Buying skills for the process engineer
05 July 2007
Eric Dawson continues his an occasional series on the role of the Process Engineer with a look the various skills involved in buying new equipment
The most expensive action that a Process Engineer will take is the procurement of capital equipment for the production line. Other decisions, such as methods of working and control of process variables are small beer in comparison. Yes, it's important to set the controls on the process and expensive mistakes can be made but they are correctable as soon as the problem appears. Buy the wrong equipment and you're stuck with it.
There are certain phases to the procurement of capital equipment, each one involving careful planning and decision making. These phases are:
- Choosing
- Buying or hiring
- Negotiating
- Installing
- Commissioning
- Maintaining
Choosing-
These are the technical questions and decisions and are therefore the aspects which interest us most as engineers. Don't be influenced by gadgetry though. This is a very important phase to plan and investigate.
You will need to analyse carefully the technical requirements of the proposed product. Will the new equipment handle all aspects of the new products and processes? Special handling may be needed for, say, connectors that are to be fitted at the pin-in-paste stage. If the proposed equipment can't handle these components without expensive options, will hand placement be acceptable?
When you are evaluating an equipment you will also be evaluating the supplier including his/her company, representative, history and service back-up. Be comfortable with all aspects of the purchase. The salesperson will also know that these aspects are important to you and should present this information at the same time as the technical information. Assuming you intend to stay in your present position you will be working with the staff of this company for some years to come so you have to be comfortable with them.
Is the supplier stable? Large or small is generally unimportant, industry in the UK is composed of many small companies working very efficiently. Investigate the company background if you don't know it already.
Previous customers of the proposed supplier are a rich source of factual information. I am not suggesting here that the supplier's representative will be untruthful but he or she is there to present the positive aspects of the product, not the negative. A good supplier will present you with information on existing customers and arrange suitable visits. I prefer to make these visits without the salesperson. Whist we are talking about visiting another facility remember that this is a networking opportunity. We can all learn new aspects of our job from colleagues in the industry.
Finally on the subject of choosing equipment, consider:
- Ergonomics - how easy is it to operate?
- Build quality - will it last?
- Aesthetics - yes really! You and your colleagues have got to live with it.
Buying or hiring-
If your company¡¦s policy is to buy equipment outright then that is the road you will probably take. However, it would still be a good idea to investigate alternative methods of financing equipment acquisition. Your manager or director may not have considered hiring or leasing before so you should present information upon which they can make an informed decision.
If you are to buy the equipment, there are more costs involved than just the straight purchase price. Justifying the expenditure will include capital cost, maintenance cost, lost interest, revenue cost and operator cost. All of these will need to be investigated and the information made available when you apply for funding. Hopefully, you will not be working alone here and helpful input should be expected from your Finance Director, Site Services Manager etc.
Is there a payback period that is expected by your company? This calculation will certainly need the input of the finance department. Don't try and do this by yourself, each company has a different method of financial accounting and will want information to be presented in the expected format.
There will have to be a reason for attempting to raise the justification and this should be based upon hard sales predictions. It could be just speculation, so it¡¦s a good idea to get the initial reason for investment in writing, stating the production figures expected. A small word of warning here from an old cynic, verbal figures that are given to you may be liable to change.
Will the equipment be used on single/double/triple shift working? The capital cost will be amortised over a larger number of products in a given accounting period if multi shifts are introduced but remember that maintenance and operator costs will also increase.
Hiring or leasing may be an attractive proposition if the initial capital outlay is not available. The contract may also cover maintenance and breakdown cover, plus upgrading the equipment is easy. Investigate the figures carefully for your own application and compare buy with hire to work out which is best for you.
Negotiating-
If your company is cash rich and carefree, pay the first quoted price. For those of us in the real world, you will be expected to ask for a discount.
A discount may take the form of cash reduction but may also be add-on hardware or training. Be careful when being offered add-ons that you don't need. Do you really need a lawnmower? (Old joke, ask author for details.)
If you don't feel comfortable negotiating, involve your Purchasing Manager at an early stage. He or she is negotiating every day and will bring a bit of gravitas to the table. Remember, the supplier will not sell at a loss but there is usually room for compromise. Don't feel awkward about negotiating.
Installation-
You have completed all the investigation, financial justification and technical considerations, then you persuaded the salesperson to give you his car into the bargain. Now you have to get the equipment into your factory.
During the negotiation you will have agreed who is responsible for:
- Delivering the equipment to your site
- Off-loading from the lorry
- Siting of the equipment
- Site preparation
- Supply of electrical, gas, water and air services
- Connecting the services
For instance, if you are buying a large reflow oven is there a large enough three phase supply adjacent to the new machine site? If you do not have enough capacity then a new 100 amp three phase supply will add a significant cost to your calculations and will be an embarrassing afterthought.
You may need to provide correctly qualified people to connect these supplies, either your own or contractors'. The DTI website contains latest information on the regulations governing these supplies and who can use them and it is a good idea to keep up to date with this knowledge.
Commissioning-
Now that the machine is sited and ready to go with all services and some product to run (probably non-production) the supplier will need to turn it on, check its functionality, train your staff as necessary and then hand you the keys.
Make sure that you are completely satisfied with the performance and quality of your new purchase before you let the representative leave the site. (Look out for laws regarding kidnap, but you must be firm). If some aspects are not to your satisfaction agree them and their solutions with the representative in writing. This sounds somewhat Draconian but remember that you are responsible to your company for this installation and will have to live with any future repercussions.
The performance targets agreed during the negotiation phase, such as placement rate must now be tested for accuracy. Does the equipment live up to its promise? Only accept it when you are completely satisfied.
Maintenance-
Would you buy a new car and then not maintain it? Of course not, and it's the same for a piece of industrial, capital equipment. A maintenance contract would be worthwhile, agreed during purchase negotiation, and will be considered as a revenue cost when calculating an hourly rate for the process.
Those aspects which are your company's responsibility must be written into a maintenance procedure and a written log of checks and work carried out should be kept.
Some equipments are rather sophisticated and have spawned "users groups". These are groups of firms that use these specific equipments and swap information and ideas on how to use them efficiently. If there is one for the machine you are choosing you should contact them before buying to gain valuable insight into the way the machine will perform with you. They represent further networking opportunities too.
Review-
As with any successful action, the outcome depends upon careful planning.
If you have precise details of what you want the machine to do then you have a chance of specifying the correct one for you.
Try to think of anything that might go wrong and plan for it.
Remember that you are not just buying a machine you are entering into a partnership with the supplier.
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