A common question that any large-scale industrial project
owner is faced with, is to choose
free-issued or vendor-supplied materials and equipment.
Free-issued materials
are materials that are supplied and delivered by the customer for the vendor to
use. Vendor-supplied materials are sourced directly by the vendor.
Here are five things to consider when deciding to choose
free-issued or vendor-supplied industrial materials:
Quality
Quality is paramount to the success of any project. Many vendors have quality checks in place
to ensure the materials they source meet high quality standards. Should a
customer choose to free-issue project materials, the task of ensuring the
materials are high-quality is now placed on them.
For some customers, this may be a great option if they have
a high degree of familiarity and knowledge about the needed materials. Others may
be engaging on a fabrication project first-time or have limited knowledge of
fabrication, and in this case, using vendor-supplied materials from a vendor
who has many years of experience sourcing high-quality materials may be the
better option.
Locally-sourced values
For some locally-owned companies, using materials from a
local source is part of their core values. For these customers, using materials
that are locally-made when possible is a large consideration when choosing
free-issued or vendor-supplied materials, depending on where the vendor’s
materials have been sourced from.
These customers may also be keen on materials that are not
only constructed from local resources, but have used local labor in the
construction as well.
Costs
There are instances for both free-issued or vendor-sourced
materials having better cost-savings advantages. In some cases, it’s cheaper
for customers to free-issue materials when the customer has a direct
relationship with the material source and thus better buying power. For
example, on certain mechanical or
equipment components, it may be more beneficial for the customer to setup a contract
with the Original Equipment Manufacturer (OEM) and get volume pricing.
In other cases, vendors
may have better buying power than the customer for main industrial materials such
as steel because the volume they purchase over time gives them buying power.
This is especially true for
well-established companies that have been around for decades.
In addition, choosing vendor supply for major materials such
as steel makes it easier for the vendor to control the purchase schedule – if
the vendor receives material late, there is then added labor costs for running
over the schedule.
Scheduling and shipment timing
One of the most important factors to consider when deciding
to free-issue materials or go with a vendor supply is scheduling.
By choosing to
free-issued materials, the delivery scheduling is now out of your vendor’s
control. If the free-issued supplier is late, it can delay the project
timeline. Vendors typically have more control over scheduling material than
the customer for a variety of reasons:
- they may already have the material on-hand
- they are well-acquainted with the project’s
daily schedule, which may have changed over time - they typically already have relationships with
trusted material suppliers already established.
Delays in schedules
can cause a plethora of problems in itself. In some cases, if a project’s
shipping date is pushed into a road band season, shipping then becomes
more complicated and the project’s delivery may be further delayed.
Combining free-issued & vendor-supplied materials
It’s common for projects to combine both free-issued and
vendor-suppled materials, depending on the nature of the project and the
factors discussed above. A common
example of this hybrid typically found in the fabrication industry, is using
vendor-supplied steel components, and free-issued mechanical components setup
by the customer with OEMs for materials such as gear boxes, bearings, pumps,
valves & instrumentation. This also help keep part numbers to a minimum
and reduces the amount of spare parts on-site for the customer.
For some customers, choosing vendor-supplied materials is an
attractive option because there are less contracts to manage, and subsequently
less coordination and inspections to oversee.
Every fabrication project is unique, and every customer is
unique in their values, existing manufacturer relationships and management
capacities. With careful consideration and partnering with an experienced
company like Saskarc, your fabrication project can be a success.
Saskarc has close to 30 years of experience providing superior steel fabrication solutions achieved by combining project analysis, stakeholder communications and design innovation for modularization. See what our customers have to say about working with us and contact us today to learn more about how we can make your fabrication project a success by utilizing modularization.
