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It is procurement month at Paperitalo Publications.

The mill-related troublesome issues that can be attributed to the purchasing department are myriad and legion. This is not to say that there are not great purchasing agents, but this is a focal point of interaction with outsiders. It can lead to grand levels of loss through misunderstanding, incompetence and fraud. We'll leave the latter, fraud, for August, when the Pulp Rats will be back once again to discuss corruption. In the meantime we'll have plenty to do in the former subjects. I have seen many missteps in all of these areas.

I want to discuss two issues today, two issues that are critical even before one arrives at the content of purchasing documents.

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The first issue is this. Purchasing agents who procure daily consumables (starch, oil, paper chemicals and so forth) have a totally different mindset from purchasing agents who procure for capital projects. It is simply different work. Purchasing daily consumables is routine, for usually the same suppliers are dealt with over a long period of time, and the relationship with each supplier involves the same people over and over. The suppliers also know to have a bit of this and that tucked away conveniently close to the mill to cover any miscalculations and to avoid running out. Usually, little expediting is required and the mill naturally gravitates to suppliers that will keep them running. Shut the mill down once, supplier, and see how long it will take to kick you off the site.

Construction procurement is completely different. On a construction project of any decent size, it is likely the mill will be working with at least some suppliers with which they are not familiar. Hence, everyone has to become familiar with and comfortable with a mutually agreed set of terms and conditions. Carriers may be unfamiliar and equipment may be procured from literally anywhere on the globe. Customs clearance may be a problem. Expediting is a particular problem and expediting must be proactive weeks ahead of when items are needed--one cannot just look out the door, notice that something has not arrived on time and then start asking questions. Expediting has to be done on the entire schedule (engineering, manufacturing, transporting) starting the day the purchase order is signed. Untimely deliveries can cost the project millions of dollars. Federal Express has created an entire division to handle problems in this area--they call it "Custom Critical" (a great name if I have to say so myself) and out on the interstates in the US you can often see these "Custom Critical" trucks zipping along--they are very distinctive and have sleeper cabs designed for two drivers--they do not stop until the mission is completed.

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The other issue I want to bring to your attention this week is doing procurement from multiple sites. This is a no-no, especially on construction projects. I recently encountered a situation where procurement up to a certain arbitrary dollar figure was done on the mill site, and above that arbitrary figure, was done at a shared services site. There was no good reason for this and it contributed to a disaster of the highest order. Why? There is no dollar-defining amount as to what is important and not important in a construction project. No doubt all the million dollar widgets are necessary for startup, but so are some of the $5,000 ones. It all has to be brought together in a manner similar to a conductor directing an orchestra. The only way it can be done on two sites is that a high level manager is at one site and all the real work is done at the other. And yes, even in this day of the internet, this is true--purchasing agents need to sit together and talk to each other on construction projects.

What do you think? Did I miss anything? Please take our quiz on line this week and let us know your thoughts.

And, of course, you will have standard safety language covering a broad scope of safety issues in all your procurement documents, won't you?

Be safe and we will talk next week.

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