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Management Side
Week of 19 June 2023: Let's talk about Purchasing, Part 3

Email Jim at jim.thompson@ipulpmedia.com

If I am being a bit hard on purchasing this month, it is because I often see purchasing as a silo in our mills and corporate structures. Purchasing is often thought of as price, terms and conditions.

There is a lot more that purchasing can do for the mill. It is not all about pricing, terms and conditions.

A true story told to me by a doctor blade salesperson. He made his usual stop at a mill that was a current customer. He was told purchasing wanted to see him. He went to purchasing.

The purchasing agent chewed him out for missing the delivery of a doctor blade the mill needed. He was very gracious to the purchasing agent and said that if they would keep the doctor blade caddy (already on the mill site) full, they wouldn't have this problem.

The purchasing agent asked what to do.

The salesperson told him he would go out and inventory the caddy cabinet and see what was missing.

Reporting back to the purchasing agent, he notified him that they needed about $150,000 worth of blades to have a complete inventory. The purchasing agent ordered them on the spot.

The salesperson told me that this happened many years ago and the mill still had not used about half the blades they bought that day.

Mills are short on personnel these days. Nothing new, they have been short on personnel my whole career. However, I have a suggestion. What about putting the mill's process engineers on a six-month rotation, working in and reporting to the purchasing department? Not the new ones, fresh out of school, but ones who have been around for about a year or so.

If these folks sit in the purchasing department, they will bring their production experience to the purchasing department, helping them make better purchasing decisions. When they rotate back to the mill, they will bring back to the mill the knowledge of how the purchasing decisions and processes work.

Overall, the mill will achieve a smoother, better and more economical result.

Be safe and we will talk next week.

________

Other interesting stories:


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Members Opinions:
June 15, 2023 at 5:05pm
Jim,
Have you discussed the need to at times limiting the number of contractors that are allowed to bid on some projects? I had 2 incidents happen at a power plant involving a painting and turbine dust blasting contractor bid packages. In the case of the painting contractor, purchasing wanted to get bids from over eight contractors. The plant responded that only 3 had the experience of working around high voltage in service equipment and purchasing should limit bidding to them. In the turbine dust blasting (although about 5 of the 10 that purchasing was wanting to bid had experience) purchasing was persuaded to limit it to the top 3 since even a minor mistake could cost a considerable delay and possible equipment damage resulting in a replacement power cost of over $250,000 a day at this large unit. Sometimes purchasing needs a little explanation of the realities of the importance of quality contractors.
Mike



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