Few structures are as complex as the plants to manufacture petrochemicals, process and specialty gases that Linde Engineering North America Inc. builds for its parent company, The Linde Group, and other companies. “We build mainly petrochemical and gas processing plants,” explains Simon Kassas, vice president of procurement for Linde Engineering North America. “We have our own technologies, such as for ethylene production. We have our own technicians. We build plants for Linde Gas and for third-party clients.
“We design, procure and construct many types of petrochemical and industrial gases plants, such as hydrogen plants, air separation plants to produce oxygen and nitrogen, and all types of chemical and petrochemical plants using our own technologies as well as others,” Kassas continues. “We are basically a T-EPC company – a technology-based engineering, procurement and construction company.”
Linde Engineering North America has full responsibility for the engineering, procurement and construction of these process plants. Kassas’ department is responsible for managing the entire supply chain from qualifying suppliers of parts, equipment and components to having them shipped on time so the company can start construction.
“We advise our staff in the bidding process,” Kassas says. “Sometimes knowledge of local suppliers or even remote competitive suppliers can make the difference between Linde winning or losing the contract. It is our responsibility to know how to buy something, where to buy it, how to price it and who the best suppliers are.” A schedule then is produced for procurement of everything that will be needed to build a process plant.
That includes sending a package of specifications from the engineers to suppliers, soliciting and examining bids, negotiating prices and issuing purchase orders. Then the best-qualified suppliers and the best-evaluated price – which is not always the lowest price – are selected. Also part of the Linde Engineering supply chain is inspection of the finished products and components from the suppliers to ensure they meet the project’s quality standards.
“It’s all part of procurement,” Kassas stresses. “Our job also is to ship the equipment to the site where it needs to be erected – the components of the plant – from steel to processing equipment. Everything used in a chemical or petrochemical plant needs to be delivered to the site. Once delivered to the site, it is the responsibility of the construction group to take possession and build it.”
One Little Valve
For each plant Linde Engineering builds, Kassas’ department receives a digital “package” from the engineering department that includes everything that needs to be procured. “When we get an engineering package with a thousand items on it – many, many parts – we take the same package and put this in our procurement process,” Kassas explains. “We can import the same package for the bidding stage, pricing and ordering. Once we order everything in the package, it goes to expediting and to our shipping people. Our shipping people know exactly what we have ordered, and they track it to ensure the supplier ships everything on the purchase order.”
Like a jigsaw puzzle, one missing piece can make the project incomplete and grind it to a halt. So another version of the company’s software tool is used. “We have tools on-site to manage receiving, to make sure everything we designed, bought and shipped is received onsite,” Kassas continues. “Some of these sites have thousands of people working on them.” Much of the equipment is stored outdoors before a structure is built, and small components may be covered in snow in the winter.
“Management of the whole supply chain process is extremely critical,” Kassas emphasizes. “You cannot operate a billion-dollar plant if you have a small relief valve missing. It’s really hard to lose heat exchangers hundreds of feet long, but when you have hundreds and thousands of valves and instruments, it’s hard to keep track of every one of them. If one small instrument is not located properly, it could hold up the whole commissioning and completion of the plant.”
Linde Engineering relies on commercial supply chain software that it has worked with developers to modify extensively for each supply chain function. “We also work closely with our own experts and in different areas – from engineering and construction to procurement and logistics – to develop the proper tools that fit our purposes,” Kassas says. “We capture feedback from users on how to improve our tools.”
Getting It There
Many of the plants that Linde Engineering builds are located in established industrial areas with similar plants. “The logistics of building a plant can be challenging,” Kassas admits. “When we build a plant, we spend a lot of time studying the routes. We design our equipment to take into consideration the location of that plant and when we can deliver. What time window of delivery do we have? If it is accessible by water, we can barge it. If it is only accessible by roads, what is the maximum dimension and weight? Location can dictate the limitations we must place on our design.”
Kassas believes that meeting challenges like these separates Linde Engineering from its competitors. “We love challenges,” he declares. “We believe this way we really can compete on a challenging project, where we can offer a better solution than anybody else. We have projects all over the world, and every location has different challenges.”
In the Middle East, it is heat. In Russia, the challenge is cold weather. The remoteness of a plant and the country in which it is located affects the availability of local supplies. “If you build a plant in a remote area or a third-world country, you might have to import every bolt, nut and light bulb,” Kassas points out.
Linde Engineering had record bookings last year, and the magnitude of bookings this year might equal those, Kassas calculates. He attributes the company’s success to The Linde Group’s more than 100-year reputation and its constant quest to improve.
Kassas emphasizes that procurement is much more than just negotiating a contract and price for components. “Our job is to bring our suppliers’ knowledge to our company, and educate our suppliers to understand our company,” Kassas stresses. “Working closely with our engineers and understanding what they want is very critical. We educate our buyers and everybody in procurement to know exactly what they are buying. They have to know what they’re buying and where it’s going, and understand why we want it a certain way and why we need it by a certain time. Procurement is not just producing a piece of paper.”