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

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

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

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

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.