Page 24 - KFTL Report

KFTL DUE DILIGENCE – Kingston, Jamaica
6 Procurement:
6.1 Procurement
The procurement process has been changed from a fully systemised/ automated process managed by the KFTL CHAMPS solution, to a mixture of automated – manual processes. This happened at the time of CMA-CGM takeover of KFTL.
The decision to break the systemised process into a mix if system and manual, has had a negative impact on the procurement process, and has added days, and in some instances, weeks to the Purchasing process.
The manual process, now known in KFTL as the PRAF (Purchase Requisition Approval Form), is printed from CHAMPS and is circulated within KFTL where it receives relevant signatures from KFTL persons. At the time of printing CHAMPS can no longer track the progress, and this lack of visibility is causing frustration and pain within KFTL.
Once approval is obtained, the manual form is then fed back in to CHAMPS where it then continues its automated process flow, up until the PO, where once again it is printed and manually distributed for approval.
The documented process was not clear, and there is a lack of visibility now throughout the process, causing unnecessary confusion and frustration. It is understood by Trent that the PRAF is being reviewed, but the current review process we witnessed continued to show the PRAF in place, despite the delays, confusion and frustration it is causing when compared to the automated CHAMPS process from KCTL.
Further confusion comes about when it comes to the ‘Goods Receiving’ of spare parts. Typical best practice is for PO and Supplier Delivery note to be used for goods receiving at storeroom. The invoice should be sent to finance, where a 3-way matching then takes place to allow acceptance and approval of delivery, and the subsequent payment made to supplier.
It is understood by Trent that on some occasions the PRAF is also required along with PO, Delivery Note and Invoice to allow approval to take place. It is very unusual to use a PR based document as part of the GRN and approval process, as this is a company’s internal approval process, with the PO/Delivery Note and Invoice being the legal documents used for acceptance, approval and ultimately payment to supplier.
Levels of authority are designed with control at limited roles within KFTL. This also delays the process when purchasing simple, low cost items, where KFTL’s Technical Director has an approval limit of zero USD. The levels of authority were not clear to Trent, but it is an area that should be reviewed in order to ensure trust is in the right place in the organisation, that allows line managers to make decisions against their budget and thus speed up the process for those items that fall within the limit of authority.
Cancellation of PO’s has caused some problems. Numerous PO’s reside in the system, and whilst no doubt this particular issue needed to be reviewed, some PO’s have been inadvertently cancelled, causing further delays to the procurement of much need spare parts, with some having to be re-ordered, leaving certain equipment unnecessarily out of service for weeks, sometimes months.
Payment process to vendors needs to be carefully understood and reviewed. A number of critical suppliers to KFTL have blocked their accounts on more than one occasion and for some significant periods of time. This has only added to the spare parts pain at KFTL today.
Payment delays to customs clearance brokers has also led to their withdrawal of services, leaving parts in the terminal unable to be cleared and used to maintain KFTL assets.
TRENT ASSOCIATES 24