Does the specification differ needlessly from industry standards? Do suppliers offer industry-standard configurations from stock or assembled from stocked components? And, if the specified equipment differs from industry standards, what lead time will be needed for replacement or repair vs. replacement of a standard item?
The supplier's scope of separation equipment is more difficult to standardize than the supplier's scope of reactors and vessels. For filter systems or centrifuges, some aspects of the specification might look like a cafeteria selection of available features. Such a unit can be highly customized before it leaves the supplier's shop. In contrast, a reactor could be little more than a jacketed vessel when delivered for installation.
The procurement representative should know the equipment, at least its basic requirements and purpose. Discuss how material feeds into the unit, and how product and/or byproduct is removed. What equipment is upstream, what is downstream, and what function does the unit perform?
Procurement might suggest alternative configurations of the same type of equipment such as a belt filter instead of a rotary vacuum filter ," or alternate approaches to accomplish the same function such as a pusher centrifuge instead of a nutsche filter. Procurement will view the equipment from a commercial perspective, and might know of alternative approaches that can be applied more easily to the commercial-scale work. Clearly, these options will be out of the question if procurement is not involved until the commercial equipment is specified.
If procurement is a centralized function, your procurement consultant might be in the best position to tell you who in your organization has recently purchased or repaired similar equipment. He also can help you find specialized expertise within your company or through an available process consultant who can help you obtain optimum project results.
Knowing the market
Because you do not return year after year to the capital equipment market for repetitive purchases, it is not possible to keep up with latest developments and new participants without relying on the expertise of others. Procurement will provide knowledge and familiarity with the directories and buyers' guides that support your requirements.
Your procurement consultant might have attended recent exhibits of capital equipment, or filed the latest documentation of the major exhibits. He or she also might be aware of any organizations that attempt to coordinate certification or standards throughout the industry. If the work crosses international boundaries, procurement might be more familiar with codes and certifications required in different countries.
Knowing the supplier
Once you agree on a narrowed field of suppliers, it is time to learn more about them.
Ask your consultant to obtain information on their current financial performance. How did they get into the current business? Many firms can tell a concise and interesting history of their involvement and evolution into their current work. Their history will help you understand whether you are dealing with a blacksmith or a metallurgist. It also will help you understand if the supplier emphasizes process expertise, fabrication expertise or both. For example, some manufacturers have specialized in filtration media, while others have excelled in mechanical systems to control mass flow.
Understand the prospective supplier's organization. Determine what he or she will perform in-shop vs. what will be subcontracted. This will help you understand where he or she could surrender control of the schedule. Look for any interruptions in work schedules such as vacation shutdowns, holiday weeks or even opening week of hunting season.
At what level do quality assurance (QA) and production personnel report to the same office? How is the quality assurance function staffed and organized? What credentials do production personnel and QA personnel typically attain, and what expertise do they bring to the function? Are code compliance requirements typically written into manufacturing procedures? Are outside inspectors and auditors routinely on-site? How will the supplier interface with any inspectors or expeditors that you can elect to use on the project?
Knowing the warranty
Litigation is a no-win alternative for buyers and sellers. As much as possible, procurement will write specifications, warranties and remedies into the contracts in such a way that litigation is a very unlikely last resort. Try to determine which prospective suppliers are competent and willing to adhere to the specifications and to support the warranties and remedies. Understand what is excluded from the warranty. Sometimes corrosion protection is not included.
The warranty should be consistent with the specification. For example, if the equipment is supplied to a mechanical specification, do not hold the supplier responsible for technology and performance. And if you are buying technology, do not settle for a warranty of workmanship only. In addition, the supplier of technology or proprietary equipment should be required to warrant that use of the system will not infringe on a competitor's design.
Specify the warranty period according to first use, not delivery. For filtration equipment, do not rely on preliminary startup testing, which might be performed with clean liquids that will not challenge filtration equipment.
Knowing payment practices
Capital equipment often requires progress payments. Buyers prefer to pay after delivery, but not all suppliers can support the buyer's preferred approach.
Payments should be contingent on milestones, not the passage of time. And payment amounts should not exceed the value of work furnished to date or the supplier's expenses to date.
The purchasing contract should be written so that progress payments establish ownership of technology and materials. If the supplier should go out of business, therefore, debate about the ownership of drawings furnished to date or the materials purchased for the job might be reduced.
The contract should specify that materials will be segregated and labeled as property of the customer by name. If the buyer is willing to provide early progress payments, the supplier should be willing to delay final payment until acceptance, which is clearly defined in the contract.
Major purchases require a high degree of expertise that might challenge an inexperienced buyer. Recognize that he or she can boost the chances of success for the overall project by performing the procurement function well. And recognize that the procurement function involves any activities linking the using community with the supplying community.
To make the right filtration and separation equipment available to the client, your consultant might need to help an existing supplier find a way to correct current problems. Do not hesitate to look in new places.
Skates is a procurement associate for Voridian, a division of Eastman Chemical Co., Kingsport, Tenn. Contact him at email@example.com.