Materials and Logistics Business Process (PTCL)

Zeshan Ali Syed

MATERIALS AND LOGISTICS BUSINESS PROCESS (PTCL)

Introduction
The Materials and Logistics (M&L) Division is the department responsible for management of
the flow of materials to and within PTCL. It comprises all supply chain related activities
including the management of materials and the logistics involved for transportation as well. The
M&L department functions in 3 regions across Pakistan. These are called Regional Store Depots
(RSD). Each RSD comprises a large inventory holding facility in order to cater to the mini RSDs
within its proximity. There are three RSDs in PTCL, located in Karachi, Lahore and Islamabad
respectively. Among these, the Karachi based RSD is located near the port and so is the most
important according to operations as all unloading of containers takes place over there. The
M&L division is responsible for the logistics and the storage of inventory for the whole
organization. M&L activities take place as a result of the procurement process carried out by the
sales team.
Purchasing and Procurement Process
The procurement process takes place as a result of a purchase requisition generated by the
commercial department, sales department and corporate sales department. The Purchase
Requisition in effect is generated as a result of any need from the commercial departments. In
response to the Purchase Requisition, various vendors offer their tenders containing their
respective quotations. From these, the procurement department selects the most suitable one and
places the Purchase Order (PO) to that vendor. The vendor dispatches the respective shipment
destined for Karachi port. Once the deal is finalized, the logistics department begins its
operations.
Functions and Processes Involving the Logistics Department

Contract: All the involved parties are mentioned in a contract which is signed by both
the end parties. The contract is compiled along with its supporting documents which
contain details regarding the terms of contract. These details include income tax terms,
INCOTERMS, deployment and training schedules, type of shipment, breach of
agreement terms and similar information.
Letter of Credit: The Letter of Credit (LC) is generated by the bank representing PTCL
as per the contract. It represents PTCL in the process of payments to take place between
the two parties. A dedicated department in PTCL stays in correspondence with the bank
regarding the opening and closing of the LC.
Pre-Shipment Inspection: Before the shipment can be dispatched from the source, in
order to save time and minimize costs, if the consignment costs high, a team of 2 PTCL
engineers is dispatched from the destination in order to test and inspect the equipment at

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Materials and Logistics Business Process (PTCL)

Zeshan Ali Syed

the source itself. This helps in identifying faulty equipment before shipment charges have
been incurred.
Duty and Excise: In order to save time and hence reducing the risk of demurrage costs,
the logistics department requests the shipping documents of the consignment before the
vessel has docked in Karachi. These shipping documents consist of a Bill of Lading and
the Shipping Invoice and are used to calculate the amount of duty and tax to be paid in
advance. For every shipment, the logistics department has to inform the port to reserve
space for 5 days as a standard operating procedure. This helps the port in organizing its
activities in a systematic way. Calculating the duty and tax amount in advance helps in
quicker clearance of the shipment about to arrive. In case, due to some reason if the
shipment reaches late, then the reservation window could run out at the port due to which
demurrage costs would have to be paid.
Receipt of Shipment and Transportation to Sites: Once the charges have been paid, the
shipment is then transported to the RSD at Karachi and the inventory is stored in
warehouses along with its tracking information maintained by the Materials Department
(maintained on SAP). Upon receipt of shipment, 60% payment is done to the vendor at
once.
Acceptance Certificates: After the receipt of equipment, a detailed inspection takes
place by the testing team at the RSD warehouse. After successful testing, a Technical
Acceptance Certificate (TAC) is issued to the vendor. After the issuance of TAC, a 12
month period of utilization of equipment takes place which involves consumption as per
normal basis. Upon successful completion of the utilization phase, the logistics
department issues a Provisional Acceptance Certificate (PAC). After some time (6 months
approximately) of the issuance of PAC, a Final Acceptance Certificate (FAC) is issued to
the vendor. The remaining 40% payment balance is paid to the vendor upon issuance of
the FAC.
Functions and Processes Involving the Materials Department
Storing Inventory: Once the materials have been transported to the RSD, the materials
department is responsible for storing it in its warehouse. Along with this, it is important
to maintain track of the materials on SAP. So the materials quantity is adjusted in the
SAP Materials Module. Each part is represented by a Standard Industrial Classification
number in the software.
Dispatching Materials: RSDs act like a hub that serve the needs of surrounding mini
RSDs and so it has to dispatch materials accordingly. Dispatching materials is a complete
process which initiates with a mini RSD conveying its need, getting acknowledgement
from the RSD, the physical transport of the inventory, the receipt of the inventory and the
final closure of the transaction by both the parties.
Materials Dispatchment Process:

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Materials and Logistics Business Process (PTCL)

Zeshan Ali Syed

o Reservation Document: Reservation document is issued by the field department

that requires the materials from the RSD. This document is the basis on which
subsequent transactions take place among the mini RSD and the RSD.
o Stock Transfer Order: The Sales Transfer Order (STO) is generated by each party
that needs to communicate with another internal party in order to ask for
materials. Field department generates STO based on Reservation Document in
order to communicate with the mini RSD. Similarly the mini RSD generates its
own STO in order to communicate with the RSD.
o Goods Transfer Note: The Goods Transfer Note (GTN) is issued by the RSD in
response to the received STO from the mini RSD. After the GTN is issued, goods
are physically picked from the warehouse and sent to the mini RSD. In the SAP
module, those respective goods statuses are set to In Transit.
o Goods Receipt Note: When the mini RSD receives the goods sent by the RSD, it
issues a Goods Receipt Note (GRN). As soon as the GRN is issued, the inventory
status against those items is set to Transferred.
o Goods Issue Voucher: The process from STO to GRN takes place as many times
as the number of mini RSDs are involved in the transport of materials from the
RSD to the field department. As mentioned earlier, the field department issues a
reservation document based on which all the subsequent transactions take place.
Once the materials reach their final destination, the field department issues a
Goods Issue Voucher (GIV). Issuing the GIV means that the materials have been
consumed.
Note: The Reservation Document, STO, GTN and GRN are issued using the SAP Materials
module.

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