Supply Strategy

Purchasing Plan for Penfield Inc.

Mission Statement:

Penfield Incorporated's Purchasing Department Mission is to provide cost savings to our corporate operations, while ensuring honesty, superiority and effectiveness as we achieve a top in class procurement process. Our teamwork is based on open cooperation within departments and creative solutions with customer-focused goals.

Vision Statement:

The goals of the Purchasing Department is to provide material and support at the best value for the entire company in a timely manner, and stimulate participation in Penfield Incorporated's process with current, new, and local vendors to continually reduce costs and provide value to its customers.

Goals & Objectives:

Penfield Incorporated's Purchasing Department goal is to maintain a continuous supply of goods and services for all departments of the company, ensuring delivery of an acceptable quality of goods and services in a timely manner at the best possible price. In order to attain these goals, Purchasing has the following objectives:

• Purchase goods and services for the company's use at the maximum end-use value per dollar spent, securing competitive bids when appropriate.

• Develop reliable alternate sources of supply to meet company requirements.

• Treat all prices and technical information submitted by suppliers as confidential in order to preserve a good business reputation and obtain competitive prices.

• Maintain liaison with vendors providing goods/services to the company, including the resolution of complaints regarding those goods/services.

• Maintain inventories of purchased goods so as to meet the use requirements of the company at the lowest possible cost.

• Verify that budgeting is available before making a commitment to purchase goods or services.

Because Penfield Inc.'s reputation and credibility are so important to maintaining good, long-term business relations, Purchasing insists on fairness and honesty in all transactions. At no time will Purchasing staff knowingly involve itself with deceptive or dishonest vendor practices.

Purchasing and Inventory Data from 2005

Metal Commodities

Steel 2005 Purchases On-hand Inventory Certified Supplier

Nucor $10,000,000 $1,000,000 Yes

US Steel $5,000,000 $500,000 Yes

Apple $1,000,000 0 No

*Dumpy $500,000 $10,000,000 No

Otto $100,000 $50 Yes

Command $150,000 $1,000 Yes

Roemer $2,000,000 $500,000 Yes

Total $18,750,000 $12,001,500

* Obsolete Inventory from 1995

Suppliers Continued

Copper 2005 Purchases On-hand Inventory Certified Supplier

Inka $5,000,000 $4,000,000 No

• There are other copper suppliers but the Old Purchasing Director was to lazy to get another supplier

Mechanical Commodities

Circuit Boards 2005 Purchases On-hand Inventory Certified Supplier

Northern $2,000,000 $100,000 Yes

Fast Boards $1,000,000 $50,000 No

Trostel $2,000,000 $100,000 Yes

Preco $1,000,000 $50,000 No

Total $6,000,000 $300,000

Fasteners 2005 Purchases On-hand Inventory Certified Supplier

Thruway $100,000 $500,000 Yes