HBL POWER SYSTEMS LIMITED

Standard Operating Procedures for Logistics

Management
PARAGRAPH
SUBJECT PAGE No.
No.
1. Introduction
2. Definition
3. Objectives
4. Scope
5. Policy
6. Role of Logistics in HBL
7. Modes of Transportation used in Logistics Management
8. Requirement Planning
9. Purchasing and procurement
10. Production planning
11. Storage and Inventory management
12. Material Handling
13. Packing
14. Transportation Procedures
15. Customer Service
16. Freight Insurance
17. Finance and Accounting
18. Appendices
19. Conclusion
In pursuant of has published the edition of Standard Operating procedure.
This document shall be known as Standard Operating Procedure-Logistics Management 2017, hereafter
referred to as SOP-LM 2017.

Standard Operating Procedures:

A set of instructions or steps for carrying out the routine operations and to provide detailed guidance for
initiating and completing any process in Logistics management with in the specified time frame.

1. Introduction:
a. Logistics is a process of moving and handling goods and materials, from the beginning to the
end of the production, sale process and waste disposal, to satisfy customers and add business
competitiveness.
b. In today’s highly competitive global market place, there is pressure on the Company to find
new ways to create value and deliver it to their customers grows ever stronger. The increasing
need for industry to compete with its products in a global market, across cost, quality and
service dimensions, has given rise to the need to develop logistic systems that are more
efficient than those traditionally employed.
c. Therefore, in the last two decades, logistics has moved from an operational function to the
corporate function level. There has been a growing recognition that effective logistics
management throughout the firm and supply chain can greatly assist in the goal of cost
reduction and service enhancement.
d. “The key to success in Logistics Management (LM) requires heavy emphasis on integration of
activities, cooperation, coordination and information sharing throughout the entire supply
chain, from suppliers to customers”.
e. This is especially true in the rapidly growing area of logistics management in Battery Industry
due to the issues in Battery handling at the time of Transportation.

2. Definition:

a. Logistics Management is the process of planning, implementing, and controlling the

efficient, effective flow and storage of raw materials, in-process inventory, finished goods,
services, and related information from point of origin to point of consumption (including
inbound, outbound, internal, and external movements) for the purpose of conforming to
customer requirements.

b. Types of Logistics:
 Inbound Logistics- Freight Inward:
Inbound logistics covers the movement of materials received from the suppliers.
  Outbound Logistics (Physical Distribution- Freight Outward):
Physical distribution refers to the movement of goods outwards from the end of the
assembly line to the customer.
 Material Management:
Material management describes the movements of materials and components
within the Company.
 Personnel Logistics:
Transportation facility is provided to the Employees of HBL through modes like Buses
and Pooling Cars depending on the Level of Employee.

3. Objectives:
a. The General objectives of the logistics can be summarized as:
 Cost reduction
 Capital reduction
 Service improvement
b. The specific objective of an ideal logistics system is to ensure the flow of supply to the
Customer, the:
 Right product
 Right quantities and assortments
 Right places
 Right time
 Right cost / price and,
 Right condition

4. Scope:
This SOP-LM 2017 Manual concentrates on policies and procedures, various key factors and
procedures involved in Logistics management in HBL namely-
 Customer service
 Demand forecasting
 Planning
 Inventory management
 Logistics
 Communications
 Material handling
 Order processing
 Packaging
 Disposal logistics
 Return of goods or rejected materials handling
 For a shorter delivery time
 For better quality
 Better product variability
 Product complexity
 Shorter life cycle of products
Hence, this SOP-LM 2017 covers all procedures and processes involved from the day
Purchase order(Appendix-A) for Raw materials to day of delivery of Finished goods to
consumer against respective Sales order(Appendix-B).
5. Policy:
This policy aims to achieve the following objectives as decentralized system of Logistics
Management is used in HBL:-
a. Provide guidelines that employees of the HBL must follow in the management and control of
transportation, including inventory and Stores management.
b. Use transportation system which is in line with the established procurement principles
contained in the HBL’s Policy.
c. Eliminate any potential misuse of Freight and possible theft, damage to goods in transit.
d. HBL’s concerned authority shall ensure:
 Inventories are transported securely
 HBL has fit-for-purpose software (SAP) and systems to accurately record the order,
movement of inventories.
 Appropriate controls are in place to ensure the accurate and timely entry of
transactional information in to Logistics systems.
 Transportation modes are in accordance with HBL’s Logistics management Policies.
 Appropriate segregation of duties and security over the access to Freight and the
processing of freight transactions, in accordance with Company’s Delegated
Authorities.
e. The implementation and review of these Logistics policies are the responsibility of HBL’s
_____________ committee.
f. HBL’s ______________ is responsible for implementation.

6. Role of Logistics in HBL

a. HBL being a manufacturing concern and with large number of divisions and plants needs a
strong and flexible Logistics management with high level of mutual co-ordination among the
Employees to achieve high level of Customer Satisfaction.
b. The main business of HBL is Production and sale of Batteries which requires good
 Stores management- for storage of Raw materials and finished goods.
 Inventory management- for having less safety stock, Stock at right quantity, right time.
 Logistics Management- For the purpose of having apt Stores management and
Inventory Management System, a Logistics Management System with relevant
procedures and policies is required with flexible and cost- effective transportation
procedures.
c. Logistics System in HBL plays a good role in transportation of:
 Raw materials- Transported from Supplier or any Internal Transfer.
 Finished goods- Transported to Customer or any Internal Transfer.
 Employees- Apart from the above HBL provides transportation facility to Employees.
d. The concept of logistics has its base upon the systems approach. There is a single chain, with
flow of materials starting from the supplier, then to the plant and finally to the end customer,
and these activities are done sequentially in order to achieve customer satisfaction at low
cost. For this to be successful there has to be co-ordination in the activities of the
departments.

7. Modes of Transportation used in Logistics Management

a. Air Transport
Only in case of Imports and Exports Air transportation is usually used in HBL.
b. Sea/ Water Transport
Only in case of Imports and Exports Air transportation is usually used in HBL.
c. Railways:
 Generally capable of transporting large quantities of freight over long distances very
economically. It is the main source of transportation of Goods and raw materials which are
transported across the length and breadth of the country. The railways also charge
competitive freight rates. HBL uses Railways mode of transportation for Indigenious Purchases
and Sales.
d. Roadways:
Roadways is the major mode of transportation used by HBL. The Company enters in to
agreement with the Contractors comprising of following terms and conditions:
 Registration Number of Vehicle
 Method of Payment
 Amount of Payment
 Duration of Engagement
 Penalty in case of Absenteeism
 Vehicle fit ness certificates, Copy of RC, Driver’s license copy, Approval from RTA,
Vehicle Insurance Policy have to be obtained at the time of execution of Contract
itself.
 Contract validity period

8. Requirement Planning
a. Check for Availability of materials, Documentation of justification & comparisons before
raising MRP (Material Requirement Plan) in SAP by PPC (Production Planning Committee)
b. Control over the investment in material is done before MRP.
c. MRP entered in SAP specifies qty and PO is raised by linking such MRP. Weekly Review of
procurement with exceptional reporting from SAP for pending requisitions.
d. MRP contains procurement schedule and expiry dates. Other terms are decided by Finance
department through SAP.
e. MRP specifies delivery schedules. PPC review of open orders based on DMR (daily material
receipt) Review of vendor performance through SAP vendor evaluation system.
f. The following requirements have to be fulfilled in MRP:
Product characteristics
Make to stock Make to order Assemble to order
Material attributes (high demand profile (low demand profile (low demand profile
products) products with high products with low
setup cost) setup cost)
Just-in-Time MRP system should
high exhibit Just in Time
demand performance
high value characteristics. Use
steady consumption cost and
close cooperation time
with supplier measures.
short delivery
Reorder point
high demand
medium value
varying consumption
close cooperation
with supplier
short delivery
 MRP
high demand
medium value
varying consumption
long delivery
EOQ*
low value
steady consumption

9. Purchasing and Procurement:

a. Purchase of Raw materials is made as per SOP on Purchase.

b. Procurement of materials at the lowest possible cost, at the same time ensuring that it is
consistent with quality and service requirements.
c. Procurement Requirements: These facilitate the material releases, shipments and the
receipts.
d. Creation of List of Approved Vendors, SOP for placing order outside approved list
Vendors are grouped under categories based on Approval & Open Market and orders are
placed as per SOP- Purchase.
e. Creating as Basic Purchase Agreement / Purchase Order Format. PO issued at negotiated
rates. Documentation & authorisations of Purchase Orders at Indenting Stage as per SOP.
f. Ship-from-party details for the Supplier against Invoices and dispatch documentation have to be
updated in the SAP.
List of approved transporters are available for various locations and ease of dispatch.
g. On the receipt on Goods at Factory gate the following have to be obtained
h. Weightment certificate – Liquid and powdered raw materials (Appendix-C)
i. Physical counting by the Stores keeper at factory gate for identifiable items
j. Copy of Invoice from the Supplier
k. Supplier’s delivery challan/ Invoice bearing the PO reference number.
l. Gate pass is issued only after comparison with PO by Stores In-charge.
m. Supplier’s delivery challan/ Invoice must bear the Inward stamp.
n. Information of arrival of materials is given to respective Production, Purchase, Finance
departments. SAP on the generation of MIGO sends mail to the concerned departments or
sometimes oral communication is given.

10. Production Planning:

Each Division in the Company must be in a status that it could provide details at any point of time,
the below given details:
PARTICULARS RAW SEMI- FINISHED
MATERIALS FINISHED GOODS
GOODS
 Sales order Number  Stock readily  Previous  Inspection
 Sales order date available process of Finished
 Customer Name  Safety stock details goods
 Tender details maintained  % of work  Packing
Production against  Tender quotation  List of raw completed  Storage
Sales Order details materials or  Next process  Delivery
 Vendor code from components details  Engaged
SAP required for  Process costs logistics
production. details
  Date of delivery of  Purchase of  No. units in  Final receipt
FG(As per SO) required Raw process (in by the
 Sales quantity as per materials against terms of FG) customer
SO PO against
 Finalised selling price  Goods reciept respective
 Engaged logistics details SO
details for Delivery to  Inward slips  FG-in-transit
Customer  Storage location
details
 Production plan  Value of stock  Inspection
Production against  Time period for PPC  Stock-in-transit of Finished
Demand  Budget approval date goods
 Packing
 Storage

11. Storage and Inventory Management

A. Inventory Management:
a. Inventory refers to the stock of materials of any kind stored for future use, mainly in the
production process. Semi-finished goods, which are awaiting use in the next process, or
finished goods, which are waiting for sale, are also included in this broad category. But these
are practically idle resources. Thus inventories are materials / resources of any kind having
some economic value, either awaiting conversion or use in future.
b. Customers demand that their orders be shipped complete, accurate and on time. That means
having the right inventory at the right place at the right time.
c. Excess of inventory in the Company increases the overall working capital requirements and
places a large cost burden on the individual plants and divisions. The levels of inventory need
to be reduced throughout the logistics System, which will lead to an effective operation.
d. This Manual focuses on retailers and their distribution services. Inventory aims to reduce costs
and simultaneously improve service. Thus the need to reduce costs as against improving
service becomes the key issue and the role played by successful inventory management is
becoming more apparent.
e. Cycle Inventory: Raw materials, components, parts are required for production. This is cycle
plays a crucial role in keeping the production cycle continuous. The work in progress inventory
is a major part of production related inventory. Determining how frequently to order and in
what quantity is called “Lot sizing”.
f. Safety Stock: In order to avoid customer service problems and the hidden costs of unavailable
components, companies hold safety stock. This gives a cushion against uncertainties in
demand, lead-time, and supply therefore ensuring that operations aren’t disrupted.
g. Access to the stores area should be limited to the stores In- Charge only. The area should be
locked during periods when the stores in-charge is not present.
h. The _________ should be held responsible for any unexplained shortages that arise from the
results of the inventory counts.
i. Delegated officials of the _____& _____should perform physical inventory counts regularly on
a test basis. The purpose is to compare the physical inventory with the theoretical records on
a test basis and to detect possible theft, fraud or accounting errors on a timeouts basis.
j. Complete inventory verifications of all items on hand should be performed at least “twice”
per financial year. These counts should be performed on the last day of the financial year and
after six months of the financial year. The purpose is to compare the total physical inventory
with the theoretical records and to detect possible theft, fraud or error.
 B. Stores Management:
a. The term storage refers to the physical act of storing the materials in a Storehouse on pallets,
shelves, racks, boxes, almirah, etc. with the objective of retrieving them later for issue to the
user. The purpose of any storehouse is to provide to users the right materials, in the right
quantity, at the right time and at the lowest possible cost.
b. For inventory management, plants are created in SAP to represent a location that receives
stores, and issues materials.
c. The inventory can be materials that are used in the production process, finished goods or
maintenance items. The storage location is the lowest inventory level in the inventory
management function.
d. Storage location is determined at purchase requisition level/ PO stage and accordingly stored
based on the user department’s location. Hence, Storage location is allotted at PO level itself.
e. SAP doesn’t permit storage in any other location.
f. Storage is made as per the list of material types designed in SAP to have proper bifurcation.
g. This SOP for Stores management is based on nature and quantity of Inventory.
h. Inventory must be stored in a secured, exclusive use area, under lock and key, furthermore
the inventory must be insured.
i. The area must be used exclusively for the storage of inventory, with limited authorized access
only.
j. Inventory must be positioned to facilitate efficient handling and checking.
k. All items must be stored separately, with proper segregation.
l. Inventory must be clearly labeled for easy identification. Inventory tag/bin cards or inventory
labels may be used to identify each item and to aid in the physical verification of the items.
m. Where ever possible, all items of the same type and reference must be stored together as per
the description on the inventory records.
n. Items with limited shelf life must be rotated on a first in first out basis, to reduce the
occurrence of expired or obsolete stocks.
o. Due diligence and care must be exercised to prevent damage of, or deterioration of inventory.
p. Due regard must be given to any safety standards which may apply to the storage of certain
inventories. High value items like silver are to be stored in Vault rooms and proper security
must be provided
q. Steps must be taken to ensure safe custody of items, including precautions against loss or
theft.
r. The Store man or Delegated Official responsible for the custody and care of inventory must
ensure that in his/her absence, such items, where ever applicable are securely stored.
s. The responsibility for the custody of the storeroom keys must be allocated by the delegated
authority to an official who is accountable for its use.
t. No unauthorized persons/officials shall obtain entry to premises, buildings or containers
where inventory is kept, unless accompanied by the responsible official.
u. Whenever a change in store personnel occurs, an inventory count must be conducted.
v. An independent official shall be nominated in writing by the delegated authority to assist
Internal Audit team with the handing and taking over with the Physical verification of the
inventory and any discrepancies.

12. Material Handling:

a. Handling of Batteries:
 Batteries are large, contain corrosive acids and produce an electrical charge. All of these post
a threat to your safety and necessitate a number of precautions be taken when handling
batteries.
 Avoid bringing metal into contact with batteries. This includes metal tools and hoist chain as
 well as personal items such as jewelry, watches and belts. As metal conducts electricity,
anyone touching a metal object as it comes into contact with the battery runs the risk of
electrocution.

 Never allow both terminals to make contact with an item (particularly yourself)
simultaneously. When both terminals are engaged, an electrical current will pass through
anything touching them
 Do not hand-guide batteries during lifting/moving process. This puts you in danger if the
battery were to drop or shift. Also, touching the battery proves a danger as it may lead to
electrical shock or bring the worker into contact with corrosive battery acid.
 Practice safe and appropriate lifting procedures. Do not bring unprotected hands into contact
with the battery throughout the moving process. Additionally, use only specified lifting
equipment designed for this purpose and approved for the battery’s weight. Otherwise, one
runs the risk of damaging the battery or lifting equipment.
 Wear protective equipment when handling batteries including gloves, eyewear and hardhat.
Gloves and protective eye gear are to guard against battery acid while a hard hat is important
during the lifting process in case a battery swings or falls.
 Batteries can be dangerous when mishandled. Not only are these batteries large and heavy
objects that can cause severe injury and damage if dropped, battery acid is extremely
corrosive and can cause severe burns to the skin or corrode equipment that it comes into
contact with. Likewise, touching batteries without proper equipment and preparation can
result in high-voltage electric shocks.
 All personnel working with batteries should first be trained in the proper lifting and handling
procedures. Also, it is a good practice to regularly remind workers of appropriate battery
handling procedures in order to maintain a safe working environment.

 Do’s and Don’ts of shipping batteries by ground. Protect batteries from short circuit by
placing cardboard insulator pads between layers and shrink-wrap for Ni-CAD batteries as
shown given below.
  Add the “Corrosive” label, Identification number and mark: “Wet, filled with acid.” Provide
bill of lading with description of hazardous material, company and shipper’s name specifically
in case of Lead acid batteries with high chances of spillage.

 Rules under Batteries (Management and Handling) Rules, 2001 which are applicable to HBL
are:
 Rule.1 - ensure that no damage to the environment occurs during transportation
 Rule.2- ensure safe transportation of collected batteries to the designated collection
centres or to the registered recycling units/ divisions.

b. Handling of Electrical Items- For Thumukunta plant, Yapral plant and PE division:
 Buffer sheets and cyro form sheets are used for packing electrical items.
 Carton boxes are used for final packing

c. Handling of concrete items- For Plants and divisions with concrete based production lines:
 Use polythene covers and buffer sheets to protect the poles from stains and damages.

 The Handling process mainly involves the removal of poles present moulds, transporation to
the Storage place, loading and unloading operations.
 At the time of demoulding the poles and piles will not gain the expected concrete strength
required , they are generally more susceptible to damages during handling. Hence, they are
to be handled in a way considering the below handling requirements:
 Position of Casting mould(Vertical/ Horizontal)
 Minimum concrete strength before demoulding, delivery and Erection.
 Adequacy design reinforcement to resist handling stresses.
 Size and weight of Goods.
 Method of lifting used, Capacity of Crane
 Location of liting points.
13. Packing:

1) VRLA Battery after packing 2) Carton boxes used for Packing 3) Defence Battery after packing

a. Batteries can be a source of dangerous heat, sparks or fire if they are improperly packaged for
shipping. For this reason, HBL customers and Employees must follow applicable safety
regulations and appropriate precautions when preparing batteries for transportation. Battery
shipments may be subject to both Indian and international safety regulations, and because of
the potential dangers associated with violations of those regulations
b. HBL has assembled this illustrative manual to help Employees in safely packing and
transportation of many kinds of batteries. In some cases, such as with alkaline or certain
nonspillable lead-acid batteries, pocket plate, Aviation batteries , your responsibilities may be
limited to simple steps such as: selecting strong outer packaging; carefully protecting battery
terminals to prevent sparking or short circuit; and carefully preparing the interior package
components to keep tools or other metal objects away from batteries.
c. Other types of batteries, including Spillable lead acid, Ni-CAD, Silver zinc, Thermal,
Defence,VRLA and other metal types, also may be fully regulated as hazardous materials (also
known as dangerous goods) for transportation, so that in addition to those basic safety
precautions they require use of specialized packaging, specific hazard labeling, and specific
documents certifying compliance with the applicable regulation.

14. Transportation Procedures

a. Transport, being the main component of logistics, plays an important part in all management
decisions within the Company, from strategic decisions to everyday operations. Day to day
management decisions also relies on transport, as “Just in Time” methods for distribution
have become more popular.
b. The appropriate use of transportation is the key to any logistics management plan.HBL uses a
responsive transportation system to lower overall costs
c. Documents in Transport Decision Making:
 Bill of Lading: A computerized, basic document, which is, utilized in purchasing
transport services. This serves as a receipt of the commodities and quantities shipped.
It also serves as the basis for damage claims in case of loss, damage, delay etc. The
terms and conditions of the carrier liability and gives in documentation form
theresponsibility for all possible causes of loss or damages.
 Freight Bill: This is how the carrier charges for the transportation services he
performs. The information contained in the bill of lading is utilized for preparation of
this.
 
Shipping Manifest: This document is used when multiple shipments are placed on a
single vehicle. The document provides a comprehensive list, which informs the entire
load content, making it unnecessary to view individual bills of lading as all details
relating to the stops, bills of lading, weight, case count etc for each shipment are listed
in this manifest.
d. The below mentioned proceures have to followed on the receipt of Materials through
Transportation:
A. Receiving general items:
1. Communication of all Purchase orders issued to all factory gates.
2. Materials from the Supplier are accepted only against PO.
3. Supplier’s delivery challan/ Invoice bear the PO reference number.
4. Gate pass is issued only after comparison with PO by Stores In-charge.
5. Weightment certificate verification( Where ever applicabe)
6. Supplier’s delivery challan/ Invoice must bear the Inward stamp.
7. Information of arrival of materials is given to respective Production, Purchase, Finance
departments. SAP on the generation of MIGO sends mail to the concerned departments
or sometimes oral communication is given.
8. Check the drivers slip to ensure that the Vendor Company states ‘Our Company’ on the
face of the slip.
9. Inward factory gate pass (Appendix-D ) must be prepared on the reciept of Goods.
a. Complete the “Receiving Log” with the following information:
i. Product Information:
 Received date
 PO number
 Item description
 Weight in kg (if applicable)
 Lot number
 Quantity received
 Shipment Supplier name
 Shipment Carrier name
ii. Vehicle Inspection:
 Visual inspection
 Odor inspection
 Truck/trailer number

B. Receiving Raw Materials

a. The shipper/receiver will:
 The trucks must be covered and closed.
 Floorboards are dry and clean.
 No evidence of chemical spills, garbage, waste or spoiled foods.
 Bad odor.
 Make a note of the truck license plate or trailer number.
 Notify the Supervisor and QA of any issues.
 Unload the shipment and inspect the condition of the shipment to
ensure that all products are on clean pallets and no damaged cases or
packages.
b. Pass the PO with all relevant information to the QC department.
c. QC will take sample as per sampling procedure SOP New Raw Material Approval.
d. Once the goods are acceptable, QC will place a “QC Approved sticker: Appendix-E on the
product.
 e. Tag the product with lot number, date received, product name, SAP item code, purchase order
number and quantity.
f. “100% verification / weighing” to be done in respect of materials listed in Appendix-C

C. Delivery of Finished goods to Customer:

a. Security guards are posted at finished goods location, docks and entry points whenever they are open.
Shipping bays and loading docks are closed and locked when goods are not being shipped or loaded.
b. System of Work Orders is used for Transportation of Goods. Bills are raised by transporters as per the
terms and conditions laid down in the Transport contract, which is the scrutinised by Logistics Dept.
head as per negotiated terms and forwarded to Finance Head to payment.
c. Shipping authorisation, numerically controlled shipping documents and bills of lading are generated in
SAP. Access controls such as user IDs and passwords are utilized and specific to each application.
Multiple failures to log on invalidate the user ID and is reported via an exception report. Management
investigates and resolves all items. Printing of duplicates are only after authorisation as per DOA.
Dispatch register is mainatined to ensure that same Finished goods are not dispatched twice.
d. On receipt of Dispatch Instruction & Packing List Logistic Dept. Checks the conetnts before the Finished
goods are loaded for delivery
e. Quality check is performed by Packing Dept. & Quality Incharge before the goods are sent for dispatch
and signed on the Packing List.
f. Weighment of finished goods is done before delivery.
g. Non- Returnable Outward gate pass (Appendix-F) and Returnable outward gate pass (Appendix-G ) are
issued for the Finished goods to go outside the factory.
h. SAP restricts the creation of Delivery Challan entry without valid invoice, a copy of the same is used as
Gate Pass.
i. Transporters are intimated in Advance for pick-up. List of pending dispatches are prepared and
followed-up on a daily basis.
j. Upon transfer of the shipment to the carrier, the shipping document is noted as “released/shipped” in
the shipping system. (Note majority shipments are FOB shipping point.)
k. This notation includes the date and time of release.Based on proof of delivery (POD) the date of
delivery is entered in SAP.
l. SAP is configured to restrict the entering of delivery date of a product which is less than the lead time
of production of the product in the Sales / Services Order

15. Customer Service:

a. Customer service is a combination of activities enables the Company to add more value to the
buyer. It is a key element of the product or service, which is offered to the customer. With
good customer service, the existing customers are satisfied and this attracts new customers
through word-of-mouth communication. Customer Service is not just a function or an activity.
It is a philosophy, and attitude. With so much importance given to customer service, HBl is
trying to increase the level of customer service and scale up to the expectations of the
customer.
b. Unless the Final products are in the hands of the customer at the time and place of
requirement, products do not have any value attached to them. To attain a commendable
service level, the Company has planned a closely integrated logistics strategy.
c. In today’s market, customers are so much demanding, not only in the quality aspect but also
with regard to the service aspect. Customers form a few perceptions in relation to the various
aspects of customer service like reliability, competency, responsiveness, trustworthiness etc.
d. With the help of these cues, customers evaluate the Company’s services and conclude
whether they are satisfied or not. Physical distribution plays a major role in delivering
customer service.
 e. As there is an increase in the competition, and there is advancement in technology, the
company is facing the mounting pressure to develop even more innovative strategies for
customer service.
f. The HBL must ensure the maintenance of a same or similar delivery period over a period of
time to deliver material to the customer. This means the Company must have the ability to
coordinate the various logistics arms, and also the efficiency and effectiveness of the entire
chain and logistics management System.
g. Also, the frequency of delivery is an important part of the customer service. Usually, a
customer does not prefer to stock huge quantities of particular items, and would prefer
smaller quantities in smaller lots.
h. Eventually there is an increase in the transportation cost, but the inventory cost reduces and
there is a net effect in the entire supply chain. When there are multiple orders from small
clients, there is congestion in the logistics system, and thus this reduces the ability of the
company to serve its larger clients more efficiently.
i. Also the logistics costs for small orders are more than the large orders and also they would
swallow up the profit on the large orders.
j. To avoid such hassles, and to avoid additional costs, the frequency of delivery and minimum
orders are being used as limitations imposed on suppliers as an effort to reduce normal
tendency of most clients.

16. Freight Insurance

a. The following types of Freight insurances are taken by HBL which covers physical damage to,
or loss of your goods whilst in transit by land, sea and air and offers considerable
opportunities and cost advantages if managed correctly, namely;
 Fire Insurance
 Marine Insurance
 Cargo Insurance
b. Original Insurance policy , Cover note are to filed in the respective plant.
c. The insurance policy value must cover the value of shipment.
d. Details of all the compensations received in case of happening of an event is to be
maintained

17. Finance and Accounting:

a. A freight bill represents ‘Freight Inward/outward’ paid by HBL when goods are transported
to/from respective Unit.
b. Freight inward is paid in accordance with the rates as approved by Commercial Department.
Upon dispatch of Goods, the Transporter submits the Freight bill to the Commercial
Department, which is forwarded to Finance Department for accounting of the expenditure.
c. For every bill an amount equal to the approved rate is added to freight as diesel charges.
d. Where a bill is received, it is booked directly.
e. In the event of non-receipt of the bill, a provisional entry is made on the basis of
 goods dispatched list and
 rates approved by the Commercial Department.
f. Later upon receipt of the bill, the provisional liability is transferred to Sundry Creditors
account. In the event of any difference between the provisional and actual amounts, the
freight outwards account is appropriately adjusted.
g. INCO terms:
i. International Commercial Terms (‘Incoterms’) are internationally recognized standard
trade terms used in sales contracts. They’re used to make sure buyer and seller know:
  Who is responsible for the cost of transporting the goods, including insurance,
taxes and duties
 Where the goods should be picked up from and transported to
 Who is responsible for the goods at each step during transportation
ii. EXW (‘Ex Works’)
The HBL makes the goods available to be collected at their premises and the buyer is
responsible for all other risks, transportation costs, taxes and duties from that point
onwards. This term is commonly used when quoting a price.
iii. CIP (‘Carriage and Insurance Paid’)
The HBL pays for insurance as well as transport to the specified destination. Responsibility
for the goods transfers to the buyer when The HBL passes them to the first carrier. CIP
(‘Carriage and Insurance Paid’) is commonly used for goods being transported by
container by more than one mode of transport. If transporting only by sea, CIF is often
used
iv. DAT (‘Delivered at Terminal’)
The HBL pays for transport to a specified terminal at the agreed destination. The buyer is
responsible for the cost of importing the goods. The buyer takes responsibility once the
goods are unloaded at the terminal.
DAP (‘Delivered at Place’)
The HBL pays for transport to the specified destination, but the buyer pays the cost of
importing the goods. The seller takes responsibility for the goods until they’re ready to
be unloaded by the buyer.
v. DDP/DTP (‘Delivered Duty Paid’)
The HBL is responsible for delivering the goods to the named destination in the buyer’s
country, including all costs involved.
vi. FAS (‘Free Alongside Ship’)
The HBL puts the goods alongside the ship at the specified port they’re going to be
shipped from. The HBL must get the goods ready for export, but the buyer is responsible
for the cost and risk involved in loading them. This term is commonly used for heavy-lift
or bulk cargo (e.g. generators, boats), but not for goods transported in containers by
more than one mode of transport (FCA is usually used for this).
vii. FOB (‘Free on Board’)
The HBL must get the goods ready for export and load them onto the specified ship. The
buyer and seller share the costs and risks when the goods are on board. This term is not
used for goods transported in containers by more than one mode of transport (FCA is
usually used for this).
viii. CFR (‘Cost and Freight’)
The HBL must pay the costs of bringing the goods to the specified port. The buyer is
responsible for risks when the goods are loaded onto the ship.
ix. CIF (‘Cost, Insurance and Freight’)
The HBL must pay the costs of bringing the goods to the specified port. They also pay for
insurance. The buyer is responsible for risks when the goods are loaded onto the ship.

18. Appendixes:
The following documents are used in the entire Logistics management system which are given as
appendices:
Appendix-A : Purchase order
Appendix-B : Sales Order
Appendix-C : Wieghment Certificate
Appendix-D : Inward Gate pass
Appendix-E : QC approved Sticker
Appendix-F : Non-returnable outward gate pass
Appendix-G : Returnable outward gate pass
19. Conclusion:
a. Personnel from Logistics department in HBL should be thoroughly familiar with the statutory
requirements, rules, by-laws and other official regulations affecting the storage, safety, etc of
the logistics management. Typical examples are the petroleum regulations, Explosives storage
act, Vehicles act, Factories act, Batteries (Management and Handling) Rules, 2001 etc.
b. The procedures covered in this SOP-LM 2017 are meant to be exhaustive. Those not specified
here should be dealt with in terms of general policy guidelines and conventions already
established.