CMC OP7400 Purchasing

							Subject: Purchasing                                           Number: CMC-OP7400
Approved By: Fred Donofrio                                    Rev.: B
Date Approved: 3/1/12                                         Page 1 of 4


                                              PURCHASING
PURPOSE:

The purpose of this procedure is to document the responsibilities for reviewing and approving
purchase orders and for evaluating subcontractors of supplies and services that are determined
to be critical to the processing of products through Combined Metals Corporation.

REQUIREMENTS:

Non-Critical Supplies and Services

   1) The Supervisors, Production Manager, and the Plant Manager (authorized purchasers)
      have the responsibility and authority to purchase supplies by completing a Purchase
      Order that contains, as a minimum, following information:
              -   vendor name and address            - quantity ordered
              -   bill to information                - description and/or item number
              -   P.O. date and date required        - price
              -   Carrier information, as applicable - authorized purchaser signature
   2) After the authorized purchaser places the order, a copy of the PO is retained by the
      issuer, a copy distributed to Receiving and the original PO is placed in the open order file.

   3) The Shipping/Receiving Supervisor or Receiver has the responsibility and authority to
      receive purchased supplies in accordance with “BW012 Receiving Inspection” and
      submits the completed receiving paperwork including the receiving copy of the PO to the
      office. If the order is incomplete, then a copy of the PO is retained in Receiving until the
      final shipment arrives.

   4) The Plant Manager or designee matches the receiving paperwork to the open PO from the
      file and verifies the completeness of the order. The PO is then placed back in the open
      PO file to await the invoice.

   5) Any discrepancies identified are reconciled by the authorized purchaser.

   6) The Administrative Assistant or designate performs the following functions on approved
      receipts:
    initiates payment for all receipts approved by the authorized purchaser
    maintains the open PO file until the final item is received and
    closes the completed purchase order in the appropriate vendor file.




            "Printed copies of this document are uncontrolled and should not be assumed to be current.
                          The current version can be found @ http://luisa.combmet.com/iso"
Subject: Purchasing                                                Number: CMC-OP7400
Approved By: Fred Donofrio                                         Rev.: B
Date Approved: 3/1/12                                              Page 2 of 4

Critical Supplies and Services including Raw Materials – In addition to the provisions
listed above, the following activities are conducted for purchasing Critical Supplies and Services.

   1) The Plant Manager, Production Manager or Quality Manager has the responsibility and
      authority to select new vendors that provide Critical Supplies or Services identified on the
      “Approved Vendor List” (BF036).

        2)         New vendors are selected based on the following criteria:
                  previous experience with that subcontractor or reputation within the industry
                   (including experience with other CMC locations or Elgiloy Specialty Metals),
                  trial order,
                  competitive pricing and service, and
                  information relating to the subcontractor’s quality management system.
                   (ISO 9000, A2LA, SFI 2005)

   3) New vendor selection is documented on the “Vendor Evaluation Form” (BF002).


   4) Once selected, new vendors are placed on the “Approved Vendor List –BF036” and
      included in the next annual evaluation.

   5) The Production Manager, Supervisors, or Plant Manager have the responsibility and
      authority to perform the following activities when purchasing critical supplies and services:
          Only use vendors or subcontractors listed on the Approved Vendors List,
          Include on the purchase order any additional requirements
          Identify initial purchase orders for new vendors or new critical supply/service items
              as “Trial” order.
          Evaluate the performance of the new vendor or critical supply/service items and
              document results.

The Production Manager / Quality Manager has the responsibility and authority to perform the
following activities:

    Publish, distribute and maintain an “Approved Vendors List” (BF036) of approved vendors
      and subcontractors providing the critical supplies and services,
    Maintain a performance file for all vendors and subcontractors on the Approved Vendors
      Listing,
    Conduct evaluations of all vendors on the Approved Vendors Listing that have received a
      vendor corrective action. The evaluation is conducted in accordance with the provisions
      documented on the “Vendor Evaluation Form” (BF002).
    Distribute a Vendor Evaluation Form, (Form BF002) to all potential “Critical Supply” vendors
      for completion as a means of obtaining information relating to the subcontractor’s quality
      management system. Completed forms are retained in the vendors performance file.




                 "Printed copies of this document are uncontrolled and should not be assumed to be current.
                               The current version can be found @ http://luisa.combmet.com/iso"
Subject: Purchasing                                           Number: CMC-OP7400
Approved By: Fred Donofrio                                    Rev.: B
Date Approved: 3/1/12                                         Page 3 of 4



   6) Vendors on the Approved Vendor List that have had a corrective action issued against
      them, are evaluated quarterly on the basis of their ability to consistently:
    produce a quality product/service that meets the purchase order requirements,
    meet the delivery schedule,
    provide continuing support/resources, as required, and
    product performance

   7) Vendors who have been placed on “probationary” status are re-evaluated at the next
      quarterly evaluation after being placed on probation. Vendors on probation who do not
      receive an “approved” rating after the probationary period are subject to removal from the
      “Approved Vendor List”.

   8) On items delivered via UPS, Fed Ex or other means that are addressed directly to the
      person who issued the Purchase Order, that person shall follow the direction for receiving
      inspection as called out in paragraph 4.1.3 above.

   9) All vendors on the approved vendor list (BF036) as of 2/24/11 are granted a grandfather
      approval; a new vendor evaluation form (BF002) will be completed for any new vendors
      under consideration after 2-24-11.

Vendor Evaluations

Evaluations for suppliers of raw material, production supplies and subcontractor services
are conducted when product/service is found to be nonconforming as defined below.
Supplier Corrective Actions being issued are typically the trigger for vendor evaluations to
be performed more frequently.
If a supplier corrective action has been issued, then the supplier is placed on “Probation”
and is subject to having an evaluation performed quarterly until the chosen corrective
action has been identified as effective.
Effectiveness of a corrective action is accepted when there have been no reoccurring
issues for the initial nonconformance for two subsequent quarters.

Raw Materials

The Director of Sales and Purchasing has the responsibility and authority to perform the
evaluations for mill suppliers of raw material.

Evaluations are performed monthly for areas of On-Time Performance and Quality of
product. Nonconforming product is defined as any shipment that does not meet the full
specifications called out on CMC’s Purchase Order to the supplier.

On-Time Delivery - The Director of Sales and Purchasing monitors activities of the
supplier’s on-time delivery performance by tracking the date received vs. the promise date
of the material. Suppliers who consistently miss their on-time deliveries are subject to
having a Corrective Action issued to them.



            "Printed copies of this document are uncontrolled and should not be assumed to be current.
                          The current version can be found @ http://luisa.combmet.com/iso"
Subject: Purchasing                                           Number: CMC-OP7400
Approved By: Fred Donofrio                                    Rev.: B
Date Approved: 3/1/12                                         Page 4 of 4

Quality – The Director of Sales and Purchasing monitors activities of the supplier’s quality.
Monitoring of credits issued to the mills is performed with evaluation resulting in
Probationary status and/or Corrective Action when suppliers are found to have excessive
credits issued.


Production Supplies

The Maintenance Coordinator has the responsibility and authority to perform the
evaluations of suppliers of production related products.

Evaluations are performed on a supplier of production supplies when the supplying
source has delivered a nonconforming product. Nonconforming product is defined as a
product that does not meet the specification as called out on the CMC purchase order to
that supplier.

Subcontractor Services

The Manager of Technical Services has the responsibility and authority to perform the
evaluations for subcontractors performing a service for CMC.

For services provided by one of CMC’s subsidiaries, no evaluations will be performed.
Internal Corrective Actions and Control of Nonconforming Product procedures in place
will address these issues.

Evaluations are performed on a supplier of a subcontractor service when the supplying
source has delivered a nonconforming product. Nonconforming product is defined as a
service that does not meet the CMC specification as listed within the purchase order for
the service performed.

Records and reports of the vendor evaluations are presented to he Management Review
meetings.


Revision Log
Revision Date                Originator                     Description of Revision
  NR       01/20/11          R. Hinton                      Original document issued.
   A       2/24/11           M. Bilos                       Added section 9 under critical supplies and
                                                            services, grandfather clause.
   B      3/1/12             F.Donofrio                     Removed line item 2(PO sign off by PM),
                                                            Remove bullet 3 from para 5 (identify critical
                                                            on PO), added section for vendor
                                                            evaluations




            "Printed copies of this document are uncontrolled and should not be assumed to be current.
                          The current version can be found @ http://luisa.combmet.com/iso"