Procedure and Guideline for defining, recording, monitoring and implementing optimum Share of

Business (SOB) for components supplied to GCL.

Objective: -

This procedure is prepared to have a clear visibility of optimum Share of Business (SOB) while releasing
delivery schedules to GCL suppliers. Necessity is felt to have a written down document to define process
for SOB definition, SOB monitoring, specific responsibility and saving realization.

Methodology: -

Share of Business (SOB) will be defined as & when required on following events: -

 New Part Development

 Alternate Source development
 Effect of any major price change during the quarter
 Cost Optimization

SOB for the listed parts would be derived by SS buyer based on Basic price, delivery terms, payment terms,
geographic location of user plant, quality rating, inputs from SCM Team and management commitment.

SOB will then be reviewed with approvers as defined as per below matrix subsequent to approval will be
amended in the system.

SOB Definition/Change Mechanism: -

Initial SOB definition in system (MEQ1) would be done by SS buyers. However only Pricing Cell would be
authorized to change/modify SOB in system. Buyers requesting change in SOB need to provide approval
copy as per below matrix to Pricing Cell.

SOB DEFINITION SAP AMENDMENT

CASE APPROVER 1 APPROVER 2 APPROVER 3
RESPONSIBILITY RESPONSIBILITY
First Time SS commodity
SS Head NA NA SS
definition manager
SS commodity President
With + ve impact SS Head Pricing cell Pricing Cell
manager (MFG & SCM)
SS commodity President
With – ve impact SS Head Pricing cell Pricing Cell
manager (MFG & SCM)

Once SOB is approved & the same would be entered in SAP (transaction code MEQ1) as per responsibility
defined above.

SCM to follow schedule lines generated in SAP through MRP, except in the exigency conditions.

SOB Compliance would be reviewed on a quarterly basis with SS Head/ Procurement Head/ Corporate
Purchasing Head & President SCM & Manufacturing as below: -
SOB Review Mechanism: -

 SOB compliance review would be chaired on a quarterly basis by President (MFG&SCM) and with
Head SS, Head CP, and Head SCM.
 80% of top dual source BOM items from all BUs would be considered in scope of the review.
 Only Items having variation greater than +/-10% between defined SOB and actual receipts during
the quarter would be discussed in details.
 Appropriate actions would then be taken to minimize the impact/modifying SOB/others as per
the decision in the meeting.

Kindly note this procedure overrides any other verbal/non-verbal instructions/practices currently being
followed on SOB

Terms:-

SOB Share of Business

SS Strategic Sourcing

CP Corporate Purchasing

Date: - 2nd Feb 2018