There Is No Small Package

On a project, everyone watches the big items. The ones on the critical path, the ones discussed every week in progress meetings, the ones engineers spend their nights on.

And very often, the problem comes from somewhere else.

A few years ago, in a previous executive role, long before FORNOW ADVISORY, I was leading a water business. We were supplying a water treatment package for a major oil & gas expansion project, through a global EPC contractor. Like many projects of that size, it was under pressure. We were already late on several items, and much of our attention was focused on the chillers, which had consumed an enormous amount of time.

Nobody was worried about the valves.

They were large valves, built to API standards, in the special stainless steel grades required for LNG service. Demanding equipment, but standard in the oil & gas world. Nothing exotic. And they were not on the critical path.

Until they were.

The Photos

For cost reasons, our procurement team had selected a low-cost supplier. As always on this type of contract, inspections were required, and we had subcontracted them to a well-known global inspection company.

The first batch of valves arrived at the workshop where they were to be assembled onto skids. The quality was terrible.

When the issue reached my weekly meeting, I decided to send our own inspector to the supplier's factory. He came back with photos: workers assembling large API valves in shorts, without any safety equipment.

That alone tells you a lot about a supplier.

At the same time, we had a complete set of inspection documents, signed by a reputable inspection company, stating that everything had been checked and was in order.

I still struggle to understand how that supplier was qualified in the first place.

The Second Chance

We sent the valves back. The supplier agreed to rework them, without any discussion.

Two months later, the valves came back. And once again, the report said they were all defective.

By then, the valves had moved onto the critical path.

This time, our inspector was regularly at the factory. But over time, we discovered something we had not anticipated: the supplier was itself subcontracting part of the work to other workshops — workshops we had never qualified, and had never seen. We could put every control in place at the factory we knew; part of the work was being done elsewhere. And we were dealing with a supplier we could no longer trust.

When I asked our inspector what he thought, he said what I needed to hear: the mistake was ours. We should never have qualified them.

Telling the Client

A sponsor meeting with the EPC contractor was already scheduled. We were already late on other equipment. And I arrived with a valve problem.

I told them I was stopping the supplier. I did not yet know how long it would take to find another one, but I preferred to tell them immediately. I asked for one week to come back with a solution.

We turned around quickly. With a reinforced procurement team, we found an established valve manufacturer with strong oil & gas references — a company we knew, but had never looked for in our own supplier lists. The valves were delivered in a remarkably short time. At roughly the same price as the supplier we had just stopped.

So the problem had never been the price. It was judgement.

There were consequences, as there should be. But the EPC contractor also appreciated our honesty. And they told us something for which I will always be grateful: our organisation was not fit for the projects we were delivering.

They were right.

Procurement Is Where You Make or Lose Money

In water companies, we talk a lot about process, engineering, start-up and operating experience. Procurement is often seen as secondary — a support function.

Yet purchased equipment and materials often represent around half of a project's value, and sometimes much more. That is where the margin is won or lost. You can double the engineering hours; it will not save a project whose purchasing decisions were wrong.

When I looked honestly at our organisation, there was no point blaming the buyer. He was managing almost the entire project with one colleague. Everybody was doing everything. Logistics was sometimes expediting. The technical buyer was sometimes the expediter. Nobody really knew who did what.

These were people with the best intentions. But good intentions do not replace the knowledge each role requires.

What We Built

I used this case to push for what we needed: a real procurement organisation in the region. Step by step, we developed each function:

• A regional procurement director, with a procurement strategy starting at the bid stage.

• Close work with the group's category managers, to use what already existed in other regions instead of reinventing it locally. Not the global team doing the work for us — a local team working with the global one.

• Senior procurement managers.

• Technical buyers, not letterboxes. One frequent criticism of procurement teams is that engineering writes the specification and procurement simply forwards it. We needed people who understood what they were buying, and who could challenge engineering rather than always buying what the engineers wanted.

• Our own vendor inspectors, rather than relying only on third-party inspection.

• A logistics team, including a material controller — a role that is critically important and almost always underestimated.

Some of our best people came from oil & gas, even though we were a water business. That was an advantage: they were used to demanding clients, rigorous supplier qualification and global sourcing.

Procurement Starts at the Bid

One of the most common mistakes I have seen throughout my career happens before the contract is even signed.

In many companies, especially smaller ones, the proposal team writes the specifications and consults suppliers itself. Procurement is fully absorbed by projects already in execution and has no time for bids. So supplier choices that will determine the project's margin are made quickly, by people whose job is to deliver the offer on time.

During the bid, you need a dedicated person from procurement — not from the proposal team — working hand in hand with the proposal team and managing the RFQs. And once again, not a letterbox: a technical profile who understands what the proposal team is building.

Every supplier quoted in your offer is a supplier you may have to live with during execution.

Look Beyond Your Usual Lists

Earlier in my career, I worked in the aluminium industry, for a company in northern France that built overhead cranes for smelters. At his farewell dinner, the CEO told us what had surprised him most when he arrived: all of the company's suppliers were local, within a short distance of the factory.

He built a team to find suppliers in the countries where the company sold — I travelled with them when I was in sales. Selling a smelter project in Russia, and fabricating 10- to 20-metre box girders in France to ship them there, simply made no sense.

The lesson still applies. In our valve story, the right supplier existed all along. We had simply not looked for it.

Where to Start

If you lead a water business and see margin slipping away on projects, start here:

• Map how procurement works, from the first supplier consultation in the bid to delivery on site. Find the missing links.

• Bring in experienced procurement people who have worked across several industries and have a global view.

• Treat supplier qualification as a decision, not a formality — and do not delegate it blindly.

• Never assume a package is small.

Process matters. Engineering matters. But the companies with the best procurement teams are the ones that win projects — and deliver them profitably.

There is no small package.