1. Procurement Policy Monthly Report
CONFIDENTIAL
Procurement Policy Monthly Report
HYUNDAI MERCHANT MARINE Co. Ltd.
December 2011
Purchasing Team / Strategic Purchasing Part
Jan. ~ Nov 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 Nov.)
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 (Nov.)
Contract Management (Jan.~Nov.)
Spend Ratio (Jan.~ Nov.)
[No. of Suppliers]
[No. of Contract]
[Unit: Billion U$] 3 1 15 24
신조기기
Feeder
GTO Terminal
Feeder
Fuel & Lubricant
New van & Reefer
Long term Container
KHT
Bulk Agent 15
133 23
110
2.82
0.42
2.40 17 16
장기임차 연료
Total Amount
Non-Target
Amount
Target
Amount
Target Supplier
Incomplete
Complete
110 target suppliers (November) are
evaluated among 133 suppliers.
Evaluated suppliers: Total 110 suppliers
- Bulk stevedore (35)
- Bulk Agent_ Liner (21)
- Fuel & Lubricant (20)
- General Repair (11)
- Feeder (10)
- Kaohsiung Hyundai Terminal (6)
- Bulk Agent_ Tramper (6)
- Bulk Agent_ Tanker (1)
The number of the contract from Jan to Nov.
CPO Target suppliers
- Spend Ratio (Jan~Nov): 85%
- USD2.40billion (Total USD2.82billion)
HMM Minimum standard 80% is passed.
Service
No. of Contract
GTO Terminal 24
Feeder 17
Fuel&Lubricant 16
New van&Reefer 15
Long term Container
KHT 3
Bulk Agent 1
Total 91

6. Ⅲ. The Summary of Monitoring
A. Spend Ratio Summary (Sum up from Jan. to Nov.)
[Unit: USD]
No.
Service
Total Purchase Amount
CPO Target Amount
Spend
Ratio 1
Long term container
34,158,905
31,517,012
92% 2
Docking Repair
16,330,225
9,355,023
57% 3
Fuel&Lubricant
1,478,824,382
1,449,484,046
98% 4
New van&Reefer
64,827,000
62,782,500
97% 5
Short term container
21,253,865
20,867,876 6
General Repair
2,764,171
1,658,111
60% 7
Spare parts
38,192,186
16,540,077
43% 8
Legal Insurance
24,001,775
23,633,050 9
General
Administration
9,033,505
5,591,932
62% 10
C. Feeder
120,836,873
96,565,035
80% 11
Trucking
169,127,932
96,011,589
No.
Service
Total Purchase Amount
CPO Target Amount
Spend
Ratio 12
Bulk Agent
4,494,291
747,626
17% 13
Terminal
592,299,803
423,879,124
72% 14
Depot / CY
35,390,830
11,634,245
33% 15
M&R
38,736,889
29,517,603
76% 16
Barge
27,124,904
19,599,771 17
Bulk Stevedore
23,765,581
8,338,647
35% 18
Container Agent
28,123,389
10,733,799
38% 19
CUT
64,247,347
58,877,220
92% 20
WUT
26,361,540
22,413,824
85% 21
KHT
4,793,422
3,496,733
73%
* HMM Local brach cost will be excepted in Container agent service.
Total Amount
Total Target
Amount
Spend Ratio
2,824,688,817
2,403,244,841
85%

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
210
207
239
262
231
285
350
268
178
321
270
CPO Target Amount
186
176
222
219
200
206
246
185
133
272
225
Spend Ratio
89%
85%
93%
84%
87%
72%
70%
75%
83%
The average of Total Purchasing Amount per month is USD 256million, the average of CPO Target Amount per month is USD 206million.
The average of Spend Ratio for 2011 is 81% (Jan.~Nov Based Data)

8. Ⅲ. The Summary of Monitoring
C. Supplier Evaluation
Service
Supplier name
Grade
Details
Note
Bulk Stevedore
Al Rashed International Shipping 98
Their business period is over 15 years, and they have professionalism in the field.
Their financial status is very stable. (*Debt ratio: 0~200%, *Current ratio: over 200%,
*Equity capital ratio: 8%) They retain required facilities and equipment for operation.
They don’t have any safety problem up to now.
Fuel & Lubricant
Exxonmobil Marine Limited 95
Their claim management is quick and accurate, and also HMM is very satisfied with
their solution. The complaint of HMM against suppliers’ service is immediately
corrected. They show a cooperative attitude to HMM.
General Repair
Shindong Digitec 93
They run cost reduction program continuously, but it is limited values to customers.
They need decisive action about cost reduction.
They have sufficient engineers for repairing and the engineers are regularly educated.
S-oil Corporation 87
They offer reasonable price comparing with other suppliers.
They have 97% of flexibility towards urgent delivery order.
HMM requested information is rapidly provided by S-oil.
Feeder
Feederlink Shipping & Trading 82
They got low score in a part of confidentiality management. If there is separate
program for HMM information protection (only restricted persons access to HMM
information), they can upgrade their performance.
In addition, information sharing activity with HMM should be considered rapidly.
Bulk Agent
- Tramper
Parekh Marine Agencies 80
When contingency arise, the agent ready to respond within 1 week after received.
Estimate Working Plan, Cargo readiness, ship's particular is reported within 2 hours
after arrival.
- Liner
Transmarine Navigation De Mexico 78
Working prospect (Terminal & Storage condition, Arrangement) is sent approximately
5 times before arrival. Daily report is provided within 3 hours at 0900LT and missing
berth.
Dept ratio: (Total dept / Equity capital*100)
Current ratio: (Total dept / Equity capital*100)
Equity capital ratio: (Equity capital / Total assets*100)

9. Evaluation status of CPO Target in November
Ⅲ. The Summary of Monitoring
C. Supplier Evaluation
Evaluation status of CPO Target in November
* Fuel & Lubricant Target supplier’s grade
No.
Supplier's name 1
EXXONMOBIL MARINE LIMITED 2
EXXONMOBIL MARINE LUBRICANTS 3
WORLD FUEL SERVICES 4
S-OIL CORPORATION 5
O.W.BUNKER MIDDLE EAST DMCC 6
SK ENERGY INCHEON COMPLEX 7
TOTAL LUBRICANT 8
KTB OIL CORPORATION 9
CHEMOIL INTERNATIONAL PTE LTD 10
NORTH SEA GROUP 11
SHELL MARINE PRODUCTS LIMITED 12
SINGAMAS MARKETING PTE,.LTD 13
BP KOREA LIMITED 14
CHEVRON MARINE PRODUCTS LLC 15
UNIVERSAL ENERGY PTE,.LTD 16
BP MARINE LIMITED 17
BRIGHTOIL PETROLEUM PTE LTD 18
SK ENERGY INTERNATIONAL PTE LTD 19
CONOCOPHILLIPS COMPANY 20
FAL ENERGY CO.,LTD.
Average: 80
* Average grade is 80, and there are 13 suppliers whose grades
are above average. Several suppliers which got low score have
some things in common.
Firstly, they have passive attitude when HMM request market
information. They need some effort to share market information
in a regular basis.
Secondly, their employees have limited professionalism and
responsibility. If they upgrade it, they can make trustful
relationship with HMM.
※ Refer to the supplier’s name with No. 1~20

10. Evaluation status of CPO Target in November
Ⅲ. The Summary of Monitoring
C. Supplier Evaluation
Evaluation status of CPO Target in November
* Bulk stevedore Target supplier’s grade
No.
Supplier's name 1
AL RASHED INTERNATIONAL SHIPPING CO 2
DIAMOND SHIPPING SERVICE WLL. 3
DIAMOND SHIPPING SERVICES 4
INTERNATIONAL SHIPPING AGENCY CO LT 5
GULF AGENCY CO (DUBAI) LLC 6
SEA MELODY MARINE & PORT SERVICES C 7
INDON SHIPPING PTE LTD 8
SEBANG CO.,LTD. MASAN BRANCH 9
SHINYANG SHIPPING SERVICE AGENCIES. 10
HANJIN TRANSPORTATION CO., LTD. 11
POON PHOL STEVEDORES CO.,LTD. 12
SEBANG CO.,LTD. GUNSAN BRANCH 13
SINO FAR EAST SHIPPING(TIANJIN) CO. 14
PASHA STEVEDORING & TERMINALS L.P. 15
PENGHAI SHIPPING AGENCY LIMITED SHA 16
SEBANG CO.,LTD. KWANGYANG BRANCH 17
PORTS AMERICA, LOUSIANAS, INC. 18
COOPER/T. SMITH STEVEDORING COMPANY 19
HANJIN CO LTD 20
GAC SHIPPING (SA) PTY LTD 21
DAEJOO HEAVY INDUSTRIES CO.,LTD 22
DONGBANG TRANSPORT & LOGISTICS CO., 23
JONES STEVEDORING COMPANY 24
COASTAL CARGO CO. 25
DONGHWA CORPORATION 26
POHANG AGENCY, KOREA EXPRESS CO., L 27
DELAWARE RIVER STEVEDORES, INC. 28
SSA COOPER, LLC 29
SOMO HOLDING CO., LTD GWANGYANG 30
LBH BRAZIL 31
SINOSTAR SHIPPING AGENCY CO.,LTD. 32
SEBANG CO.,LTD. INCHON BRANCH 33
KING AND SONS 34
DONGBANG CO.,LTD. ULSAN BRANCH OFFI 35
DESTINY SHIPPING SDN. BHD.
Average: 89
※ Refer to the supplier’s name with No. 1~35
* Average grade is 89, and there are 20 suppliers whose grades are above average.
Several suppliers which got high score have some things in common.
Firstly, their financial status is very stable, and their credit ratings are highly ranked
among local & global accounts.
Secondly, they do not have any breach of safety standard case, so they gain
customers confidence in business.
Thirdly, their facilities and equipment maintenance is very satisfied.

11. New & Updated Contract (Jan~Nov)
Ⅲ. The Summary of Monitoring
D. Contract Management
New & Updated Contract (Jan~Nov)
* Contract Amount & Number of Contract (Jan~Oct)
* Contract Status for Each Month 33
Kaosiung Hyundai Terminal
New van & Reefer
Feeder
Long term Container
Bulk Agent
Fuel & Lubricant
(94.15%) 11 11 10 10
Service
Contract Amount (U$)
Contract Amount Ratio
No. of Contract
No. of Contract Ratio
Fuel&Lubricant
16,137,000,000
95.28% 16
17.58%
New van&Reefer
666,330,000
3.93% 15
16.48%
Feeder
22,540,636
0.13% 17
18.68%
KHT
58,132,500
0.34% 3
3.30%
Long term Container
49,913,750
0.29%
Bulk Agent
2,203,400
0.01% 1
1.10%
GTO Terminal - 24
26.37%
Total
16,936,120,286
100% 91 5 5 4 2
• 33 contracts was made in January among total 93 contracts. (36%)
(Most of the contracts are Feeder service.)
※ 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.