AVO New Zealand

06.02.01.01

All purchases of the following materials or services are conducted via an AVO New Zealand Purchase Order Template Form:

• Capital Equipment Items (A prior authorization by the Managing Director is required, via a Requisition for Supplies Form);
• Proprietary Stationery Items;
• Printing and Artwork for customised stationery items;
• Printing and Artwork for promotional material;
• Advertising - consumable items;
• New materials for the Production purposes, sub assembly items for the Factory Operation (with the exception of those items addressed in Section 06.02.02), and production prototyping purposes;
• Automobile servicing over $200;
• Computer System Software Support.

06.02.01.02

Purchase Orders are prepared on an AVO New Zealand Purchase Order Template Form. Purchase Order numbers are derived sequentially from Master Purchase Order File Index Sheet held in the Christchurch Office. Only one Purchase Order File is in operation at any one time.

06.02.01.03

All relevant details of the materials or service required are entered on to the Purchase Order form and must include:

• The Supplier's full name (where practicable, both the registered and trading names, should they be different);
• The supplier's full box/street address, as applicable;
• A contact name or position at the supplier, as applicable;
• A clear statement of the quantity required;
• A clear description of the material or service required.
• A price. If firm prices are not available, state an estimate furnished by the supplier. Refer clearly to any quotations or estimates given i.e. include date, person and reference (if any);
• A statement covering the responsibility for exchange rate variations, if applicable;
• A clear statement as to any discounts and the INCOTERMS that apply;
• A clear statement of the freight method preferred, including if applicable details of any nominated freight company or quoted freight figures the may have been furnished by the supplier at the quotation stage;
• Any relevant special terms and conditions, such as required delivery dates or specific technical features that depart from standard packages.
• A concise statement, entered only on the Master Purchase Order File Index Sheet, of the date the purchase order is uplifted, a general description of the ordered item, and the customer to which the ordered item is destined. Items ordered for stock are recorded as such instead of a customer name.
• The Master PO File index also records relevant details of foreign exchange contracts applicable to the order and the date of order acknowledgment by the supplier.

06.02.01.04

Each individual order is reviewed and authorised by one of the following people:

• Managing Director;
• Commercial Manager;
• General Manager.

Orders for office stationery up to NZD 200 in value, and equipment calibration up to NZD 400 in value are authorised by the Office Administrator and Service Co-coordinators, respectively.

06.02.01.05

Orders are either faxed, emailed, posted, or hand-delivered to the supplier and both the delivery method, date, and sender's initials are recorded upon the Purchase Order Form prior to filing.

06.02.01.06

All verbally-placed or emailed orders or emailed order notifications are confirmed to the supplier in writing via a Purchase Order Form clearly labelled with the words "Confirmation of our telephoned/verbal/emailed order (Ref ....) of (Date). Please do not duplicate".

06.02.01.07

Amendments to an existing order are conducted as follows:

1. Requirement to add to an existing order: Treat as a new order
2. Requirement to decrease the quantity or all or part of an existing order or to make any other amendment: The supplier is advised of this via the raising of an amended order, so designated by using the original order number followed by the words: "-Amendment X". The amended purchase order will also clearly identify the amendments made to the original order.

06.02.01.08

Order acknowledgments from the supplier are placed in the master purchase Order File and noted on the master Purchase Order File Index Sheet. Pricing and quantities of the acknowledged order are compared by the relevant Product Manager for accuracy against the original order. Discrepancies are advised to the supplier in writing and a new acknowledgment sought.

06.02.01.09

Non urgent orders may be written on a Purchase Order Form and posted to the appropriate supplier.

06.02.01.10

A copy (or original, as the case may be) of the Purchase Order is permanently affixed in the Purchase Order Book with a clear marking as to the method by which the form was sent to the customer and the date of dispatch to them.

06.02.02.01

On occasion, supplies for the Production Operation that are not deemed appropriate for purchasing directly from outside suppliers (as per 06.02.01) are acquired from the AVO New Zealand Warehouse Stock.

06.02.02.02

AVO New Zealand regards, for stock management purposes, the Warehouse facilities of the Production Operation and the Christchurch Warehouse as being one-in-the-same. The Production Operation conducts all procedures of stock management under the overall responsibility of the Christchurch Warehouse Manager.

06.02.02.03

Certain goods, judged to be classified as "expendable items", removed as above, are recorded by the Christchurch Warehouse Manager (or his designated assistant) on a Stock Modification Form at the time of their transfer from the Christchurch Warehouse to the Production Operation. A multipurpose triplicate form, manually headed "Stock Modification" by the instigator in the course of filing out the form, , is used for this purpose. The quantity and type of goods removed via this form is checked by the Warehouse Person and verified by his initials/date in the "issued by" space on the form. The verified form is forwarded by the relevant Production Manager to the Christchurch Accounts Department. Expendable items comprise specifically of:

• Parts and accessories.

06.02.02.04

All raw materials other than "expendable items" used in the Production Operation, whether purchased by the Production Operation or acquired from Christchurch Warehouse, are accounted for and duly reported to the Christchurch Accounts Department for the appropriate stock control action.

06.02.03.01

All orders for stock are conducted via the AVO New Zealand Purchase Order Template Form.

06.02.03.02

The Purchase Order Template Forms is maintained as a template in the Word Processor of the Christchurch Office staff.

06.02.03.03

Purchase orders are not pre-numbered, they are allocated a sequential reference number from the Master Purchase Order File at the time of preparation.

06.02.03.04

All relevant details concerning the supplier and the materials or service required are entered on the Purchase Order Form. These details include:

• The Supplier's full name (where practicable, both the registered and trading names, should they be different);
• A full postal address;
• A contact name or position at the supplier, as applicable;
• A clear statement of the quantity required;
• A full and adequate technical description of the product or service required, including any part or code numbers that apply, a full technical itemization of any relevant included accessories (as applicable), any special non-standard requirements sought or previously negotiated;
• Where possible a unit price, stated in the currency of origin, and qualified by the reseller discount (if applicable) and the pricing / INCOTERM-based delivery terms (e.g. FOB, C & F, CIF, EX WORKS). Any special discounts or pricing packages negotiated are fully referenced. Should the goods not be able to be priced at the time of the order, the words "At Best Price" are placed after the description. Should pricing for the goods have been derived from a quotation or correspondence from the supplier, a reference to that quotation / correspondence is included;
• If import duty is applicable, the percentage amount is entered as a suffix to the form labeled: "Tariff", this information being gleaned from the "Customs Tariff of New Zealand" and sourced from our approved Customs Broker.
• A full delivery address, including (for overseas suppliers) the full address of the AVO New Zealand approved Customs Brokers;
• A full specification of the method of freighting, the freight company to be used being added where appropriate. Should pricing for freight have been derived from a quotation from the supplier, a reference to that quotation is included. Unless specifically noted to be an exception, suppliers are always requested by us to prepay freight, the following phrase being added to the order after the listing of the required goods "Please Prepay the Freight and Charge to our Account";
• Insurance on imported goods is covered by an AVO New Zealand open marine policy and suppliers are thus advised not to insure goods;
• The terms of payment we have negotiated with the supplier (these being recorded in the individual agency files held in the Christchurch Office), or any special terms we might have secured on that occasion.
• A concise statement, entered only on the Master Purchase Order File Index Sheet, of the date the purchase order is uplifted, a general description of the ordered item, and the customer to which the ordered item is destined. Items ordered for stock are recorded as such instead of a customer name.
• The Master PO File index also records relevant details of foreign exchange contracts applicable to the order and the date of order acknowledgment by the supplier.

06.02.03.05

Stock Orders are reviewed and approved by the relevant Product Manager prior to being submitted to either the General Manager or the Managing Director for an authorization signature.

06.02.03.06

Orders are either faxed, emailed, posted, or hand-delivered to the supplier and both the delivery method, date, and sender's initials are recorded upon the Purchase Order Form prior to filing.

06.02.03.07

All verbally-placed or emailed orders or emailed order notifications are confirmed to the supplier in writing via a Purchase Order Form clearly labelled with the words "Confirmation of our telephoned/verbal/emailed order (Ref ....) of (Date). Please do not duplicate".

06.02.03.08

Amendments to an existing order are conducted as follows:

1. Requirement to add to an existing order: treat as a new order
2. Requirement to decrease the quantity or all or part of an existing order or to make any other amendment: The supplier is advised of this via the raising of an amended order, so designated by using the original order number followed by the words: "-Amendment X". The amended purchase order will also clearly identify the amendments made to the original order.

06.02.03.09

Prior to the act of filing in the Master Purchase Order file, if necessasry a copy of the Purchase Order is sent to the relevant freight forwarder /Customs agent (ref section 06.02.03.14) and the method of sending the copy, the date, and the initials of the sender are recorded on the original of the order.

06.02.03.10

If using the "Purchase Order" module in Prophet the nominal delivery times for standard stock items are: ###### SEE OTHER NOTES ########

06.02.03.11

06.02.03.12 Delivery Status of Orders for Stock

a)

Order acknowledgements from the supplier are placed in the master purchase Order File and noted on the master Purchase Order File Index Sheet. Pricing and quantities of the acknowledged order are compared by the relevant Product Manager for accuracy against the original order. Discrepancies are advised to the supplier in writing and a new acknowledgement sought.

In the event of a significant discrepancy a CAR is raised.

b)

##### The arrival details of Stock/Indent Orders placed on overseas suppliers are entered in the "Enter/Edit Purchase Order" sub menu of the Prophet Package, overwriting the date originally entered in Section 06.02.03.07. #######

c)

Delivery Status of orders pertaining to imported goods may be ascertained at any time by reference to the Suppliers Order Acknowledgement or appropriate Product Manager.

Outside that accessibility, delivery status is obtained by a telephone or written request to the Christchurch Sales Office. Response to a delivery request is within half a working day and is conducted as quickly as practicable.

06.02.03.13 Methods of Payment for Orders

Payment terms with suppliers are held by the Christchurch Accounts Office who handle the processing of all payments. Payment to suppliers is deemed to be beyond the scope of the Quality Manual but is summarised below:

Four Methods of payment are used to cover orders raised as follows:

• Open Account (the most common method, applicable to both local and overseas suppliers);
• Prepayment (applicable to overseas suppliers only, the money being sent by the Christchurch Accounts Office to the supplier via Telegraphic Transfer prior to shipment date);
• Sight Draft (an on going agreement between our bank and that of our supplier whereby money is forwarded to the supplier upon presentation of a set of documents raised for each order placed upon the supplier);
• Letters of Credit (similar to sight draft but raised afresh per order. This is rarely employed and is handled on a case by case basis by the Commercial manager who instructs the Christchurch Accounts Office accordingly).

06.02.03.14 Customs Clearance of Orders Pertaining to Imported Goods

AVO New Zealand employs the services of approved Customs and Freight Brokers who contract to handle, on the company's behalf, the Customs clearance of all imported goods and their delivery to our nominated destination on the original order (06.02.03.04)

Should a door to door courier service be retained by either us or the supplier, the courier company attends to the Customs clearances and local delivery details unless otherwise instructed by the product manager responsible for those goods or a representative of the Commercial Manager.

06.02.04.01

All purchases of product servicing and calibration on either customer-supplied goods or AVO New Zealand stock items are conducted via the AVO New Zealand Purchase Order Template form.

06.02.04.02

All relevant details concerning both the service or calibration required and the item being repaired are entered on the AVO New Zealand Service/Calibration Form upon the arrival of the item for repair at the AVO New Zealand Christchurch Office-based National Service Centre. Essential details of the item to be repaired are also entered at that time in a Service/Calibration Repair Register Book maintained at the National Service Centre. At that time, a unique Work Order Number is taken from a sequential numbering system the Service/Calibration Register Book and entered upon the Service/Calibration Repair Form. The completed Service/Calibration Form is duplicated and one copy is firmly affixed to the item requiring servicing, the original copy being filed in the Service/Calibration register book with the original copy of the applicable Customer's Works Order. A tag bearing the applicable Works Order number is attached to the item until ultimately removed at the time of dispatch of repaired item.

06.02.04.03

The form is filled out and authorised by the designated repairs coordinator, or his deputy. Only in the case of repairs to stock is the authorization of the relevant Product Manager required.

06.02.04.04

The completed Service/Calibration Form is sent to the approved serviceman or approved calibration lab with the job to be repaired. The duplicate copy is lodged in the Service/Calibration Register Book.

06.02.04.05

Upon completion of the service or calibration, the Service/Calibration form accompanying the goods is completed by the service provider. The returned form is used to prepare the invoicing process by the Service Coordinator and passed to the Christchurch Accounts office for the invoicing process. Upon completion of the packing slip phase of the invoicing process, the Form is returned to the service coordinator by the accounts office where it is then mated and filed with the original Service/Calibration form in the Service / Calibration register.

06.03.02.01

Unless a special requirement exists (for example a time constraint), authorised by the appropriate Product Manager, all goods ordered for stock or on behalf of a customer are delivered to the Christchurch Warehouse.

06.03.02.02

The receiving member of staff is the Warehouse Person or his designated Assistant. The receiving member of staff checks that the goods received are those stated on the Packing Slip. In the event that a packing slip is not supplied, a copy of the original order or customer invoice is substituted.

06.03.02.03

All items, other than service/calibration work, received are fully documented on either the packing Slip accompanying the Goods, or the Commercial Invoice, or copy of the original order, together with details of any obvious consignment damage or product discrepancies. The receiving person signs and dates the record made.

06.03.02.04

All items received in the course of service or calibration work are fully documented on either the AVO NZ service / calibration form accompanying the goods, or the commercial invoice, together with details of any obvious consignment damage or product discrepancies. The receiving person signs and dates the record made.

06.03.02.05

For the purposes of the practicality of eventual stock handling, non standard packaging descriptions are occasionally invoked during the completion of the process for the receipting of goods. When this practice is employed, the revised descriptions/quantities equate to the actual total number of items received.

06.03.02.06

The completed receipting documentation is forwarded to the Christchurch Accounts Department for processing.

06.03.02.07

Damaged, incomplete or non-conforming product is placed in an area of the Warehouse clearly marked "Product Isolation Area" and tagged with a copy of the appropriate CAR Form should the problem be "significant". Further action is taken according to Section 14 - Corrective and Preventive Action of the Quality Assurance Manual. Where non conformance is of a minor nature, the same procedure is followed but with a suitably-annotated copy of the receipting documentation being substituted for the CAR Form.

06.03.02.08

Received goods are stored in appropriate and designated areas of the Warehouse at all times. Where practicable, goods are stored or shelved to promote stock rotation i.e. with older stock positioned so that it will be picked before newer stock at the time of dispatch. Apart from items in the "Non Conforming Stock" area all stock items will be in a "Ready to Sell" condition.

06.03.02.09

Perishable, limited lifetime and hazardous goods are clearly segregated and their date of arrival recorded on each package. The handling and storage of such goods is further detailed in Section 15 of this Quality Assurance Manual.

06.03.02.10

Where manufacturer's labelling of goods is inadequate for a full identification after being placed in their storage configuration and position, the goods are individually, clearly marked and labelled to permit reliable identification.

06.03.02.11

If a prior arrangement has been arranged to route a consignment of goods directly to an address other than AVO New Zealand Warehouse, the nominated customs agent separates the supplier's paperwork from the goods at the time of clearing as instructed on the original Purchase Order. The customs agent undertakes to deliver both the goods to the customer by the nominated means and to forward the relevant copies of the supplier's paperwork to the Christchurch Head Office of AVO New Zealand. On receipt of the paperwork, the Accounts Department raises a Goods Received Docket and stock control and normal customer invoicing procedures are performed.

06.03.03.01

The categories covered are described in Section 06.02.01.01. In all cases the goods/services are checked by the Warehouse Person / receipting person against the packing slip. Any variances, obvious transit damage or product discrepancies are noted directly on the Packing Slip. The receiving member of staff records the date of receipt and their name on the documentation. Any identified non conforming product is isolated in the Warehouse as described in Section 06.03.02.07

06.03.03.02

In the event that no packing slip is provided with the product or service, the Invoice or copy of the original order is treated as per the packing slip in the above paragraph, the provision of the correct product/service being verified with the following statement written directly on the Invoice:

"Goods/Service correct and as ordered.
Signed .............. (Originator)
Date : ............... "

06.03.03.03

The above documents are then further processed by the Accounts Department in the manner prescribed in Section 06.03.06

06.03.04.01

A multipurpose, triplicate form is used to conduct this process and is referred to as a Manual Packing Slip form when used for these purposes.

06.03.04.02

In the scenario of transferred goods being received at a Branch, they are accompanied by duplicate copies of the Manual Packing Slip Form. The receiving member of staff checks that the goods received are those stated on the Manual Packing Slip Form. All items received are fully documented on the other copy of the Manual Packing Slip Form. The receiving person signs and dates the form upon completion and returns it to the Christchurch Accounts office. The other copy is retained at the receiving branch.

06.03.04.03

In the event of any obvious consignment damage or discrepancies, the details are noted on the Manual Packing Slip form and the goods, plus both copies of the Form, are returned to the Christchurch Head Office where they are isolated in accordance with Section 06.03.02.07.

06.03.04.04

In the scenario of transferred goods being received at the Christchurch Head Office from a Branch, the goods are accompanied by the duplicate copies of the Manual Packing Slip Form. The receiving person checks that the goods received are those stated on the manual packing slip form. All items received are fully documented on the other copy of this form. The receiving person then signs and dates the form and sends it to the Christchurch Accounts Office for Inventory Control processing and billing.

In the event of any obvious consignment damage or product discrepancies being noted in the course of the receiving process, the details are noted on the Manual Packing Slip Form and the non-conforming product is isolated in the warehouse as described in Section 06.03.02.07.

06.03.05.01

The serviceman or calibration laboratory person completes his service description on the copy of the AVO New Zealand Service/Calibration Form sent with the goods and returns this document with the repair / calibration. The receiving member of staff checks that:

1. The repaired item is returned intact with the accessories booked in originally;
2. That the work performed is appropriate and adequately detailed;
3. That the Form has been completed as required by the serviceman.

06.03.05.02

Any items with identified discrepancies are isolated in the warehouse as described in Section 06.03.02.07.

06.03.05.03

The receiving member of staff completes the other requisite details of the Service/Calibration Form and passes it to the Repair Coordinator for the initiation of the invoicing process (See Section 15.04.01).

06.03.05.04

Upon completion of the packing slip phase of the invoicing process, the form is returned to the Service Coordinator by the Accounts office then mated and filed with the original service/calibration form in the Service/Calibration register.

06.03.06.01

AVO New Zealand regards, for stock management purposes, the Warehouse facilities of the Production Operation and the Christchurch Warehouse as being one-in-the-same. The Production Operation conducts all procedures of stock management under the overall responsibility of the Christchurch Warehouse Person.

06.03.06.02

Goods are received at the AVO New Zealand Production Operation by the Warehouse Manager or his designated assistant.

06.03.06.03

The receiving staff member checks that the goods received are those stated on the Packing Slip. If a packing slip is not supplied, a copy of the original order document or invoice is substituted.

06.03.06.04

All items received are fully documented on either the packing Slip accompanying the Goods, or the Commercial Invoice, or copy of the original order, together with details of any obvious consignment damage or product discrepancies. The receiving person signs and dates the record made.

06.03.06.05

All items received via the cover of a Stock Modification Schedule Form (refer Section 06.02.02.03) from the Christchurch Warehouse are checked at the time of up lifting as outlined in Section 06.02.01.

06.03.06.06

After receipt of goods into the Production Operation, subsequent procedures for handling the receipting documentation and any non conforming product are described in Section 06.03.02.

06.03.07.01

Finished goods are transferred from the Christchurch based Production Operation to the Christchurch Warehouse by a member of the Production Staff. The consignments are covered by a Waybill Form completed by the relevant Production Manager or his designated assistant in accordance with the Production Process Procedure Manuals. A MOORE-brand Rediform triplicate pre-numbered form R/MULTIBK3, suitably headed "Waybill Form" by the person processing the goods for consignment, is used as the Waybill.

06.03.07.02

With the exception that the waybill Form is substituted for the Original Purchase Order Form, the receipt of finished goods by the Warehouse is handled as per Section 06.03.02.

06.03.08.01

Purchase Orders are placed in a "Purchase Order Master File" until the arrival of the goods.

06.03.08.02

Supplier's Invoices are placed in alphabetical order of supplier in the Accounts Department "Incoming Invoices" File upon their receipt.

06.03.08.03

Customs Agent/Freight Forward Invoices are placed alphabetically in the "Incoming Invoices" File.

06.03.08.04

Upon receipt of the checked packing slip/invoice, the Accounts Department matches these documents to the appropriate Incoming Invoice. A Goods Received Docket is then completed detailing quantities, costs, and freight to arrive at a landed cost for each item received.

06.03.08.05

AVO New Zealand operates the Prophet Business Software Package and the Accounts Department is responsible for the administration of the package under the direction of the General Manager.

06.03.08.06

The Accounts Department calls up the "Enter/Edit Purchase Order" Sub Menu of the Purchase Order Menu, a full description of this procedure is contained in the PROPHET Operations Manual. Stock Orders, with the exception of the General Ledger items, are already entered on the package.

06.03.08.07

The "Enter/Edit Purchase Order" Sub Menu is supplied with the appropriate details of the incoming delivery and the package provides a vehicle for the Accounts Department to check the quantity of goods supplied. Actual quantities received, as well as landed costs, are then entered against for item against the details on the original order.

06.03.08.08

Any significant/unresolved discrepancies noted are recorded on a CAR Form and processed as per Section 14 of the Quality Assurance Manual, The originator is notified for either their approval of the variance, their resolution of the variance with the supplier or their approval of interim acceptance.

06.03.08.09

Resolution of variances is finally achieved when either the originator of the order accepts the variance and signs off the CAR Form, the supplier rectifies a pricing variance with an appropriate credit (accepted by the signature, on the CAR Form, of the orders originator) or when the supplier rectifies a goods/service shortfall, and confirmed by the signature, on the CAR Form, of the order's originator.

06.03.09.01

Purchase Order are placed in a "Purchase Order master File" until the arrival of the goods.

06.03.09.02

Suppliers' invoices are placed in alphabetical order of supplier in the Accounts Department "Incoming Invoices" File upon their receipt.

06.03.09.03

Customs Agent/Freight Invoices are placed alphabetically in the "Incoming Invoices" File.

06.03.09.04

Upon receipt of the checked packing slip/invoice, the Accounts Department matches these documents to the appropriate Incoming Invoice. If correct, the invoice is stamped with the AVO "Approval for payment" stamp and coded to "Purchases".