3.2 Supply

Given that one of the Management's main goals is to improve relationships with internal customers, we reached out to different businesses in order to better understand their situation and necessities and to find the best way to provide them with a better service. To that end, its important to provide consulting services to the business and thus help them better understand the current regulations as well assisting them in the optimization of management and contributing to a good decision making process to satisfy their needs.

Some of the main goals of these meetings were the strengthening of relations within different areas and the evaluation of specific operation issues of management of supply to the different reception desks.

Moreover, we put forward the need to carry out new studies of critical, relevant or obsolete spare parts and supplies using a follow up spreadsheet. The specifics of said spreadsheet shall also be used to follow up on the status of construction works and to control purchases.

We also executed Service Agreements while maintaining our close relationships with clients and foreseeing the need for planning and consulting regarding purchases. In this context, we gained ground with the areas of IT, Eating Facilities, Medical Services, Building Maintenance and Engineering.

We are currently measuring this area with the "Relationship Establishment Times" indicator. This indicator measures the amount of days that an order application stays in the Customer Relations area.

Amounts of the Purchase and Hiring Procedures

Normal direct Purchase up to $346,000

Extended Direct Purchase, up to $1,039,000

Abbreviated biddings without bid specifications, up to $2,079,000

Abbreviated biddings with bid specifications, up to $41,574,000

Public tender, over $ 41,574,000

Purchases under regulated exceptions: this applies to the exceptions set out by the TOCAF (Valid Text for the Financial Administration and Accounting Act, in force in 2015), regardless of the sum.

We are currently measuring this area with various indicators, such as "Compliance with Direct Purchases within 30 days", the evolution of which is shown below:

This indicator is used to calculate the SRV, the set goal was 62%. In 2015 we reached 66.68%, thereby surpassing said goal.Inventory Storage and Logistics (GDIL)

Area's functions:

Guaranteeing the availability and safekeeping of the materials that other areas of the company grant to GDIL in custody, with the best value for money.

Guaranteeing the managing of stock of all materials required by the company's different areas.

Amount of SKU and inventories.

We currently measure this area using various indicators, such as "Stock Reliability", which had the following evolution:

We use this indicator calculate the SRV, the set goal was an accumulated 80%. The accumulated results for 2015 are shown below. We reached 91%, thereby surpassing said goal.

This area also includes Imports and Exports.

This section carried out 600 import processes and 30 export processes in 2015.

GDIL Outreach:

Stock Management -MRP.

Storage units (La Teja, Oficinas Centrales, Manga and Plants outside of Montevideo).

Reception of Materials.

Inventory Control.

Imports and Exports.

Registration (catalogues)

GDIL Indicators:

Stock Reliability (SRV)

Stock Rotation

Follow up of purchases with pending deliveries

Contract Management is in charge of the follow up and control of purchases with pending delivery from every user area in ANCAP and aims to reactivate orders that are still required and the supplier has not delivered, while either maintaining the order in force or cancelling it due to expired needs.

In 2015 we kept clearing purchase orders with pending deliveries in SAP.

We worked on putting together a dynamic table for claims regarding said orders (pending delivery) so that information can reach different storages and users. In this way, they reply and Contract Management makes the corresponding claims.

Inventory of current contracts

We carry out a control and an evaluation of companies that outsource staff to ANCAP. We input data to the Contract Execution Control dashboard (outsourced staff) and HR is provided with the necessary information to deliver Christmas and school gift baskets.

A sample of all surveillance and cleaning contracts is carried for the user area (General Services Management) to have up to date information regarding its contracts so that the management of contracts can take place in due time and manner.

Goal: To have a real, up to date inventory of all current contracts in ANCAP and provide information to Customer Relations and Processing and Execution of Purchases regarding the state of contracts to begin the purchase process.

Number of companies outsourcing staff and executing contracts for the 2014 and 2015 terms:

Control of required documents

We are carrying out a sample with the abbreviated tender called for the hiring of maintenance for green spaces in areas of Montevideo and the direct purchase under regulated exceptions called for the hiring of staff for storage and administrative tasks in the Manga, Minas and Paysandú Portland Cement plants, requesting to awarded bidders the periodic documents required by the regulations regarding outsourcing. Control, filing and preservation of reference documents.

Goal: when the evolution of said sample takes place, we plan to regularly incorporate other current contracts, replicating said control.

RUPE (single registry of state suppliers) service point:

ANCAP was appointed as a RUPE service point and this is the area that centralizes said Registry and oversees the verification (document control) and activation of suppliers who wish to work for the State.

RUPE is the supplier information system used by state agencies, where all the updated information of the entities interested in entering into contracts with the State can be found.

Amount of suppliers whose documents were verified in 2015.

Supply Management

In 2011, we initiated the redesign of the structure of the Supply Management (formerly the Purchases Management) to improve the quality of the services it provides. To achieve this, the management started a path for the transformation of the Supply Service that ended in 2013 and resulted in the redesign of processes and areas. One of the main innovations of this transformation process was the implementation of a dashboard.

The dashboard arose from the need to obtain trustworthy information regarding the Management's activities, to compare data and to manage with the aim of improving the service's quality.

Initially, we collected data regarding direct purchases that resulted in the conclusion that an average purchase took 90 days. This number came as a shock, since we believed that purchases took less time. This particular issue gave way to the measurement of times and lead us to recognize the importance of managing based on objective information instead of perceptions.

For this reason, the "Supply Management" was created, which is made up of a multidisciplinary team committed to follow up the dashboard's indicators and to the constant development of new tools to continuously improve the management. Since its creation in 2012 to this date, the area has acquired new responsibilities and tasks. On top of everything that pertains the dashboard and the management, it is currently the area in charge of designing, administering and carrying out the follow up to the Management's budget for the Energy section. In 2014 it took on a new challenge: the implementation and follow up of indicators included in calculating the SRV. In 2014 this area also worked on the "Supplier Development Program", a project of great importance for the company and for the country, which aims at improving the performance and capabilities of current and potential suppliers so as to fulfill long and short term goals such as achieving a sustainable development, building a company for the future, operating more efficiently and purchasing at the lowest possible prices.

All of this is also part of the aim to get the Management certified. To do so, we need controlled and standardized procedures and, for this reason, its crucial to have the information needed to manage. In this regard, the dashboard plays a key role as it provides information for the management.

The dashboard is developed by the Supply Management area, which is in charge of calculating and following up on the indicators regularly. The dashboard is presented to every sector's key players each month so that it can then be transmitted to all the Management's staff. During the monthly presentation, besides presenting the dashboard, the results are discussed and analyzed, new proposals for improvements come up, etc. This shows commitment from the entire Management team to work to improve the provided services and to see this improvement reflected on the dashboard.

Some of the indicators included in the dashboard are:

• Times for establishing relationships with the client
• Fulfillment of direct purchases
• Backlog of direct purchases
• Bottleneck for direct purchases
• Duration of tenders
• Suppliers Ranking
• Evolution in amount of procedures
• Framework contracts
• Budget evolution
• Hours worked (staff availability)

Some of the specific tasks carried out during 2015 were:

• Design, control and follow up of the 2016 Supply budget
• We continued working on initiatives from the Supplier Development Program
• We held monthly presentations regarding the dashboard and its indicators for all of the Management's staff
• We revised processes and procedures (participated in the "Process Management in Shared Services" project)
• We participated in the GPL10 Forum, an initiative for Supply Indicators.
• We assisted the Management with reports for third parties (Deres, UTE, Maps - OCDE Project)
• We carried out a weekly follow up of non issued purchases
• We carried out a follow up of overdue files in the Management