Procurement of Goods Policy

General Policy

All purchasing for Richt International Inc (referred to as “Company” ahead) must be done pursuant to established guidelines, as outlined in this policy. The objective is to promote the honest and efficient procurement of all the goods and services Company needs, on the best terms and conditions practical.

All Purchasing Shall Be Done through the Purchasing Function

All purchasing of any type shall only be done through the purchasing function. From time to time, Company, through its purchasing function, may establish certain small amounts that can be committed by those outside the purchasing function. Currently, that amount is $2500. This low threshold is intended to be applied responsibly by those in Company and to facilitate purchasing of items where the knowledge and expertise of the purchasing function would not necessarily be required.

Some Purchasing Responsibilities May Be Delegated

From time to time, the Director of Purchasing may delegate certain procurement responsibilities to those in other departments. The criteria used will simply be that such delegation promotes efficiency and does not present a situation where the knowledge and expertise of the purchasing function is required. This can only be done in writing, and anyone operating under such an exception is required to observe any limits or procedures that may be established by the Director of Purchasing. At a minimum, the writing shall:

• Specify the name of the department head to which such authority has been delegated;
• Specify the general nature of the products or services that can be procured by that department head without further purchasing approval;
• Specify the minimum documentation that shall be required in all such procurements (those operating under this delegation must keep in mind that the basic company policy on purchasing requires that all significant procurements be evidenced by a writing that will allow the auditing of such procurements, and will provide sufficient documentation to justify payments to the vendors for the relevant goods or services);
• Establish a monetary limit which cannot be exceeded;
• Set a deadline where the authority will expire unless renewed by the Director of Purchasing;
• Establish a place, location, or manner in which the relevant documentation for such purchases shall be maintained;
• Establish and maintain a listing of each individual who has been authorized by the department head to interact with suppliers, and assure that such individual has read, understood, and acknowledged the receipt of our policy on gratuities from suppliers.

Maintenance of Database of Suppliers

The Director of Purchasing shall be responsible for maintaining a database of suppliers, and where thought appropriate, potential suppliers, and for each such supplier, the database shall contain information about the amount of money, in total, which Company has spent with such supplier. This information is Company confidential, but may be used by the Director of Purchasing in negotiations with suppliers, as well as selection of suppliers, to assure that Company is afforded the best possible prices, terms and conditions, and service in connection with its purchases.

This database of suppliers shall also include relevant information about the minority ownership of the supplier to facilitate Company’s goals of purchasing appropriate quantities of goods or services from minority-owned firms.

Relationship of Purchasing to Other Departments

It is recognized that many of the needs for goods or services will be based on work and responsibilities under the direction of other departments. The needs of those other departments for certain goods or services, including certain qualities and quantities of these goods or services shall be accorded great weight by the purchasing function. Similarly, in some situations, those who have specific needs will have knowledge of appropriate suppliers and may have certain preferences as to those sources. These also shall be accorded great weight by the purchasing function. On the other hand, those with needs for goods or services must also bear in mind that Company must always strive for the most efficient and effective procurement of the goods and services that may be required. Company must also manage our level of inventories of goods and suppliers so that we have what is required, when it is required, but that we do not incur costs of holding inventory that could be avoided with efficient procurement.

This policy does not attempt to specify any hard and fast rules as to how any possible differences between purchasing and the function of Company needing the goods or services should be resolved. Rather, it establishes a policy that the respective roles and expertise of everyone involved must be respected, and that all parties shall work together toward the common goal of effective and efficient procurement.

Should the need arise, the Chief Operating Officer of Company shall be available to intercede and assist in the resolution of any such differences.

Preference for Approved Suppliers

While Company is always ready to discuss purchasing goods or services from new entities with which it has not done business before, we also recognize that we can only purchase from reputable financially stable companies as well as those that share our desires for diversity, respect for the environment, legal and ethical conduct, and fair labor practices. Everyone in Company must also recognize that a certain amount of time and effort (which is often ongoing) is expended in making sure our suppliers satisfy our standards. The Director of Purchasing will, therefore, maintain a list of approved suppliers that Company has determined satisfy our standards. The Director of Purchasing is authorized to give appropriate preferences to such companies. The Director of Purchasing is responsible for deciding the degree of such preference, as well as for determining what other additional companies should be added to the list of approved suppliers from time to time.

Should the Director of Purchasing feel it is necessary or appropriate to remove a supplier from the list of qualified suppliers, the supplier so removed shall be given a reasonable explanation as to the reason for taking such action, and such reasons shall be documented and maintained in the relevant files. This provision is intended only to reflect our policy of treating all suppliers fairly and candidly, and not to create any “right of appeal” of this decision.

Preferences for Procurement on the Company Standard Terms and Conditions of Purchase

Company has designed a set of terms and conditions for purchasing that are printed on the back of company purchase orders. These terms and conditions are also available in digital form for procurements done in that manner. Company shall give preference to those suppliers who accept our standard terms and conditions. The degree of such preference shall be determined by the Director of Purchasing, in consultation with the company’s lawyers where appropriate.

Preferences for Procurement on Corporate Agreements

Company recognizes that some situations do not lend themselves to procurement using our standard terms and conditions. A specific corporate agreement with the supplier may be more appropriate. Such a corporate agreement can establish the legal terms and conditions that apply to the parties—leaving the specifics of each individual transaction to “releases” that may take the form of the company purchase order or the vendor’s standard sales forms. In such instances the master or corporate agreement shall be signed by both Company and the supplier, and shall state that its terms supercede those in any standard forms used by the parties, which shall be inapplicable. Such contracts shall be negotiated by the Director of Purchasing, with assistance as may be required from the company lawyers. Where such a master or corporate agreement exists with a supplier, the Director of Purchasing shall give that supplier the degree of preference thought appropriate.

The policy of Company is that no such master or corporate agreement shall preclude Company from purchasing goods or services from any other supplier. Any exception to this policy shall be approved by both the Director of Purchasing and the Company General Counsel, and either may bring the matter to the attention of the Chief Executive Officer of Company if thought appropriate.

Preference for Competitive Bidding

For all significant procurements, Company’s preference is for competitive bidding. In all such competitive bidding situations, the following general rules shall be observed:

 

1. In general, bidders shall be selected from the list of approved suppliers. Where this is not practical, any company not on the list of approved suppliers shall, even if successful in its bidding, not be awarded any contract by Company unless and until the Director of Purchasing conducts a sufficient investigation the results of which justify adding this company to the list of approved suppliers.
2. In general, competitive bids will be solicited from the three highest qualified suppliers known to the purchasing function. If exceptions are to be made, they shall be approved by the Director of Purchasing.
3. Each supplier will be required to submit its lowest and best bid initially. In general, no supplier will be told anything about any other supplier’s bid. Should there be a problem in the procurement such that the Director of Purchasing feels that any supplier misunderstood the requirements or made a mistake and that such supplier should be allowed to rebid, all other suppliers shall be allowed to rebid too. It is anticipated that this will be an unusual situation.
4. - When competitive bids are solicited, the bidders shall be given all the relevant information on which to base their bids, including both the technical, legal, and business facets of the procurement.
5. In general, Company will accept the lowest and best responsive bid. It is recognized that, in some situations, this may be a subjective decision as price is only one of the aspects of the bid to be considered. The Director of Purchasing is charged with the responsibility of making this determination—with advice from the Company General Counsel if the issues relate to the legal terms and conditions of the bids.
6. The rationale or business judgment involved in the selection of the winning bidder shall be noted in writing and maintained in the contract file.

Reverse Auctions

The company will only engage in so-called reverse auctions if they have been approved by the Director of Purchasing, the General Counsel, and also the Chief Operating Officer of Company.

Preference against “Evergreen” Contracts

Company may arrange for annual contracts with certain suppliers, with the anticipation that the relationship may be ongoing for a long time. However, in order to assure that Company reevaluates the supplier and the contract each year, Company has established a preference for contracts that call for some affirmative action to be renewed, and against the so-called evergreen contracts that renew automatically unless either party takes some action to cancel the contract.

Purchasing Responsible for Returns and Credits

Should it be necessary to return items shipped to us from any supplier, the purchasing function shall be responsible for handling the negotiations and discussions with the supplier relating to such returns, including any appropriate replacement or substitute shipments and/or any credits to which Company may be entitled.

No Procurement for Personal Employee Use

The resources of Company procurement department are intended only for the benefit of Company, and not for the personal benefit of any individual employee. Accordingly, the purchasing department and its personnel shall normally not be available for employees who may want to obtain some of the products or services of our vendors for their personal use.

The Purchasing Function Shall Handle Disposal of Equipment No Longer Needed In addition to its responsibilities for procurement, the purchasing function shall also be responsible for disposing of equipment or supplies (including furniture and computers) no longer needed by Company.

Director of Purchasing Responsible for Training

The Director of Purchasing shall be responsible for seeing that all procurement people in the department receive education and training that is appropriate to their role in the organization. It is anticipated that everyone in the procurement function shall receive ethics training. Legal, negotiation, and technical training shall be provided as appropriate under the direction of the Director of Purchasing.

The Director of Purchasing shall maintain a roster of all those in the purchasing function, which shows the training they have received, and the dates on which they have received it. The Director of Purchasing shall review this roster at least annually, and make necessary arrangements where it appears that additional training may be appropriate.

Policy Applies to Changes and Modifications

The provisions of this policy apply not only to initial procurements but also to changes and modifications. These shall be done only by authorized persons and documented to the same extent as the initial procurement.

Records

The Director of Purchasing shall be responsible for making sure that Company creates and maintains all appropriate records reflecting our procurements. To the extent that such records are created or maintained electronically, the Director of Purchasing shall be responsible for coordinating with the Director of Information Services, and the General Counsel if necessary, to make sure Company always has the documentation to allow audits of our purchases.

Recommendations and Publicity

Company will not generally recommend any supplier or the products or services of any supplier to any other customer or potential customer. Any records Company keeps about the performance of any supplier or the products or services of any supplier shall be treated as Company confidential information. Suppliers shall not be allowed to use the Company name in their advertisements in any way that might tend to indicate any endorsement or approval of the supplier or the suppliers’ goods or services.

Reporting Ethical Violations

Company has legal and ethical conduct policies that apply to everyone and, in addition, special policies aimed at purchasing people as they are often the “targets” of those who might seek favor with Company through gifts and entertainment. Everyone in the purchasing function shall faithfully observe these policies.

In addition, however, those in the purchasing function are required to report not only any actual impropriety, but any attempted impropriety from any representative of any supplier. Of course, such allegations can be sensitive and should be so handled. Any such reports should be made on a factual basis, and only to either the Director of Purchasing or the Company General Counsel.

All contracts with all suppliers shall contain a provision authorizing Company to cancel any and all contracts with such supplier in the event representatives of the supplier make any improper payments or furnish any excessive gifts or entertainments to any of our people, or attempt to do so.

Use of E-mail and Other Electronic Communications

As technology evolves, the people in the purchasing function will be using such technology in any appropriate way to facilitate our work. This includes e-mail, as well as any other electronic communication techniques now available or developed in the future. However, all purchasing professionals are directed to be aware of the potential for misunderstanding and embarrassment should e-mails be used carelessly or improperly. Each individual purchaser is responsible for their own judgment and discretion on how and when e-mail should be used in connection with discussions with suppliers.

Purchasing people are discouraged from using e-mail when the communications involve anything that is trade secret or confidential. To the extent this may become necessary, the purchasing person doing this shall be responsible for coordinating with the Director of Information Services to make sure appropriate encryption or other safeguards are used. Purchasing people may also use cellular phones, but use of such phones when the communication involves trade secret or confidential information is discouraged, as such transmissions may not be private.

Preference for Alternative Dispute Resolution

Company realizes that disputes with our suppliers may arise from time to time. Company policy is to attempt to resolve such disputes as follows:

• First, good faith negotiation between the parties, followed if necessary by an "escalation" of the matter to higher management in each organization, hopefully people not involved in the initial contract discussions.
• Second, should such good faith negotiations fail to reach a suitable result, Company policy is to carefully consider nonbinding mediation to attempt to resolve such disputes.
• Finally, should the informal means fail to provide an acceptable solution, Company and the supplier may pursue the matter either in litigation or in binding arbitration.

Company will attempt in good faith to include clauses that express this preference for alternative dispute resolution techniques in all contracts.

Company Intellectual Property Rights

Company intellectual property will often be an exception to this policy. Should we feel that a supplier is infringing any of our intellectual property rights, we may want the right to go into court immediately and attempt to obtain an injunction against this conduct.

We Are Willing to Share Cost Improvements

Company policy is to engage in a process of continuous improvement, or continuous cost reduction. Wherever practical, Company will include provisions in our major contracts that will encourage our suppliers to assist us in this regard. Where appropriate, such provisions may provide a sharing of the benefits of this cost improvement. Such provisions are generally drafted and negotiated on an individual basis, and the approval of the Director of Purchasing (and where appropriate the General Counsel) should be obtained.

We Think Reciprocity Is Bad Business

We recognize that some of our suppliers may also be our customers—and vice versa. However, our strict purchasing policy is not to consider the fact that a supplier is also a customer in any degree whatsoever. Our policy also prohibits creating or maintaining information that is directed at showing this information. Any instance in which a supplier or potential supplier appears to be attempting to gain some advantage by pointing out the purchases his company makes from us should be reported promptly to the Director of Purchasing.

Incorporation of Employee Safety and Health Requirements

We operate a drug-free workplace, smoking is not allowed except for designated locations, alcohol and firearms are prohibited, we do not tolerate sexual harassment or any other type of harassment, access to certain areas of our facility is restricted, and in certain areas, other safety or health requirements may apply (e.g., hard hat areas, etc.). While we recognize that those with whom we contract may have their own policies and views on these subjects, when our contractors come onto our property to do work, they must be required to comply with all of these requirements. Accordingly, the policy of the Company is to include in all such contracts provisions that require such compliance on the part of all contractors who come onto our property. Company shall have the right to terminate any contract where these rules are not observed.

Contact Us

If you have any questions about this Privacy Policy, You can contact us:

• By email: sales@richtinc.com

• By visiting this page on our website: https://richtinc.com/

• By phone number: +1-770-715-5415