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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.
Today's purchasing professionals are much better than the ones I ran into early in my career, but there is still room for improvement. A great purchasing executive must be a strategic and tactical thinker, also keeping their company's ESG goals in mind.
We can't start talking about purchasing without talking about corruption. This is my 54th June in industry, and I wish I could tell you that corruption in purchasing has diminished over this period, but I can't. One bright spot I know is a mill in Texas where a new purchasing agent eliminated all hats, pens, calendars, meals...any freebies provided by the vendors and suppliers. Sounds harsh? Once the camel gets its nose under the tent, there is no stopping.
No, this is not a retirement announcement. I am merely pointing out that we are done with energy for this month. We'll be back with more energy columns in December. If you haven't figured it out yet, Nip Impressions features energy two months per year--May and December. Energy is that important. As I have said before, it has been important for my entire career and will be far into the future.
I have been beating around this energy trends subject all month. It is time for me to get serious and give you some help. Are there any sure-fire energy solutions you can do now and not be required to back track later? Let us think about it for a minute and see what we can develop and what can be set up for continuous improvement.
At this point in time, we have forgotten that using electricity as a widespread energy form is an almost new experience. My own grandparents, for instance, were born (early 1880's) when electric lights were brand new and only in the homes of the rich in concentrated urban places like New York City. It was years before they experienced these in the US Midwest. While electricity brought many advantages and improvements to life, business and industry, it was not without its negative side effects, too.
Let's take a walk down nostalgia and fantasy lanes this week. I am so frustrated with energy issues; I see no other choice.
It is energy month again, and, quite frankly, I am getting tired of talking about energy matters. As I have stated before, the first energy crisis occurred about four months after I received my undergraduate degree. We have been talking about energy ever since, not only in our mills, but in life in general. At first, the issue was, do we have enough? At the time, known petroleum reserves were about eight years, which would have gotten us to 1981. Obviously that was incorrect. Later in my career, climate change became the issue when the powers that be decided we face global warming instead of global cooling.
When I was young, binge drinking seemed to be the personally destructive behavior of choice. In one mill where I worked, the staff was in the habit of having a beer blowout after every shutdown day. I don't know if that is still a widespread activity or not. Of course, drugs, especial fentanyl, are widespread today and kill many people. We have had this tragedy hit close to us. Today, however, I want to talk about overeating and weight. We all, including me, struggle with this.
What I am about to describe can happen anywhere...work or home. Most of us would say our life is more important than material goods. However, here in our neighborhood, two people have lost their lives in the last six months because, in a rapidly developing situation, they thought saving material goods was paramount. They didn't have time to think it through.
In recent years, companies have started emphasizing safety off their premises as well as at work, for anything that causes an employee to be missing from work is a cost. It is just a matter of how big that cost is.
As we start safety month, we could almost repeat the issues discussed last month in maintenance month. We'll spend some time this month talking about attitudes as well. Attitudes have a lot to do with safety.
We started off this month talking about obsolete equipment and processes left in place. This is not what I am talking about now. Here, I am talking largely about installed spares.
There has been a vast improvement in the selection of materials for new capital projects during my 53-year career. There are new materials, upgrades to old materials and a general view of specifying materials more suitable for the application now than in prior decades. If you have read me for any length of time, you know I like galvanized steel for all structural components (indoors and out) and stainless for nearly everything else where appropriate in pulp and paper mills. Granted, there a bleach plants constructed of titanium, but those are more the exception than the rule. I like plastic, too. CPVC pipe, FRP tanks are your friend.
Last week, we talked about the first step to better maintenance. That was cleanliness, as in wholesale cleanliness by removing dead and obsolete equipment. To me, the next thing after cleanliness is oil and grease--lubrication.
If you have taken an automobile to a dealer's repair shop lately, you have no doubt noticed how clean and neat the facility is. I have been wheeled into operating rooms in prestigious hospitals with more clutter and cobwebs than one will find in the typical auto dealer repair shop. Automobile dealers work at a high charge out rate, out of a rate book. They have a constant struggle between the profitability demanded by their owners and the resistance of the customers to high prices. The repair shop is a profit center. The repair services provided by the maintenance department in your pulp or paper mill are treated as a cost center, a cost center the mill does not want to own. Big difference from the automobile dealership repair shop. Perhaps this is at least one reason why pulp and paper mill maintenance centers are so unkempt and trashy.
Your mill has all sorts of motive equipment, from skid steer loaders to clamp trucks to over-the-road transportation providers. The outside suppliers who maintain this equipment have a tremendous amount of valuable information that can save you hundreds of thousands of dollars, sometimes on a monthly basis. The key is how you approach accessing this information.
At this point the decision to go electric in your motive equipment or trucks is an easy one. If the vehicles are used for short range and there is charging time, go electric if it makes economic sense. For everything else, don't even bother doing the calculation.
A lot of money leaks out of a company through the travel budget. It does not need to be this way.
It is transportation month and I will be the first to admit that this column will likely not make you any money. But occasionally, we should have a little education and fun without worrying about ROI, eh? Over the years, when I have brought up these matters with individuals, I get, "Well I didn't know that." So perhaps I can give you a little education, too.
If you are building statues or monuments, when the construction is done, you are done. We don't build statues and monuments in the pulp and paper industry.
If you have spent your career in the shelter of large, rated companies, you likely have not experienced this problem. Some explanation. By "rated" I mean a company that carries a rating by a Dun & Bradstreet, Fitch, or some other recognized rating agency. Most such companies fund their capital projects through their corporate treasury.
Very long time reader Dene Taylor wrote me a note after last week's column (Week of 9 January 2023 "First Number Uttered") suggesting the second number uttered is the time to complete a project. Mike Higgins offered a similar comment. This is so true and in line with the items I covered the first week of this series, the week of 2 January 2023. I have seen so many schedules blown over the years that they are uncountable. The worst are the rebuild schedules, for they are the ones that take an operating machine out of production for a period of time, endangering the customer base. There is a lot of pressure to make these as short as possible.
Capital project budgets suffer from "first number uttered" syndrome. Whatever project cost number gets to the executive suite first is the one that every decision hangs on. That number may arrive from a back of the envelope exercise, an article read in a trade publication, or some other unresearched source. The corollary to "first number uttered" is, "surely we can beat competitor x's reported costs." More projects have been doomed by these kinds of thinking than any other I have ever known, and remember, we're talking about my fifty-three-year career here.
What continues to amaze me are the stories of projects gone bad. Large, small, makes no difference, there are still for me, after nearly 53 years of watching projects from all sides, reports of disastrous projects. In this time period, experienced and learned people have brought forth courses, books and institutes to tackle the subject of project management, yet my side gig of being an expert witness in construction lawsuits continues to thrive. These are the top five reasons I think capital construction projects fail...
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