PROSAFE COMPANY
INVENTORY MANAGEMENT
STANDARD OPERATING PROCEDURES
Offshore Shipping & Supply Chain Operations
|
Document Number |
SOP-INV-001 |
|
Revision |
1.0 |
|
Effective Date |
February 5, 2026 |
|
Prepared By |
Supply Chain Management |
|
Approved By |
Operations Director |
TABLE OF CONTENTS
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This Standard Operating Procedure (SOP) establishes the comprehensive inventory management framework for Prosafe Company's offshore shipping and supply chain operations. This document governs all inventory-related activities across offshore vessels, onshore warehouses, and third-party logistics (3PL) facilities.
The primary objectives of this SOP are to:
· Define standardized processes for receiving, storing, issuing, and transferring inventory across all Prosafe Company locations
· Establish clear roles, responsibilities, and delegation of authority for inventory transactions
· Ensure accurate inventory records in the IFS (Industrial and Financial Systems) Enterprise Resource Planning system
· Maintain inventory accuracy through systematic cycle counting and physical inventory procedures
· Protect company assets through proper storage, preservation, and handling practices
· Optimize inventory levels to support operational requirements while minimizing carrying costs
· Ensure regulatory compliance and audit readiness for all inventory operations
· Provide a framework for continuous improvement in inventory management practices
This SOP applies to all inventory management activities conducted by Prosafe Company and covers the following operational areas:
· All offshore vessels operating under Prosafe Company management
· Shore-based warehouses and storage facilities owned or operated by Prosafe Company
· Third-party logistics (3PL) providers engaged by Prosafe Company for warehousing and distribution
· Supply chain operations team members at all locations
· Technical and engineering personnel involved in inventory requisitioning and usage
· Spare parts and consumables for vessel operations
· Marine equipment and machinery components
· Safety equipment and personal protective equipment (PPE)
· Office supplies and administrative materials
· Chemicals, lubricants, and hazardous materials
· Deck and mooring equipment
· Navigation and communication equipment spare parts
· Receiving procedures for incoming materials from vendors and internal transfers
· Inspection and quality control processes
· Putaway and storage location management
· Issue procedures for operational consumption
· Returns to stock from vessels or projects
· Inter-location transfers and stock movements
· Cycle counting and physical inventory procedures
· Obsolescence identification and disposal processes
· Min/Max replenishment governance
The following items are excluded from the scope of this SOP:
· Fuel and bulk petroleum products (governed by separate fuel management procedures)
· Food and catering supplies (managed under catering services SOP)
· Fixed assets and capital equipment (governed by asset management procedures)
· Third-party owned materials stored on consignment
The following terms and abbreviations are used throughout this document:
|
Term |
Definition |
|
3PL |
Third-Party Logistics provider contracted to manage warehousing, distribution, or other supply chain functions on behalf of Prosafe Company. |
|
Cycle Count |
A periodic inventory counting procedure focused on specific locations, parts, or value categories performed throughout the year without disrupting operations. |
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GRN |
Goods Receipt Note - a document recorded in IFS upon receipt of materials that confirms delivery and enables invoice processing. |
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IFS |
Industrial and Financial Systems - the Enterprise Resource Planning (ERP) system used by Prosafe Company for managing inventory, procurement, finance, and operations. |
|
Min/Max Levels |
Minimum and Maximum inventory levels established for critical parts to trigger automatic replenishment when stock falls below the minimum threshold. |
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NCR |
Nonconformance Report - a formal document used to record materials that do not meet specified requirements due to damage, incorrect specifications, or quality issues. |
|
Physical Count |
A comprehensive inventory count of all items at a location, typically conducted annually, requiring full operational shutdown or significant resource allocation. |
|
PO |
Purchase Order - a commercial document issued by Prosafe Company to a vendor indicating types, quantities, and agreed prices for products or services. |
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Putaway |
The process of moving received materials from the receiving area to their designated storage locations and updating IFS with the specific bin or location assignment. |
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SKU |
Stock Keeping Unit - a unique identifier assigned to each distinct inventory item in IFS for tracking and management purposes. |
|
Storekeeper |
Personnel responsible for day-to-day inventory management at offshore vessels or onshore warehouse facilities, including receiving, issuing, and maintaining accurate inventory records. |
|
Transfer Order |
An IFS transaction authorizing the movement of inventory between Prosafe Company locations, including vessel-to-vessel, warehouse-to-vessel, or inter-warehouse transfers. |
This section establishes the governance framework for inventory management at Prosafe Company, defining authority levels, approval requirements, and escalation procedures.
The following delegation of authority matrix defines approval requirements for inventory-related transactions:
|
Transaction Type |
Value Threshold |
Approval Required |
Documentation |
|
Material Issue |
< $1,000 |
Storekeeper |
Issue Log |
|
Material Issue |
$1,000 - $10,000 |
Chief Engineer |
Issue Log + Approval |
|
Material Issue |
> $10,000 |
Vessel Manager |
Issue Log + Approval |
|
Transfer Order |
< $5,000 |
Supply Chain Mgr |
Transfer Order |
|
Transfer Order |
> $5,000 |
Vessel Manager |
Transfer Order |
|
Inventory Write-Off |
< $2,500 |
Supply Chain Mgr |
Disposal Form + NCR |
|
Inventory Write-Off |
> $2,500 |
Operations Director |
Disposal Form + NCR |
|
Cycle Count Variance |
< $500 |
Storekeeper |
Variance Report |
|
Cycle Count Variance |
> $500 |
Supply Chain Mgr |
Variance Report |
All inventory-related documentation must be retained according to the following schedule:
· Issue logs and receiving documents: 3 years
· Cycle count and physical count records: 5 years
· Nonconformance reports: 7 years
· Disposal and scrapping documentation: 7 years
· Transfer orders and shipping documents: 3 years
Access to inventory management functions in IFS is controlled through role-based permissions. The Supply Chain Manager is responsible for:
· Approving and managing user access requests
· Conducting quarterly access reviews
· Ensuring segregation of duties between receiving, issuing, and financial approval functions
· Monitoring system audit logs for unauthorized transactions
This section defines the key roles involved in inventory management and their specific responsibilities.
The Storekeeper is the primary personnel responsible for day-to-day inventory operations at vessel or warehouse locations. Key responsibilities include:
1. Execute all receiving activities including physical inspection, quantity verification, and GRN creation in IFS
2. Perform putaway operations and maintain accurate bin location records
3. Process material issues to requesting departments in accordance with approval authority limits
4. Maintain accurate and legible issue logs and night issue logs
5. Conduct daily cycle counts as assigned and investigate variances below approval threshold
6. Ensure proper storage conditions and preservation of inventory items
7. Coordinate with procurement and supply chain teams on stock replenishment needs
8. Initiate Nonconformance Reports for damaged or non-compliant materials
9. Maintain organization and cleanliness of storage areas
10. Report system issues or discrepancies to the Supply Chain Manager immediately
The Chief Engineer has oversight responsibility for vessel inventory operations and technical material requirements:
11. Approve material issues between $1,000 and $10,000
12. Review and authorize emergency or unplanned requisitions
13. Validate technical specifications for materials being ordered or received
14. Oversee maintenance-related inventory consumption and trends
15. Participate in annual physical inventory counts
16. Approve Min/Max level adjustments for critical spares
17. Coordinate with Technical Superintendent on obsolete or slow-moving technical inventory
Shore-based Technical Superintendents provide technical oversight and support for vessel inventory management:
18. Define technical specifications and approved vendors for critical spare parts
19. Review and approve Min/Max levels for vessel critical spares
20. Analyze inventory consumption patterns and recommend optimization strategies
21. Coordinate standardization initiatives across vessel fleet
22. Support Chief Engineers in resolving technical nonconformances
23. Participate in obsolescence review processes
24. Provide input on inventory policy and procedure improvements
The Vessel Manager has ultimate accountability for vessel operations including inventory control:
25. Approve material issues exceeding $10,000
26. Approve transfer orders exceeding $5,000
27. Review monthly inventory reports and variance analyses
28. Ensure compliance with inventory procedures during vessel audits
29. Allocate resources for annual physical inventory counts
30. Escalate significant inventory discrepancies to Operations Director
31. Approve disposal of obsolete or damaged inventory within authority limits
Procurement personnel are responsible for vendor management and purchase order execution:
32. Issue purchase orders in IFS based on approved requisitions
33. Coordinate delivery schedules with vendors and warehouse operations
34. Expedite critical or emergency orders as required
35. Resolve vendor delivery discrepancies and quality issues
36. Maintain vendor performance records and conduct periodic reviews
37. Work with receiving teams to close out purchase orders accurately
38. Support Nonconformance Report resolution with vendors
The Warehouse Manager oversees onshore warehouse operations and 3PL performance:
39. Ensure warehouse personnel follow all receiving, putaway, and issue procedures
40. Manage warehouse layout optimization and bin location strategies
41. Coordinate inbound and outbound shipments for vessel transfers
42. Monitor 3PL service level agreements and performance metrics
43. Conduct weekly cycle counts and monthly accuracy reviews
44. Implement and maintain proper preservation and storage protocols
45. Manage warehouse staffing and training programs
46. Report KPIs to Supply Chain Manager monthly
The Supply Chain Manager has overall responsibility for inventory policy, system integrity, and continuous improvement:
47. Develop, maintain, and update inventory management policies and procedures
48. Approve transfer orders under $5,000 and inventory write-offs under $2,500
49. Manage IFS system configuration and user access rights
50. Review and approve cycle count variance resolutions exceeding $500
51. Conduct quarterly inventory accuracy assessments across all locations
52. Lead obsolescence review meetings and disposition decisions
53. Provide training and support to storekeepers and warehouse personnel
54. Drive inventory optimization and cost reduction initiatives
55. Report inventory performance metrics to senior management
56. Coordinate internal and external inventory audits
The Cost Controller provides financial oversight and reporting for inventory valuation:
57. Monitor inventory valuation and aging reports monthly
58. Analyze inventory turns and carrying costs by category
59. Validate financial accuracy of inventory transactions in IFS
60. Coordinate year-end physical inventory for financial statement purposes
61. Review and approve inventory reserve requirements
62. Support audit requests for inventory-related financial data
63. Provide financial analysis for major disposal or obsolescence decisions
All inventory transactions at Prosafe Company must be recorded in the IFS Enterprise Resource Planning system to ensure data accuracy, traceability, and financial integrity.
· All personnel performing inventory transactions must have active IFS user accounts with appropriate role-based access
· Shared login credentials are strictly prohibited; each user must use their individual credentials
· Users must log out of IFS when leaving workstations unattended
· Password changes must comply with Prosafe Company IT security policies
· All inventory transactions must be recorded in IFS at the time of physical movement
· Batch processing or delayed entry of transactions is not permitted except during system outages
· During system outages, manual logs must be maintained and entered into IFS within 24 hours of system restoration
· Backdating of transactions is prohibited unless approved by the Supply Chain Manager with documented justification
The following data fields must be completed for all inventory transactions in IFS:
· Part number (SKU)
· Quantity (in unit of measure specified for the part)
· Location code and bin/storage position
· Transaction date and time (system-generated)
· User ID (system-generated)
· Reference document number (PO, Transfer Order, Issue Log number, etc.)
· Lot/batch/serial number (where applicable for tracked items)
· Condition code (serviceable, quarantine, scrap, etc.)
· Part descriptions must be clear, accurate, and follow Prosafe naming conventions
· Units of measure must be consistent with procurement and engineering specifications
· Location codes must reflect actual physical storage positions
· Users must verify data entry accuracy before finalizing transactions
· Errors identified post-transaction must be corrected through formal adjustment procedures, not by deleting records
· IFS data is backed up daily by the IT Department in accordance with Prosafe Company backup policies
· In the event of extended system outages, manual procedures outlined in the Business Continuity Plan must be activated
· Storekeepers must maintain manual backup logs during outages and reconcile with IFS upon restoration
The receiving procedure ensures that all incoming materials are properly inspected, documented, and recorded in IFS. This section differentiates between offshore vessel receiving and onshore/3PL warehouse receiving.
Materials arriving at offshore vessels must be received promptly to support continuous operations while maintaining accuracy and accountability.
64. Verify that a valid Purchase Order exists in IFS for the incoming shipment
65. Physically receive materials from supply vessel or helicopter delivery
66. Compare packing slip or delivery note quantities against Purchase Order line items
67. Conduct visual inspection for packaging damage, correct part numbers, and obvious discrepancies
68. Count or weigh materials to verify quantities match shipping documentation
69. For critical or high-value items, open packaging and inspect for hidden damage or incorrect specifications
70. Record receipt in IFS by creating a Goods Receipt Note (GRN) against the Purchase Order
71. Ensure the GRN includes: PO number, part number, quantity received, receiving location, condition code, and receiver name
72. If discrepancies are identified (quantity variance, damage, wrong part), create a Nonconformance Report (NCR) immediately and quarantine affected materials
73. Print or electronically file the GRN confirmation for record retention
74. Notify the Chief Engineer and Procurement team of receipt completion, especially for critical or expedited items
75. Verify that a Transfer Order has been created in IFS by the sending location
76. Receive materials from inter-vessel transfer or shore-to-vessel shipment
77. Compare actual materials received against the Transfer Order line items
78. Inspect materials for damage that may have occurred during transit
79. Record receipt in IFS by confirming receipt against the Transfer Order
80. Document any discrepancies or damage on the Transfer Order and notify the sending location's storekeeper immediately
81. If significant discrepancies exist, initiate a variance investigation before finalizing the receipt
Shore-based warehouses and 3PL facilities typically handle larger volumes and require more robust dock and staging area management.
82. Confirm appointment or expected delivery via communication with carrier or vendor
83. Inspect inbound truck or container for signs of damage, tampering, or seal discrepancies
84. Unload materials in designated receiving area and segregate by Purchase Order if multiple POs are on one delivery
85. Match packing slips and bills of lading against open Purchase Orders in IFS
86. Perform piece count or weight verification for all line items
87. Conduct quality inspection per section 8.0 Inspection & Nonconformance Handling
88. Create Goods Receipt Note (GRN) in IFS for each Purchase Order, capturing all required data fields
89. Apply receiving labels or barcodes to materials for tracking through putaway
90. Move materials to inspection hold area if further quality checks are required before putaway
91. Notify Procurement of receipt completion and any discrepancies requiring vendor follow-up
92. Review inbound Transfer Orders scheduled for arrival and prepare receiving area
93. Verify transfer documentation (packing list, Transfer Order number) upon arrival
94. Unload and segregate materials by Transfer Order if multiple transfers arrive simultaneously
95. Perform count verification and damage inspection
96. Confirm receipt in IFS against the Transfer Order, updating quantity and condition as appropriate
97. Label materials with destination storage location for putaway team
98. Communicate receipt confirmation to sending location storekeeper and Supply Chain Manager
All received materials must undergo inspection to verify conformance with purchase specifications. Materials that fail inspection must be quarantined and formally documented.
Materials must be inspected for the following criteria upon receipt:
· Correct part number and manufacturer as specified on Purchase Order
· Quantity accuracy (count, weight, or volumetric measurement as applicable)
· Packaging integrity and protection from environmental damage
· Presence of required documentation (certificates, test reports, calibration records, etc.)
· Physical condition (no visible damage, corrosion, or deterioration)
· Expiration dates or shelf life requirements for time-sensitive materials
· Compliance with hazardous material labeling and safety data sheet (SDS) requirements
When materials fail inspection criteria, the following process must be followed:
99. Immediately segregate nonconforming materials in a designated quarantine area
100. Apply quarantine labels or tags to prevent inadvertent use
101. Create a Nonconformance Report using the template in Appendix C, documenting: NCR number, part number, quantity affected, description of nonconformance, photographs if applicable, receiver name and date
102. Update material condition in IFS to 'Quarantine' status to block availability for issue
103. Notify the Procurement team and Supply Chain Manager of the NCR within 24 hours
104. For vendor-supplied materials, Procurement will contact the vendor for resolution (return, replacement, or concession)
105. For internal transfer nonconformances, contact the sending location to investigate root cause
106. Disposition options must be selected by authorized personnel: Accept as-is (with technical justification and approval), Return to vendor for credit or replacement, Use in alternate application (with engineering approval), Scrap or dispose (with proper documentation)
107. Once disposition is approved, update IFS and move materials accordingly (issue if accepted, return if rejected, scrap if disposed)
108. Close the NCR in the tracking system with final disposition and lessons learned
For materials requiring certification or test documentation, the following apply:
· Materials shall not be issued for use until required certificates are received and validated
· Certificates must be filed with the material record in IFS or the document management system
· Missing or incorrect certificates trigger an NCR and vendor follow-up
· The Technical Superintendent or Chief Engineer must validate technical compliance of certificates before material release
Putaway is the process of moving received materials from the receiving area to their assigned storage locations. Proper putaway ensures inventory accuracy and efficient retrieval.
· High-turnover items should be stored in easily accessible locations near the issue counter
· Heavy or bulky items should be stored at floor level to minimize handling risks
· Hazardous materials must be segregated according to compatibility and regulatory requirements (refer to Appendix E)
· Similar parts or part families should be grouped together to facilitate picking
· First-In-First-Out (FIFO) principles apply to items with shelf life or expiration dates
· Storage locations must be clearly labeled with bin or shelf identifiers matching IFS location codes
109. After GRN creation and inspection clearance, identify the storage location for each item based on: Part master data location assignment in IFS, Warehouse layout and slotting strategy, Material handling equipment availability
110. Transport materials from receiving area to designated storage location using appropriate handling equipment (forklifts, pallet jacks, manual carts)
111. Place materials in assigned bin, shelf, or rack position
112. Ensure materials are stable, secure, and protected from damage or environmental exposure
113. For items requiring preservation (corrosion inhibitors, desiccants, protective wrapping), apply appropriate measures per section 13.0
114. Update IFS with the specific bin location if not automatically populated during GRN
115. For serialized or lot-tracked items, ensure serial numbers or lot codes are recorded in IFS and physically marked or labeled on the item
116. Verify putaway completion by conducting a quick visual check of bin accuracy
117. Access the IFS Inventory Management module
118. Navigate to the Putaway function and select items awaiting putaway (typically items with GRNs completed but no bin location assigned)
119. Scan or manually enter the bin location code
120. Confirm the putaway transaction, which updates inventory availability in IFS
121. Print putaway confirmation document for record retention
· Offshore vessels: Putaway must be completed within 24 hours of receipt to prevent deck clutter and safety hazards
· Onshore warehouses: Putaway must be completed within 48 hours of receipt to maintain receiving dock throughput
· 3PL facilities: Putaway SLA is 48 hours as specified in the 3PL service agreement
· Critical or expedited items may require immediate putaway and should be prioritized
Material issues transfer inventory from storage to operational use. All issues must be properly authorized, documented, and recorded in IFS to maintain inventory accuracy and cost tracking.
Materials may only be issued upon receipt of a valid requisition or work order. Authorization levels are defined in section 4.1 Delegation of Authority.
· Routine issues under $1,000: Verbal or written request from authorized personnel (Chief Engineer, department heads)
· Issues $1,000 - $10,000: Written requisition approved by Chief Engineer
· Issues over $10,000: Written requisition approved by Vessel Manager or Technical Superintendent
· Emergency issues outside normal hours: Logged in Night Issue Log (Appendix B) and formalized in IFS the following business day
122. Receive and validate the material requisition or work order number
123. Verify approval authority based on estimated material value
124. Locate the requested part in storage using IFS bin location data
125. Physically pick the material from the bin location
126. Verify part number, description, and quantity against the requisition
127. For serialized items, record the specific serial number being issued
128. Complete an Issue Log entry (Appendix A) with: Date and time, Part number and description, Quantity issued, Requesting department or work order, Issued to (recipient name), Storekeeper signature
129. Process the issue transaction in IFS, which debits the inventory location and charges the cost to the appropriate cost center or work order
130. Provide the material to the requester and obtain their signature acknowledgment on the Issue Log
131. File the Issue Log for record retention
132. Access IFS Inventory Management module and navigate to Material Issue function
133. Enter or select the part number to be issued
134. Enter the quantity to issue in the appropriate unit of measure
135. Select the source location (bin) from which the material is being picked
136. Enter the destination cost center, work order, or project code for cost allocation
137. For serialized/lot-tracked items, select the specific serial number or lot from available inventory
138. Review the transaction summary for accuracy
139. Confirm and post the issue transaction
140. Print the issue document for the recipient and file a copy with the Issue Log
· If requested quantity is not available in stock, issue the available quantity and create a backorder requisition for the remaining amount
· Notify the requester of the partial issue and expected delivery date for backorder
· Coordinate with Procurement to expedite backorder fulfillment if critical to operations
· Issue Logs must be maintained in chronological order with no missing entry numbers
· Corrections to Issue Logs must be made by single-line strike-through with initials and date; erasures or white-out are prohibited
· Completed Issue Logs must be submitted to the Supply Chain Manager monthly for review
· Night Issue Logs must be reconciled with regular Issue Logs and IFS entries within 24 hours
Materials that were previously issued but are no longer needed may be returned to stock if they remain in serviceable condition. Returns must be properly documented to maintain inventory accuracy.
Materials are eligible for return to stock if they meet all of the following criteria:
· Materials are in unused, serviceable condition with no damage or deterioration
· Original packaging is intact or materials can be properly re-packaged for storage
· Materials have not exceeded shelf life or expiration dates
· Materials are standard stock items (not custom fabricated or project-specific)
· No contamination or exposure to hazardous conditions has occurred
141. Department or individual returning materials must present them to the Storekeeper with a return request
142. Storekeeper inspects materials to verify serviceability and compliance with return criteria
143. If materials are not eligible for return (damaged, expired, contaminated), reject the return and instruct the department to dispose of materials through proper channels
144. If materials are acceptable, complete a return document or note on the original Issue Log indicating: Date of return, Part number and quantity, Original issue reference (work order, cost center), Condition assessment (serviceable, inspect, etc.), Returning person's name and signature
145. Process the return transaction in IFS to credit the inventory location and reverse the cost charge
146. Place materials in appropriate storage location following putaway procedures
147. Update IFS bin location if needed
148. Access IFS Inventory Management module and navigate to Return to Stock function
149. Enter the part number and quantity being returned
150. Select the destination bin location for putaway
151. Enter the original cost center or work order that was charged during issue (this allows cost reversal)
152. Add any notes regarding condition or reason for return
153. Confirm and post the return transaction
154. Print return confirmation for record retention
If returned materials require inspection, testing, or refurbishment before being made available for reissue:
· Return materials to inventory with condition code set to 'Inspect' or 'Quarantine' in IFS
· Coordinate with technical personnel to conduct required inspection or testing
· Upon successful inspection, update condition code to 'Serviceable' to make available for future issues
· If materials fail inspection, initiate disposal or scrap procedures per section 18.0
Inventory transfers move materials between Prosafe Company locations (vessel-to-vessel, warehouse-to-vessel, warehouse-to-warehouse, or vessel-to-warehouse). All transfers must be authorized and documented in IFS.
Transfer requests may be initiated by vessel personnel, Technical Superintendents, or Supply Chain team members. Approval requirements are defined in section 4.1:
· Transfers under $5,000: Approved by Supply Chain Manager
· Transfers over $5,000: Approved by Vessel Manager or Operations Director
155. Requesting location identifies the need for materials available at another Prosafe location
156. Storekeeper or department head submits a transfer request to the Supply Chain Manager, specifying: Part number and quantity needed, Urgency and required delivery date, Destination location and contact person, Justification (emergency, stock balancing, project requirement, etc.)
157. Supply Chain Manager reviews inventory availability at potential source locations using IFS
158. Supply Chain Manager determines the most appropriate source location based on: Inventory availability and excess stock levels, Proximity and transportation logistics, Operational impact on the source location
159. Supply Chain Manager obtains required approval based on transfer value
160. Supply Chain Manager creates Transfer Order in IFS and notifies both sending and receiving locations
The sending location executes the following steps in IFS:
161. Access the approved Transfer Order in IFS
162. Pick materials from inventory and verify part numbers and quantities
163. Pack materials appropriately for transport, ensuring protection from damage and environmental exposure
164. Prepare packing list and shipping documentation
165. Process the Transfer Issue transaction in IFS, which: Debits inventory at the sending location, Updates status to 'In Transit', Generates transfer documentation
166. Arrange transportation with logistics coordinator or supply vessel scheduler
167. Ship materials to destination location
The receiving location executes the following steps (as detailed in section 7.1.2 and 7.2.2):
168. Receive materials and verify against Transfer Order packing list
169. Inspect for damage incurred during transit
170. Process Transfer Receipt transaction in IFS, which: Credits inventory at the receiving location, Closes the Transfer Order
171. Complete putaway procedures
172. Notify sending location and Supply Chain Manager of receipt confirmation
· Transfer Order number must be referenced on all packing lists and shipping documents
· Packing lists must itemize all materials with part numbers, descriptions, and quantities
· For hazardous materials transfers, appropriate shipping declarations and Material Safety Data Sheets (MSDS) must accompany the shipment
· Transfer documentation must be retained for 3 years per section 4.2
In cases of operational emergencies requiring immediate material transfers:
· Verbal authorization may be granted by the Vessel Manager or Operations Director
· Materials may be shipped concurrently with IFS Transfer Order creation
· Transfer Order must be formalized in IFS within 24 hours of verbal authorization
· Emergency justification must be documented in the Transfer Order notes
Proper storage and preservation practices protect inventory from damage, deterioration, and environmental degradation, ensuring materials remain serviceable until needed.
· Storage areas must be clean, dry, and protected from weather exposure (offshore) or environmental extremes (onshore)
· Temperature and humidity should be controlled within ranges specified for sensitive materials (electronics, chemicals, etc.)
· Storage areas must have adequate lighting for safe handling and accurate picking
· Aisles and emergency exits must remain clear and accessible at all times
· Fire suppression systems and safety equipment must be operational and accessible
· Smoking, open flames, and welding are prohibited in or near storage areas unless specifically authorized with hot work permits
Refer to Appendix E: Preservation & Storage Requirements Matrix for detailed requirements by material category. Key requirements include:
1. Electronics and Electrical Components:
· Store in climate-controlled areas with relative humidity below 60%
· Use anti-static packaging and grounding when handling sensitive components
· Protect from electromagnetic interference and direct sunlight
2. Bearings and Precision Parts:
· Maintain original factory packaging and preservative coatings
· Store in low-humidity environment to prevent corrosion
· Rotate stock regularly and inspect for deterioration
3. Gaskets, O-Rings, and Rubber Goods:
· Protect from UV light, ozone, and temperature extremes
· Store in sealed containers or original packaging
· Monitor shelf life and rotate stock (typically 5-10 year shelf life)
4. Chemicals and Lubricants:
· Segregate by compatibility groups per SDS requirements
· Store in approved cabinets with secondary containment
· Label clearly with contents, hazard symbols, and expiration dates
· Maintain inventory of hazardous materials and report as required by regulations
5. Paints and Coatings:
· Store in temperature-controlled area to prevent freezing or overheating
· Keep containers sealed to prevent solvent evaporation and skin formation
· Rotate stock and mark with receipt dates
6. Tools and Hand-Held Equipment:
· Store in clean, dry conditions to prevent rust and corrosion
· Maintain calibration records for precision tools and measuring equipment
· Protect cutting edges and precision surfaces
· Corrosion Inhibitors: Apply vapor-phase corrosion inhibitor (VCI) packaging or desiccants to moisture-sensitive metal parts
· Protective Coatings: Maintain factory-applied grease, oil, or wax coatings on machined surfaces
· Environmental Protection: Use sealed plastic bags, containers, or shrink wrap to protect from dust, moisture, and contamination
· Desiccant Packs: Include silica gel or other desiccants in sealed packaging for moisture-sensitive items; replace desiccants when saturated
· Materials with defined shelf life must be labeled with expiration dates upon receipt
· IFS must be configured to track shelf life and generate alerts for items approaching expiration
· Storekeepers must conduct monthly shelf life audits and report items within 90 days of expiration
· Expired materials must be quarantined and evaluated for extension (with engineering approval) or disposal
· Warehouse Managers and Storekeepers must conduct quarterly storage condition audits
· Audit checklist must include: Housekeeping and organization, Environmental controls functioning properly, Preservation measures intact, Expiration dates monitored, Hazardous material compliance
· Audit findings and corrective actions must be documented and submitted to the Supply Chain Manager
Min/Max inventory levels are established for critical spare parts to ensure operational readiness while avoiding excessive stock. This section defines the process for setting, reviewing, and adjusting these levels.
Min/Max levels are established based on the following factors:
· Criticality: Parts essential for safe operations or with high failure consequences warrant higher stock levels
· Lead Time: Longer vendor or transportation lead times require higher safety stock
· Usage Rate: Historical consumption patterns inform appropriate stock quantities
· Failure Frequency: Parts with higher failure rates or shorter mean time between failures (MTBF) require more stock
· Vendor Reliability: Unreliable vendors or frequent backorders justify higher Min levels
· Shelf Life: Perishable or degradable items require lower Max levels to minimize obsolescence risk
· Cost and Value: High-value items may have lower Max levels to reduce carrying costs unless criticality overrides
· Technical Superintendent: Defines criticality and recommends Min/Max levels for vessel technical spares
· Chief Engineer: Validates Min/Max recommendations based on operational experience and provides usage data
· Supply Chain Manager: Analyzes lead times, vendor performance, and cost implications; approves final Min/Max settings
· Procurement: Provides input on vendor lead times and availability constraints
173. Technical Superintendent or Chief Engineer identifies parts requiring Min/Max controls
174. Propose initial Min/Max levels using the following calculation methodology: Min Level = (Average Daily Usage × Lead Time in Days) + Safety Stock, Max Level = Min Level + Economic Order Quantity (EOQ) or practical replenishment quantity, Safety Stock = Coverage for variability in usage and lead time (typically 30-60 days for critical items)
175. Submit proposal to Supply Chain Manager with supporting data: Historical usage reports from IFS, Vendor lead time documentation, Criticality assessment (A/B/C classification)
176. Supply Chain Manager reviews proposal for cost impact and alignment with inventory policies
177. Upon approval, Supply Chain Manager configures Min/Max parameters in IFS for automatic replenishment triggers
· IFS automatically generates replenishment alerts when inventory falls below the Min level
· Procurement reviews replenishment alerts daily and creates purchase requisitions
· Order quantity is typically calculated to bring stock back to Max level
· In cases of supply constraints or budget restrictions, Procurement may coordinate with the Supply Chain Manager to authorize reduced order quantities
· Min/Max levels must be reviewed semi-annually by the Technical Superintendent and Supply Chain Manager
· Reviews should consider: Changes in operational profiles or vessel assignments, Equipment modifications or upgrades affecting spare part requirements, Consumption trend analysis, Vendor lead time changes, Inventory turns and carrying cost performance
· Adjustments to Min/Max levels require approval from the Technical Superintendent and Supply Chain Manager
· IFS parameters must be updated within 5 business days of approved changes
· Stock levels consistently above Max indicate potential excess inventory
· Supply Chain Manager reviews excess stock reports monthly
· Excess stock may be transferred to other locations with demand or flagged for obsolescence review
Cycle counting is a continuous inventory verification process that maintains accuracy without the disruption of full physical inventories. Prosafe Company uses a risk-based approach to prioritize cycle count frequency.
Inventory items are classified into cycle count frequency categories based on value and criticality:
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Category |
Criteria |
Count Frequency |
|
A Items |
High value (top 20% of inventory value) or critical spares designated as essential for operations |
Monthly (12 times per year) |
|
B Items |
Moderate value (middle 30% of inventory value) or moderately critical for operations |
Quarterly (4 times per year) |
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C Items |
Lower value (bottom 50% of inventory value) or readily available consumables |
Semi-annually (2 times per year) |
178. Supply Chain Manager or Warehouse Manager generates cycle count list from IFS based on scheduled frequencies and ABC classification
179. Storekeeper receives cycle count assignment with list of parts and bin locations to count
180. Perform physical count of assigned items without referencing IFS on-hand quantities (blind count)
181. Record actual count quantities on cycle count sheet or directly in handheld device
182. For serialized items, record specific serial numbers present in the bin
183. Compare physical count to IFS system quantity
184. If counts match, finalize cycle count in IFS with 'Count Verified' status
185. If variance exists, perform immediate recount to confirm accuracy
186. If recount confirms variance, document on Inventory Variance Investigation Report (Appendix D)
187. For variances under $500, Storekeeper investigates and adjusts IFS if root cause is identified (refer to section 15.3)
188. For variances over $500, escalate to Supply Chain Manager for investigation and approval before adjustment
All cycle count variances must be investigated to identify root causes and prevent recurrence:
· Review recent transaction history in IFS for the part to identify potential data entry errors
· Check Issue Logs and Night Issue Logs for unrecorded transactions
· Verify bin location accuracy - material may be in wrong location
· Look for unreturned materials or materials issued but not yet consumed
· Check for duplicate part numbers or look-alike parts that may have been confused
· Interview personnel who recently handled the material
Common root causes and corrective actions:
· Data entry errors: Adjust IFS, retrain user on proper transaction procedures
· Unrecorded issues: Process corrective transaction, emphasize real-time entry requirement
· Wrong bin location: Move material to correct location, update IFS
· Unreturned materials: Locate and return materials or process formal issue if consumed
· Damaged or lost materials: Process disposal transaction with appropriate approvals
The following metrics are tracked monthly to measure cycle count effectiveness:
· Inventory Accuracy Rate = (Items Counted Accurately / Total Items Counted) × 100%
· Target: ≥ 95% accuracy for all locations
· Value Accuracy = (Absolute Value of Variances / Total Inventory Value Counted) × 100%
· Target: ≤ 2% variance by value
· Cycle Count Completion Rate = (Scheduled Counts Completed / Scheduled Counts Due) × 100%
· Target: 100% on-time completion
A comprehensive physical inventory count of all items at each location is conducted annually to validate inventory accuracy for financial reporting purposes.
189. Supply Chain Manager schedules annual physical counts at least 60 days in advance
190. Coordinate with operations to minimize impact (typically scheduled during maintenance periods or operational lulls)
191. Assign count teams with defined responsibilities (counters, recorders, supervisors)
192. Conduct pre-count meetings to review procedures and expectations
193. Prepare count sheets or configure handheld devices with item lists and bin locations
194. Complete all pending transactions and reconcile any backlog before count freeze
195. Freeze all inventory transactions in IFS at designated cutoff time (no issues, receipts, or transfers during count)
196. Issue count sheets to teams organized by storage area or bin range
197. Count all items in assigned areas, recording: Part number, Bin location, Physical quantity, Counter initials, Count date and time
198. Use two-person teams for high-value or critical items to ensure accuracy
199. Mark bins or shelves as counted to prevent double-counting or omissions
200. Immediately segregate and tag any unidentified, unlabeled, or questionable items for later research
201. Submit completed count sheets to count supervisor for compilation
202. Compare physical count data to IFS system quantities
203. Generate variance report showing all discrepancies
204. Assign recount tasks for significant variances (dollar threshold established by Supply Chain Manager)
205. Investigate root causes for all variances exceeding tolerance (typically ±2% by value)
206. Obtain required approvals for inventory adjustments per delegation of authority in section 4.1
207. Process approved adjustments in IFS to align system with physical count
208. Prepare final physical count report with variance analysis and corrective action plan
· Resume normal inventory transactions after adjustments are finalized
· Conduct lessons learned meeting with count teams to identify process improvements
· Update cycle count priorities based on items with recurring variances
· Submit final count results to Cost Controller for financial reporting
· Implement corrective actions to address root causes of significant variances
Proactive identification and management of obsolete and slow-moving inventory reduces carrying costs and frees up storage space for active materials.
Inventory items are considered obsolete if any of the following conditions apply:
· Equipment or system for which the part was purchased is no longer in service or has been permanently retired
· Part has been superseded by a new design or specification and is no longer usable
· Part has exceeded shelf life or expiration date and cannot be recertified
· No usage recorded in the past 36 months and no anticipated future demand
· Vendor no longer supports the part and no alternative sources are available
· Part is damaged or deteriorated beyond repair or refurbishment
· Slow-moving items are defined as parts with no usage in the past 24 months but not yet meeting obsolescence criteria
· Supply Chain Manager generates slow-moving inventory reports quarterly from IFS
· Reports are distributed to Technical Superintendents and Warehouse Managers for review
209. Supply Chain Manager schedules quarterly obsolescence review meetings with Technical Superintendents, Chief Engineers, and Cost Controller
210. Review obsolete and slow-moving inventory reports
211. For each item, determine disposition: Retain - item is still required for backup or emergency use (document justification), Transfer - demand exists at another location (initiate transfer), Sell - salable to third parties through surplus sale channels, Scrap - no residual value, dispose through proper channels (see section 18.0), Return to Vendor - eligible for return or buyback (coordinate with Procurement)
212. Obtain required approvals for disposition decisions based on item value (section 4.1)
213. Assign action owners and target completion dates for each disposition action
214. Track disposition progress and report completion status in subsequent review meetings
· Improve Min/Max accuracy to avoid overstocking
· Standardize equipment across fleet to reduce part proliferation
· Implement vendor-managed inventory (VMI) programs for consumables
· Coordinate with engineering on equipment end-of-life planning to avoid stranded spare parts inventory
· Review slow-moving reports proactively to identify issues before items become obsolete
Proper disposal of obsolete, damaged, or unusable inventory must comply with environmental regulations, safety requirements, and financial controls.
Disposal transactions require approval based on value thresholds defined in section 4.1:
· Disposals under $2,500: Approved by Supply Chain Manager
· Disposals over $2,500: Approved by Operations Director
215. Identify materials for disposal based on obsolescence review, nonconformance disposition, or damage assessment
216. Segregate materials in designated disposal holding area, clearly marked to prevent inadvertent use
217. Complete Disposal Request Form documenting: Part number, description, and quantity, Reason for disposal (obsolete, damaged, expired, etc.), Estimated value, Proposed disposal method (scrap, recycle, hazmat disposal, donation, etc.), Environmental or safety considerations
218. Attach supporting documentation such as NCR, obsolescence review minutes, or damage assessment photos
219. Submit Disposal Request Form to appropriate approver based on value
220. Upon approval, coordinate disposal execution: For scrap metal or recyclables, engage approved scrap vendor and obtain weigh tickets, For hazardous materials, use certified hazardous waste disposal contractor with proper manifests, For electronic waste, comply with e-waste recycling regulations, For donation or surplus sale, coordinate with approved channels and document recipient
221. Process disposal transaction in IFS to remove items from inventory with reference to approval documentation
222. Retain disposal documentation including approvals, weigh tickets, disposal certificates, and IFS transaction records for 7 years
· All hazardous materials must be disposed of through licensed hazardous waste contractors
· Maintain Material Safety Data Sheets (SDS) for all hazardous materials being disposed
· Complete hazardous waste manifests accurately and retain copies for regulatory compliance
· Coordinate with Environmental, Health & Safety (EHS) personnel for proper handling and disposal procedures
· Never dispose of hazardous materials in general waste streams or through unauthorized channels
· Segregate scrap metal by type (ferrous, non-ferrous, mixed) to maximize reclaim value
· Obtain weigh tickets or receipts from scrap vendors documenting quantity and value
· Credit scrap proceeds to inventory cost center or as directed by Cost Controller
· Disposal transactions are subject to internal and external audit
· Ensure all approvals, supporting documentation, and IFS records are complete and accurate
· Supply Chain Manager reviews disposal reports quarterly for trends and compliance
Regular audits ensure adherence to inventory procedures, identify improvement opportunities, and maintain regulatory and financial compliance.
· Supply Chain Manager conducts annual internal audits of all inventory locations (vessels, warehouses, 3PL facilities)
· Audit scope includes: Process compliance with this SOP, Data accuracy in IFS vs. physical records, Documentation completeness and retention, User access and system security, Cycle count and physical count procedures, Preservation and storage conditions, Hazardous material handling and segregation
· Audit findings are documented with corrective action plans and target completion dates
· Corrective actions are tracked and verified for closure
· Cost Controller coordinates external financial audits requiring inventory verification
· Storekeepers and Warehouse Managers must provide access, documentation, and support to external auditors
· Physical counts or sample verifications requested by auditors must be completed promptly and accurately
· Inventory operations must comply with applicable maritime regulations, environmental laws, and safety standards
· Hazardous materials inventory must comply with IMDG Code, EPA, and local regulations
· Inventory records must be available for inspection by flag state authorities, port authorities, or classification societies
The following KPIs are tracked and reported monthly to monitor inventory performance:
|
KPI |
Target |
Measurement |
|
Inventory Accuracy Rate |
≥ 95% |
Cycle Count Results |
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Inventory Turnover Rate |
≥ 2.0 |
Annual COGS / Avg Inventory |
|
Stock-Out Rate |
< 2% |
Backorders / Total Requests |
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Obsolete Inventory (% of Total Value) |
< 5% |
Quarterly Review |
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Receiving Timeliness (GRN within 24 hrs) |
≥ 98% |
IFS Transaction Logs |
· This SOP is owned and maintained by the Supply Chain Manager
· All revisions require review and approval by the Operations Director
· Changes impacting financial controls require additional review by the Cost Controller
· Controlled copies of this SOP are distributed to: All Vessel Managers and Chief Engineers, Warehouse Managers and Storekeepers, Technical Superintendents, Procurement Manager, Cost Controller, Quality Assurance
· Electronic copies are available on the company document management system
· Obsolete versions must be removed from circulation and archived
223. Requests for revisions may be submitted by any stakeholder to the Supply Chain Manager
224. Supply Chain Manager reviews requests and determines if revision is warranted
225. Draft revisions are circulated for stakeholder feedback
226. Supply Chain Manager incorporates feedback and submits for Operations Director approval
227. Upon approval, new revision is issued with updated revision number and date
228. Revision history is maintained in the table below
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Revision |
Date |
Changes Made |
Approved By |
|
1.0 |
Feb 5, 2026 |
Initial Release |
Operations Director |
The following appendices provide standardized templates and reference materials to support the procedures outlined in this SOP.
This template is used for documenting all material issues from inventory. Storekeepers must maintain sequential issue logs and retain completed logs for 3 years.
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Part Number |
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Qty |
Work Order / Cost Center |
Issued To |
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This simplified template is used for after-hours emergency issues when the regular storekeeper is not on duty. All night issues must be entered into IFS and the regular Issue Log within 24 hours.
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Part Number |
Description |
Qty |
Taken By (Name) |
Reason / Emergency |
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Use this template to document materials that do not meet specifications or are damaged upon receipt.
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NONCONFORMANCE REPORT (NCR) |
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NCR Number: |
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Date Reported: |
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Location: |
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Part Number: |
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Part Description: |
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Quantity Affected: |
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PO Number / Vendor: |
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Description of Nonconformance: |
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Proposed Disposition: |
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☐ Return to Vendor ☐ Accept with Concession ☐ Scrap / Dispose ☐ Rework |
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Reported By: |
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Approved By / Date: |
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This form is completed when cycle count or physical count variances are identified and require investigation.
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INVENTORY VARIANCE INVESTIGATION REPORT |
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Investigation Date: |
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Location: |
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Part Number: |
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Description: |
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IFS System Quantity: |
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Physical Count Quantity: |
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Variance (+/-) : |
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Estimated Value Impact: |
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Investigation Findings / Root Cause: |
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Corrective Action Taken: |
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This matrix provides material-specific preservation and storage requirements to maintain inventory in serviceable condition.
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Material Category |
Storage Conditions |
Preservation Method |
Shelf Life / Inspection Frequency |
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Electronics & Electrical |
Climate controlled, RH < 60%, protect from EMI |
Anti-static packaging, desiccants |
Varies; inspect semi-annually |
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Bearings & Precision Parts |
Dry, low humidity, temperature controlled |
Maintain factory preservative, VCI packaging |
Inspect annually, rotate stock |
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Rubber Goods & Gaskets |
Cool, dark, away from UV and ozone sources |
Sealed containers, original packaging |
5-10 year shelf life, mark dates |
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Chemicals & Lubricants |
Approved cabinets, segregated by compatibility |
Secondary containment, SDS available |
Per SDS, typically 2-5 years |
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Paints & Coatings |
Temperature controlled, prevent freezing |
Keep sealed, rotate stock |
1-3 years, mark receipt dates |
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Hydraulic Hoses & Fittings |
Avoid kinking, protect from sunlight |
Capped ends, vertical or coiled storage |
4-8 years per manufacturer |
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Filters (Air, Oil, Fuel) |
Dry, clean environment |
Sealed in original packaging |
5 years, inspect for deterioration |
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Steel & Metal Parts |
Dry, well-ventilated |
VCI wrapping, corrosion inhibitor coating |
Inspect annually for rust |
This RACI matrix defines accountability for key inventory management processes. R = Responsible (executes), A = Accountable (ultimate ownership), C = Consulted (provides input), I = Informed (kept updated).
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Activity |
Storekeeper |
Chief Engineer |
Vessel Manager |
Tech Supt |
Procurement |
SC Manager |
Cost Controller |
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Material Receiving |
R, A |
I |
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I |
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Material Issue |
R, A |
A (>$1K) |
A (>$10K) |
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Cycle Counting |
R, A |
I |
I |
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A (>$500) |
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Transfer Orders |
R |
C |
A (>$5K) |
C |
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R, A |
I |
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Min/Max Setting |
C |
C |
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R |
C |
A |
C |
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NCR Processing |
R |
C |
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C |
R |
A |
I |
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Obsolescence Review |
C |
C |
I |
C |
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R, A |
C |
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Disposal & Scrapping |
R |
C |
A (>$2.5K) |
C |
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A (<$2.5K) |
C |
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Physical Count |
R |
R |
I |
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A |
C |
END OF DOCUMENT