EPC Equipment Supplier Guide: To chase or be chased by your clients

Challenges

If you’re a supplier of custom-designed equipment to EPC Contractors, chances are you’re constantly stressed about how to deliver to your clients on schedule despite multiple design revisions and late change requests. Plus, you’re constantly at risk for delay penalties. So under the circumstances, how do you expedite your process?

• Strict timelines
• Stringent Quality requirements
• Multiple revision of documents
• Late changes from clients
• Logistics issues
• Site Inspections
• Punch clearance, commissioning & performance testing
• As-Built and handover

In my experience of working with EPC contractors and owner organizations over the years, I’ve seen firsthand the challenges equipment suppliers face in delivering equipment as per the project requirement and the struggle to close out the equipment supply contracts by both supplier and EPC organizations.

The challenge for the supplier begins from the pre-award phase when the offer is submitted without complete clarity on the client’s requirements, without the availability of technical information and site conditions, and all too often at ‘cut-throat’ prices. This happens because the intense competition leaves suppliers with no choice but to accept contracts and pricing.

Then, when the supplier produces design and detailed engineering based on the input received from the EPCs and Owners and is reviewed and commented on multiple times before approval for manufacturing, it’s easy to see how most of the activity of an equipment supplier is dependent on others. Also, the ordering of materials used for the fabrication of the equipment can be done only after approval of the specifications by the EPCs and Owner. Also, during the manufacturing stage also, the supplier has to comply with the multistage inspection requirements of the client before dispatching the equipment to the site for installation. The site installation and commissioning are dependent on factors that are not in the direct control of the supplier. So exactly how much control is left with the suppliers? Can a supplier take charge of his process?

I would say yes, but only with digital technology.

The Digital Solution for Real-World Business Problems

When documents are exchanged through e-mail or SharePoint sites, it becomes a herculean task to maintain the record of each transaction, especially when multiple projects for different customers are being executed simultaneously. Also, since resources are shared between projects, it’s easy to lose track due to the amount of handling documentation. Thus, both internally and externally, progress reviews become marathon exercises, considering the amount of data to be collated to produce reports for submission and review.

Storing multiple revisions of documents and archiving the comments received from clients requires a large number of manhours. I have seen the struggle to close out contracts just because the equipment supplier failed to deliver the final documentation in the prescribed formats. This delay has a huge financial implication on the EPC Contractors and the supplier because 5-10% of the contract value can be held up until the delivery of As-Built documents.

Do the manhours spent on these activities add value to the business process?

I have to say No.

Many equipment suppliers worldwide have started to adopt systems for the digitization of documents following in the footsteps of EPC contractors to leverage the advantages of such systems. Moreover, they are looking at flexible solutions to suit their business process rather than the rigid frameworks offered by older document management systems. So now experienced and skilled resources get utilized for more productive and value-adding activities rather than low-value but high-cost tasks like keeping track of documents, which get taken care of by proven technologies.

In this way, with the wise adaption of digital technology, Equipment suppliers can turn the tables and chase EPC contractors for responses rather than be chased by them, and so can enhance the upscaling opportunities for their business.