Material management for multi-unit EPC turnkey projects (multi-project management)
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During the EPC turnkey project for several sets of equipment, regarding the management of materials, the materials management department proposed that, at the time of procurement, materials of the same type from various devices should be gathered together for centralized purchasing (centralized quotation and ordering, as well as production)； Upon arrival, all materials are delivered together; they are not separated by device, and are stored in the warehouse in a centralized manner. During construction, materials are allocated based on the actual installation schedule of each device, meaning that procurement, storage, and material distribution are all managed on a centralized basis for each device ； Advantages: Lower costs, fewer procurement documents required, less labor input, facilitates procurement organization, and allows for centralized allocation of resources at the construction site based on priorities ； Question: For the turnkey project involving multiple units, the project team does not have detailed information on the order quantities, delivery amounts, incoming quantities, storage quantities, outgoing quantities, and inventory levels for each individual unit; instead, it only focuses on determining whether the overall project is feasible Can the certification of qualified material quality obtained through centralized procurement be applied simultaneously to the material inspection submissions from the construction units of various installations? With centralized procurement deliveries, the invoice for this order cannot be broken down by individual units; will this affect the calculation of the actual procurement investment for each unit? With centralized procurement deliveries, it is not possible to clearly see the status of material orders and deliveries for a particular device; could this affect the progress planning?
Large-scale EPC projects all use material management software, along with on-site material management teams, so most of the issues you mentioned can be avoided
I. Centralized procurement is necessary; the advantages in terms of costs, efficiency, and investment, along with the resulting benefits, are quite significant； II. The key to resolving existing problems lies in planning: each unit shall submit a detailed material plan, and the materials procurement department will consolidate these plans before making unified purchases, after which the materials will be distributed to each unit according to their respective plans ； III. Issue a material transfer order by obtaining materials according to the device.
It’s a bit like the major maintenance shutdown of a facility at one of Sinopec’s subsidiaries, lol. In response to LZ’s question, here are some common practices for centralized procurement by Sinopec’s facilities management department for your reference! Question 1: The equipment department of the facility that requires major repairs (which is essentially a factory) must submit its equipment procurement plan to the Materials and Equipment Department within the specified time frame, so that it can be consolidated and purchases can be made in a categorized manner ； The key point and prerequisite here is that the material storage warehouse is managed by the Logistics Department, and there are strict requirements regarding the timing of transmitting purchase order plans (for performance evaluation). Question 2: There’s no issue with the material submission for inspection; the main trouble lies in preparing the documents for handover and archiving ； The key is the materials, as the equipment comes with a single set of documents (originals); for valves and similar items, the supplier can also be required to provide one set of documents per unit (originals) ； Other materials can be requested from the supplier for assistance in resolving them. Question 3: I haven’t encountered it, as Sinopec handles unified settlement and reimbursement through bank transfers. Question 4: Utilize the enterprise’s internal local area network to announce the arrival status of materials, informing those who requested them in a timely manner. It generally won’t affect the construction schedule! I’m not sure if it will be useful, just for reference!
The advantages of centralized procurement are undeniable; the question is whether, if EPC contracts are signed separately for each set of units, and the materials are purchased in bulk and delivered together, it is still necessary to allocate the quantities of materials according to each unit Should the procurement plans submitted by each device also indicate the planned usage amount for each device? Since it involves how to establish the database for the material management software, we hope to achieve more detailed management of materials on a per-device basis, but we are not sure whether this is necessary.
During the prefabrication phase, the personnel from various construction companies arrive on site, while the materials arrive in batches and with delays. More often than not, the matching rate between pipes, valves, and other components is low, which makes it difficult to distribute them evenly. The construction companies keep a close eye on this process, and for the materials department, deciding who gets what is also a challenge. Therefore, I personally believe that even if material procurement is centralized, it should still be managed in detail by device.
I agree with your view. Going further, here are the details: 1. Our Materials Department requires that the material plans submitted include the latest possible delivery date as well as the exact quantity needed. 2. We ask suppliers to deliver the materials in batches according to the required quantities, so as to meet the needs of the end users； Specifically, the materials delivered in one batch should be sufficient to meet the needs of at least one user; they cannot be distributed evenly. 3. Impose severe penalties on suppliers for delayed deliveries ； But such situations occur rarely, as it is always long-term cooperative relationships, and everyone is aware of the serious consequences. (This may pose a challenge for the material departments of the construction firms or general contractors.) 4. Due to the extremely high demand for materials for the simultaneous overhauls of various units at the branch offices, and because these materials are used in a concentrated manner (the actual period during which work can be carried out involving open flames is only about 25–30 days), ； Therefore, for bulk general-purpose materials such as stainless steel seamless pipes, they are sourced from 2 to 3 different suppliers to avoid relying on just one supplier. 5. Since the Material and Equipment Department is a permanent department, ERP management is implemented for the procurement and supply of materials, spare parts, supplies, equipment, raw materials, fuel, etc., for various installations. For reference!
In fact, it is best to consolidate the procurement of different units for the same project. As long as a unified coding system is used in the EPC material management software, all such issues can be resolved. In the Qinzhou project in Guangxi, I am responsible for purchasing multiple sets of equipment at once and managing them uniformly on site
Coordinated planning! ! ! First, the procurement contract needs to be divided into packages! The package must include delivery time details! The above plan includes e/p/c optimization! The rest falls under matters of system and procedure...
1. Centralized procurement is necessary. 2. Accurately summarize the plans for each individual device; 3. Refine the purchase contracts by determining the quantity, timing, and batches of delivery based on the progress requirements of each device, as well as requiring quality certification documents. 4. Separate entry and exit for inventory. 5. Invoices can be issued in accordance with the settlement requirements of the EPC contract. A foolish opinion!
In fact, the most important aspect of material management is ensuring traceability; traceability is the key element in material management!