1. Procurement Policy Monthly Report
CONFIDENTIAL
Procurement Policy Monthly Report
HYUNDAI MERCHANT MARINE Co. Ltd.
July 2012
Purchasing Team / Strategic Purchasing Part
June Based Data

2. Table of Contents Ⅰ. The Purpose of the Procurement Policy
Ⅱ. The Summary of Key Indicator
Ⅲ. The Summary of Monitoring (June. 2012)
A. Spend Analysis
B. Supplier Evaluation
C. 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
* The supplier should be
evaluated more than 3 people.
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 (June)
Contract Management (June)
Spend Ratio (June)
[No. of Suppliers]
Long-term con.
(2)
[Million U$]
New van
(5) 5 6
1717 32
Feeder
(16)
Spare parts
(7)
1374 12
Feeder 35 13 25
343 10
장기임차
Target Supplier
Incomplete
Complete
Total Amount
Non-Target
Amount
Target
Amount
The number of the contract from Jan. to June.
There are 35 target suppliers in June.
(Service: Spare part)
25 suppliers which are not complete will be
evaluated by next month
The average score of evaluated suppliers are
81.
The supplier evaluation of WUT will be
handled from July to August.
39 contracts were made in 2012
(Feeder, Fuel & Lub. Spare parts, New van
Long-term container)
Total purchasing amount is U$ 40,877,850
( The purchasing amount above is only about
New van, Long-term container and Feeder.
The other contracts don’t have fixed total
amount when they make contract.)
CPO Target suppliers
- Spend Ratio: 80%
- USD 1,374million (Total USD 1,717million)
HMM Minimum standard 80% is passed.

6. Ⅲ. The Summary of Monitoring
A. Spend Analysis
[Unit: USD]
No.
Service
Total Purchase Amount
CPO Target Amount
Spend
Ratio 1
Long term container
25,450,612
22,669,977
89% 2
Docking Repair
4,975,125
3,244,935
65% 3
Fuel&Lubricant
908,061,601
852,197,024
94% 4
New van&Reefer
43,415,000
39,942,500
92% 5
Short term container
14,529,211
13,680,784 6
General Repair
1,626,688
720,434
44% 7
Spare parts
25,156,221
20,792,175
83% 8
Legal Insurance
9,608,528
9,253,037
96% 9
General
Administration
5,178,024
2,587,237
50% 10
C. Feeder
66,993,152
34,375,911
51% 11
Trucking
95,180,879
50,335,217
53%
No.
Service
Total Purchase Amount
CPO Target Amount
Spend
Ratio 12
Bulk Agent
3,013,878
726,116
24% 13
Terminal
365,972,854
236,859,617
65% 14
Depot / CY
20,292,477
5,914,259
29% 15
M&R
19,351,110
11,061,792
57% 16
Barge
17,773,510
12,316,729
69% 17
Bulk Stevedore
24,080,303
9,485,722
39% 18
Container Agent
16,066,199
4,162,059
26% 19
CUT
34,549,740
31,794,712
92% 20
WUT
14,121,349
11,063,296
78% 21
KHT
2,159,193
1,631,398
76%
* HMM Local brach cost will be excepted in Container agent service.
Total Amount
Total Target
Amount
Spend Ratio
1,717,555,655
1,374,814,931
80%

7. Ⅲ. The Summary of Monitoring
A. Spend Analysis
Update Target Suppliers
Newly updated target suppliers were notified in the beginning of 2012.
For managing accuracy of visibility on all procurement activities, we purchasing team would like to update target suppliers
of some services which have low spend ratio. (20%~50%)
Target services for updating is like below.
Updated vendor List will be noticed in the next monthly report.
Service
Spend Ratio
(Until June)
General Repair
44%
General Administration
50%
C. Feeder
51%
Depot/CY
29%
Container Agent
26%
Evaluation Plan

8. Procurement Policy 19 Services Total Purchasing Amount (Monthly)
Ⅲ. The Summary of Monitoring
A. Spend Analysis
Procurement Policy 19 Services Total Purchasing Amount (Monthly)
[Million U$]
Total
Purchasing Amount
CPO Target Amount
[Unit: million U$]
Item　
Total Purchasing Amount
350
268
178
321
270
285
246
294
352
291
273
260
CPO Target Amount
185
133
272
225
237
195
234
281
230
217
214
Spend Ratio
70%
75%
85%
83%
80%
79%
The average of total purchasing amount per month is USD 282million, the average of CPO target amount per month is USD 222million.
The average of spend ratio for 2012 is 80% (Jan.~June Based Data)

9. Evaluation status of CPO Target in June
Ⅲ. The Summary of Monitoring
B. Supplier Evaluation
Evaluation status of CPO Target in June
* Spare parts Target supplier’s grade
* Average grade is 81, and there are 8 suppliers whose grades are above average among 10 suppliers.
It means that almost all of the evaluated suppliers show
good performance in their service and goods.
The gap between the lowest mark and the highest mark is 12 point.
The gap between the suppliers which got good marks and low marks in performance assessment is 13point.
The criteria in performance assessment is Delivery time,
After service, Quality management , Cost reduction rate, Service quality (timely & accurate service).
According to the assessment data, the suppliers which have lower marks should strengthen the deadline management and cost reduction in their performance.
The cost reduction rate comparing with total order amount should be at least more than 3%.
In addition, deadline management should be well established, and working process should be clear like as other good-performance-suppliers.
Average: 81

10. New & Updated Contract (Jan. ~June)
Ⅲ. The Summary of Monitoring
C. Contract Management
New & Updated Contract (Jan. ~June)
* Contract Amount & Number of Contract (Jan. ~June)
* Contract Status for Each Month
Service
Contract Amount (U$)
Contract Amount Ratio
No. of Contract
No. of Contract Ratio
Feeder
25,280,000
61.84% 16
41%
Fuel & Lub. - 9
23%
Spare parts 7
18%
New van
13,338,500
32.63% 5
13%
Long-term con.
2,259,350
5.53% 2 5%
Total
40,877,850
100% 39 28 10 1
※ Feeder contract amount is estimated by purchasing amount of last year.
※ Fuel & Lub. cost will be changed everyday by international bunker price.
※ Spare parts cost will be calculated as it occurs.
• 28 contracts was made in January among total 39 contracts. (72%)

11. General Administration
Ⅳ. Procurement Policy Monitoring
Re-selection of CPO Target Suppliers for 2012
CPO Target Suppliers for 2012 are updated based on 2011 data
→ Newly updated target suppliers will be evaluated by the group in charge at least once a year.
→ New evaluation plan in 2012 is like the attached file.
Evaluation Plan
No.
Service
The number of
target suppliers 1
Long term container 11 8
Legal Insurance 6 15
M&R 37 2
Docking Repair 9
General Administration 7 16
Barge 31 3
Fuel&Lubricant 23 10
C. Feeder 25 17
Bulk Stevedore 99 4
New van&Reefer
Trucking 98 18
Container Agent 57 5
Short term container 12
Bulk Agent 46 19
CUT
General Repair 13
Terminal 39 20
WUT 24
Spare parts 35 14
Depot / CY 65 21
KHT
Total
667

12. Ⅳ. Procurement Policy Monitoring
Re-selection of CPO Target Suppliers for 2012
CPO Target Suppliers for 2012 are updated based on 2011 data
Month
The No. of suppliers
Target Service 1 39
KHT, Depot, Mater lease, M&R 2 - 3 4 9
Depot, Bulk agent 5 13
WUT, CUT, Bulk agent 6 36
CUT, Spare parts 7 8
New van (Box, RF) 55
Terminal, KHT, WUT, CUT, Depot 10
197
Terminal, KHT, WUT, Feeder, Trucking, Barge, Depot 11
194
WUT, KHT, Feeder, Fuel & Lubricant, Trucking, Barge, General repair Stevedoring, Bulk Agent, 12
117
Docking repair, Feeder, Long-term lease, Legal affairs & insurance, General Management, Trucking, Barge, Bulk agent, Container agent
Total
667

13. Ⅳ. Procurement Policy Monitoring
Spend Ratio
 Collect the total purchasing amount of 19 services using CPO system
The people who are in charge of CPO Evaluation can use ZMMR0840 in SAP program for checking
evaluation marks.
Manual for ZMMR0840
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
 Total score of every suppliers will be presented in the next month report
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)

14. ※ 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)

15. ※ 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.

16. ※ 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.

17. ※ 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.

18. ※ 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.

19. ※ 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.