Thomas Industrial Library

Parts vendor Selection Basics

The issue of Parts Vendors for Shutdown situations is, can you count on what they promise you? A few dollars saved is nothing compared with a missed delivery window. The same vendors should be used for routine purchases as for shutdown purchases. They should be brought into the process and should consider having representatives sitting in on some of the shutdown meetings. If they are in the loop they can intelligently stock up to support the shutdown needs.

If the contract for spares or materials exceeds $50,000 for a single shutdown, and the potential firm is small, the financial status of the organization should be reviewed. This would include a Dun and Bradstreet (credit) report, trade references, bank references, financial situation of owner (or annual report if public). In short, does the firm have the financial clout to support you and complete the shutdown work?

Review the proposed terms of sale in detail. What is the published return policy, stock balancing policy, warranty policy, and shipping/delivery/pick-up policy? Are there any incentive plans (plus any informal deals they have offered your firm)? The return policy is particularly important. It is common practice to over order materials for shutdowns, just in case more are needed. The return policy then takes on increased importance.

If the vendor is new to you, ask for some non-competitive customer references. Ask the customers about delivery, returns experience, stock situation, accounting problems and accuracy. Ask how are the counter/phone people to work with. Is Internet ordering available?

For large, expensive items more intensive management might be required.

Some Special Functions

Questions for selecting a component or other asset rebuilder

q Is the component updated to the latest engineering revision of the OEM (Original Equipment Manufacturer?

q Does the OEM certify the rebuilder?

q Is the component rebuilt to OEM specifications or known to you to be better than OEM?

q Can the rebuilder give you an analysis of why the component failed, and do they keep records on previous rebuilds of the same component (particularly large components)?

q Will the rebuilder stock your requirements on a consignment basis?

q On bulk works, can the rebuilder ramp up to rebuild a mass of items quickly?

Make versus buy (decision by planner, purchasing, fabrication manager or shutdown manager

Generally the project manager, in consultation with the maintenance department, makes the decision whether to make or buy a specific part. The decision to make or buy a part depends firstly on the cost comparison and secondly on the availability of the part. Some parts have to be made because the OEM is out of business or the lead-time is both long and unreliable. There are two make versus buy options. One is to find a shop that has the capability to build the part (or even, if you are lucky, builds that item for OEMs as a contractor) or to build the part in-house yourself.

Questions in the make-buy decision include:

q Which method is cheaper?

q How long will it take by either method?

q Do we have the capacity to engineer the part and assure engineering compliance?

q Will the manufacture or engineering of the part displace other more important jobs (if we do it in-house)?

q Is there a liability issue that you do not want to take on?

q Can a core be found on the used market so that just rebuilding will serve instead of building from scratch?

If you decide to make the part, decisions will have to be made:

✓ Who will do the engineering?

✓ How much time is needed for each step of the process?

✓ It there any special liability?

✓ Do we use in-house manufacturing or a fabrication vendor?

If we buy the part:

✓ Do we go to the OEM (Original Equipment Manufacturer- this is usually the easiest but not always), or to distributors?

✓ Should we check used sources, sister plants, or other plants (outside our system)?

✓ What is the delivered cost?

✓ What is the solid lead-time?

In either event, should the part be stocked or bought specially for the shutdown? If we make them or have them made, can we sell a few to sister plants (or on an EBay auction)? Adding a few pieces to the order dramatically lowers the individual price.