This article
introduces the
first step of the survey for your consideration.
Step 1. Selecting a Vendor
This is not step one because it is the most important step. Far
from it, in fact. Finding a vendor is just the first step in
getting the lubricant to the machine. Purchase agreements
precede supply and use.
In these 'single source' conscious days there is so much focus
applied to volume driven price leverage that the vendor
selection process is almost a tragedy. In my opinion, the truly
sad part is that many of these multi-plant, multi-national
agreements don’t add real economic value to anyone’s business,
often not even the supplier.
The strong local relationships with local community vendors that
are forged through many trips into the furnaces of emergency and
catastrophe together are brushed away with the stroke of a pen.
The maintenance planner is left holding the bag of promises and
a requirement to make it work. This is an unfortunate reality.
By striving to modernize current practices into a ‘Best
Practice’, including well thought out purchasing plans,
hopefully the maintenance organization can begin to impose the
kind of qualities that an agreement needs to support the broader
reliability objectives.
Vendor Selection:
There are four categories of questions under the topic of vendor
selection. They are:
1) General Criteria
2) Product Performance
3) Service
4) Logistical
Effective machinery lubrication requires more than selecting and
using a brand name lubricant. Product performance is not the
same between brands even if it is similar. Some brands try to
enhance the lifecycle, some try to enhance the wear resistance
capability, and some try to accomplish both. Still others focus
on producing a product that meet the application minimum
performance level at a rock-bottom price. Where products are in
fact the same, there can be a world of difference between local
distributors.
Some distributors much more like warehouse and delivery agents
than industrial suppliers. Obviously, these are different types
of business. Most big brand’s local marketers are small
companies trying to play by the rules and survive. No offense to
these guys as a group, but very few of them understand what is
occurring in the reliability movement today. Very few.
In the next few paragraphs I will try to explain the importance
of the items that are found on the survey. If you have any
questions, drop me an email.
General Criteria
List
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Criteria |
Obj Score |
Sub. Score |
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The
company/corporation maintains a multi-year lubricant
master supply agreement with one to three vendors |
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The
agreements for fuels, lubricants and process oils are
maintained as separate agreements |
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There is an objective and quantitative method in place
for selecting lubricant vendors |
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The
method used to select vendors incorporates discrete
decisions for pricing , product performance and service
(including, but not limited to, product delivery) |
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Individual plants are able to purchase outside of the
vendor agreements to meet delivery and service
requirements |
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The
company has aggregated the majority of its lubricant
consumption where possible into one vendor agreement |
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The
purchase agreement provides escalation caps tied to the
cost of raw materials (base oils) to prevent price
escalation |
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The
purchase agreement incorporates vendor penalties for
failure to deliver, or delivery delay for, any product
on the agreement |
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Product pricing represents no more than 1/3 of the
weighted decision criteria in the vendor selection
process |
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First of all, does
the site have a clearly defined practice for purchasing
lubricants? Lubricant purchases represent 1% ± of a plant’s
maintenance budget, but poor selection and application practices
may can cost the plant many times this value.
The process should be thoughtfully considered, defined, and then
documented for future requirements. Does the purchasing process
incorporate standards for product quality, service, delivery and
pricing? Are the expectations for each clearly stated so that
there is no ambiguity when a conflict arises?
Are lubricants purchased independently or as part of the
petroleum contract? Lubricants are not a commodity, and should
not be treated as such. The fuels and lubricant agreements
should be addressed separately to allow flexibility in lubricant
selection.
Is the corporate consumption consolidated to one agreement?
Probably so. After all, that is the point of a single-source
multi-site agreement. The volume leverage can produce healthy
discounts, but there still needs to be sufficient flexibility to
allow the sites to purchase products outside of the brand. When
a purchase agreement is to constraining (all one brand or off to
the guillotine!) then the reliability engineer is limited on
available resources to tap in his pursuit to deliver the one
truly valuable product that maintenance has to offer: productive
time.
Most agreements contain escalation clauses that enable an
orderly and incremental price increase. This is necessary to
protect the supplier, who typically does not control raw
materials costs. Most agreements also have a failure to deliver
clause, which protect the buyer. Penalties for 'failure to
deliver' should be steep enough that smaller private labels can
be considered a viable alternative to the multi-nationals. If
the penalty hurts enough to miss a delivery then they will find
a way.
Lastly, is the decision process balanced, giving ample
consideration to product quality and service? Contracts based on
price alone neglect the potential value that can be provided
when skillful vendors are shut out of the equation.
Product
Performance Checklist
|
Criteria |
Obj Score |
Sub. Score |
|
The
company maintains a lubricant specification system that
identifies lubricants by type, grade and performance
criteria |
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The
company maintains a product performance profile to
identify lubricants by type to suppliers |
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The
company maintains a high performance product profile to
identify advanced technology lubricants by type to its
suppliers |
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The
product profile includes information on viscosity,
additive type, product longevity (oxidation resistance),
and wear resistance based on standardized ASTM test
methods appropriate for each lubricant type |
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The
lubricant ASTM test standard includes values for minimum
acceptable product performance |
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The
product profile includes requirements for product
purity, including maximum limits for moisture and solid
particulate concentrations |
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Product comparisons are performed for products
designated for critical machine applications (turbine
oil, paper machine oil and grease, rolling mill oil and
grease, high temperature service products, etc…)
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There is a clearly defined process in place to measure
and grade product performance capabilities for each of
the candidate vendors |
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The
product performance score represents at least 1/3 of the
selection decision |
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The company should
have a technical purchasing standard for each type of product
that is expected to be used on-site. The standard should include
parameters for performance under standardized tests, and a
cleanliness standard. High performance products require a
different performance standard. High performance (aka ‘specialty
lubricants’) products should be an open and viable option for
critical applications.
Does the company conduct performance analysis on a cross-section
of the available products to see if those products match the
stated performance capability? Interestingly enough, while some
performance parameters are highly consistent between brands
(Viscosity, Viscosity Index), many parameters vary quite a bit.
Comparative testing should be performed, particularly for the
purpose of verifying that the high performance products are in
fact superior in performance to the ‘general application’
materials. The results should be weighted to give greater value
to the tests that are most important for machine reliability,
and then ranked in order of performance. Product performance
should represent at least 1/3 of the reason to select a vendor.
Service Criteria
Checklist
|
Criteria |
Obj Score |
Sub. Score |
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There is a clearly defined process in place to grade the
service capabilities of candidate suppliers |
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The
process to grade service capabilities is quantitative
and objective |
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The
service grade for each supplier candidate incorporates
scores for both lubricant manufacturer and local
vendor/delivery organizations when they are separate
organizations |
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The
service grade for each production sites’ local vendor is
taken into consideration in the vendor selection process |
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The
service grade for each local vendor includes the
lubricant manufacturer's score of that vendor's internal
product handling practices |
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The
vendor provides documentation for cleaning of any
semi-bulk containers that are returned to their physical
plant for refill |
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Similarly, the
vendor’s collective service capabilities should be measured,
weighted and scored in order of best to worst, and this score
should also represent 1/3 of the final decision.
Does the purchasing group have an organized way to characterize
the ‘business qualities’ of the local vendor? Lubricant users
are married to the local vendor for the term of the purchase
agreement. It makes sense to learn about the vendor, and in
particular what their designated manufacturer’s think of their
operations. Is the local vendor’s bulk handling and supply
rating (conducted by the brands that the vendor is licensed to
supply) included into the vendor service rating? Does the vendor
own the ‘can-do’ attitude toward their clients that is a
necessary ingredient to overcome difficult circumstances?
Lastly, is it clear which company has responsibility for each
aspect of the total service obligation? Things like
responsibility to clean totes between turns can easily get
overlooked.
It is the local agent that truly represents the product. If the
service capacity is poor then the net service experience is
going to be poor. Regardless of their sincere intentions, the
national service folks will have difficulty responding in a
timely fashion when the chips are down.
Logistical
Criteria
|
Criteria |
Obj Score |
Sub. Score |
|
Site
lubricant requirements have been optimized to limit
product purchases |
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Site
lubricants are purchased in bulk and semi-bulk
quantities where practical (≥ 5 drums or more a given
product per year) |
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Consolidation into
fewer products and into fewer containers are two legitimate
logistical points of interest. Consolidation is good for a
variety of reasons, not the least of which is the option to
purchase in low cost semi-bulk and bulk quantities.
Consolidation can
also improve simplicity and reduce the risk of mistakes
occurring from having too many options. Consolidation can also
improve the nature of lubricant cleanliness and limit spoilage
concerns.
When feasible,
products should be narrowed to as few of a given type (ISO 46
AW, ISO 220 EP, ISO 32 R&O, etc…) of product, and then the
number of containers in ‘open stores’ should be consolidated as
well. This is a convenient opportunity to purchase in small
bulk containers (5 drum qty, 3 drum qty) if the container is
likely to be emptied with normal use during a given 12 month
period.
There are arguably
more items that could be included in a logistical consideration
score, but are more closely associated with other areas of the
survey, and will be handled there instead
Summary
Selecting a
supplier shouldn’t, but often does, boil down to the best sales
pitch and the best price. This occurs when engineering is
precluded from the opportunity to, or abdicates a responsibility
to, assert reliability centered concerns into the process.
Click here to participate in the online benchmarking survey.
In 10 months, at the end of the process, you will have a fully
objective and qualified assessment of the state of your plant
lubrication practice.
Experience tells
me that you will be surprised at the outcome once you begin to
consider all the ways that the lubrication program can influence
reliability.
If you have any questions don’t
hesitate to send me an email at:
mjohnson@amrri.com. I
would be pleased to help if I can.
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