can also put the supplier name
in the search bar.
4) Click the appropriate vendor name
on the list.

16. ※ Appendix Vendor Information Manual
1) Click ‘Edit’ for entering the information.
2) Click ‘Save’ after you complete the form.
( The items with red star should be entered
necessarily.)
* Vendor information should be completed
during supplier’s evaluation period.

17. ※ Appendix Contract Management Manual
1) Click ‘ELMS’ in system link for managing
new and updated contract.
(You can also access ‘ELMS’ using this URL)
2) Click ‘Contract Management’
in ‘Contract Review’ category.
3) Click ‘New Entry’ for entering contract
information.

18. ※ Appendix Contract Management Manual Search the vendor code
Fill the CPO Evaluation period out
Summarize the contents of contract here.
Click here and attach the contract.