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Laura and I were on vacation in Nuremburg, Germany a few years ago. We arrived at our hotel, on the outskirts of town, fairly late in the evening. We wanted to go into town to eat dinner. There were two choices of transportation, bus or taxi. Laura headed for the bus stop. At that time of evening, the busses were very infrequent. Laura is the frugal one, I am a bit more of a spendthrift. We stood there awhile as I silently composed the argument I was about to present to her.
It went like this. On vacation, what is the most important currency? The answer is time. You have already spent the money to travel to a destination, book accommodations, and so forth. You are going, in this case, to be in town for one evening. Do you want to miss dinner by saving 0.01% of the total trip costs by waiting for the bus? We took a taxi.
In today's world, you may want to think long and hard about how the new or replacement piece of equipment (or other vital supplies) reach your mill. If you can afford to wait 12 - 18 weeks for those special refiner plates to arrive, put them on a ship. If you are losing production or quality every day because you do not have them, fly 'em, the most economical overall cost.
Now this may seem counter to my column last week, where I was arguing about FOB. The clarification to reconcile that column to this one is simple: sorry, one size does not fit all. Each purchase must be considered in the whole context of what is right for your mill or project in today's environment.
If you are a capital projects manager, yes, this means your job just got more complicated. There are some items that cannot be flown for they simply will not fit in the largest freighter aircraft. As demonstrated by the press roll story I previously related, I don't think you will run into a weight limit, however.
So, before you order, talk with your supplier, get a realistic delivery date, jointly choose a method of delivery and then ask for the item(s) on FOB terms based on that method of delivery.
The big Dutch shipping companies, such as Maersk, are currently buying freighter aircraft. We should take a cue from these specialists and adjust our thinking. Not only thinking just ships, but look holistically at your project and see if, overall, it is costing your project or your company money to wait for a ship.
You don't want to miss dinner, just because you erroneously chose the wrong method of transportation.
Be safe and we will talk next week.
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