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Week of 17 June 2024: Procurement--Understanding the Legal Aspects

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Forty years ago, I was up to my eyeballs in a major rebuild of the paper machine where I worked. One day, a couple of months before the actual commencement of the shutdown for the rebuild, I got a call in my office.

It was a truck driver that was in the administration building. He had walked there from where he left his truck, about two miles down the road (no cell phones in those days). I went out to see what I could do for him. He took me to his truck. It was barely off the two-lane highway. One set of the trailer's rear axle tires were gone, and the wheel hubs were worn down to the axle. We are talking about two axles.

He had left the Port of New Orleans about three weeks earlier, and because of the overweight load, he had only been traveling by daylight; officers in all the states he traversed would not let him travel otherwise. There was one large wooden box on the truck that contained one of our two granite rolls (I know, you kids have never seen a granite roll; they had a propensity to explode but forty years ago they were state of the art). We had plenty of cranes and heavy trucks on site and he asked if we could come out and off load him.

I went to my boss.

"No! The contract includes freight for delivery to the mill. You go down there, pick up that roll and drop it, it will be on us!"

I gave the driver the bad news.

When I came to work the next morning, there was a large groove cut in the highway from where that truck had been sitting all the way to our delivery gate. With no other recourse, during the night the driver had dragged it up to our receiving gate.

Now, that driver was working for a lousy trucking company. They had not supported him at all.

But my boss was correct, too.

There's more. There were two granite rolls, one being a spare. The second one was late and missed the date that all parts were to be at the mill. We had a $10,000 per day penalty in the supplier's contract for everything, even one little bolt, that didn't make it to the mill by the agreed date. Except, it wasn't a tiny bolt that was late, but a 90,000-pound granite roll. The supplier asks for special dispensation since this second roll was theoretically a spare. My boss knew one word and it was, "No!"

The supplier chartered a 747 and flew one roll from Europe to the nearest major airport and trucked it to us from there. They still incurred $100,000 in late charges--10 days late.

Extreme example. Anticipate the legal aspects of your purchases, put them in the contract and then enforce them.

Be safe and we will talk next week.


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