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SHIKOKU ELECTRIC POWER CO.,INC.

Standard Procurement ProcedureStandard Procurement Procedure

Standard Procurement Procedure

1.Preliminary Procedure

(a) Application
Suppliers interested in entering into business relations with YONDEN are to contact the Purchasing and Materials Department, and submit documents such as company profile, products brochure and technical information, so that an outline of range of products, sales points and price is well presented. It is important that suppliers demonstrate how eligible they are with regard to the items listed in 3 Points to Consider in Sales Approach.
(b) Supplier registration system
YONDEN procures Materials from registered suppliers. Therefore companies wishing to do business with YONDEN are required to register following a procedure.

YONDEN is to survey the submitted forms of application and accompanying materials and to make an evaluation if requirements are complied with:  management requirements such as operation scale and financial condition, and technical requirements such as technical skill, production system, quality control system, sales record, after-sales service system and delivery system. Furthermore, YONDEN also considers in the process the applicant's degree of co-existence with the local community and the quantity of orders within the community in comparison with that of YONDEN.

For power equipment products that are procured by YONDEN continuously and repeatedly, distribution equipment for instance, type certificate must be obtained from the relevant technical department prior to registration.

Following the evaluation, those approved for registration are listed on the List of Registered Suppliers, which is available at the Purchasing and Materials Department.

2.Procurement Procedure

(a) Request for procurement
Request for procurement is first made by the department requiring the procurement, specifying quantities, dates and place of delivery of the Materials to the Purchasing and Materials Department. It then starts its procurement procedures.
(b) Selection of a supplier qualified to submit a quotation
YONDEN procures materials, in principle, through competitive quotations among the suppliers it selects from the list of registered suppliers. In some specific cases, however, where the Material is to be manufactured under a particular patent or where strict compatibility with existing facilities is required, a specific supplier is selected to submit a quotation.
YONDEN makes Procurement Information on the main procurement items specifying quantities and delivery dates.
(c) Submission and examination of specifications for quotation
At first, YONDEN shows specifications for purchasing Materials defining the contracting terms and conditions, and the specifications requested by YONDEN. Next, YONDEN asks suppliers to submit specifications for quotation according to specifications for purchase.
The technical department of YONDEN requiring Materials examines whether submitted specifications for quotation meet the specifications requested by YONDEN. They must be approved by this department.
In addition, YONDEN encourages the alternative quotation of “VE Proposal” in order to promote lowering procurement costs. This system is that suppliers propose another method for lowering procurement costs without losing functions requested originally. The supplier approved the proposal is selected as the priority supplier qualified to request for quotation by YONDEN.
(d) Request for quotation and submission of the quotation sheet.
In the case of passing examination of specifications for quotation, YONDEN requests for quotation through showing the prescribed quotation sheet defining terms and conditions of quotation. Also, in the case of approving specifications for quotation on condition that they should be modified partially, YONDEN may ask the supplier to reflect their modification to the quotation sheet.
The quotation sheet is valid when submitted by the due date.
(e) Price examination and negotiation
The quotation with the lowest price, among the valid estimates, is, in principle, examined by YONDEN, and price and other terms and conditions are negotiated.
(f) Conclusion of contract
When the negotiation is finalized, a contract in a form prescribed by YONDEN is drawn up.
(g) Delivery, inspection and payment
YONDEN inspects Materials delivered to confirm that they meet the requirements of YONDEN.
Payment is made, in principle, at the end of the month following the month of acceptance (closing date being the end of every month).
YONDEN makes special arrangements for payment in circumstances where Materials are manufactured over an extended time period.
(h) Other terms
YONDEN does not disclose to the third party any confidential information gained during the course of transaction without prior consent of the supplier. The supplier is required to do the same. YONDEN may claim damages if Materials are delivered after the due date.