So what do buyers look for in valve suppliers? Companies with the lowest prices? The widest product range? Fast deliveries? Proven technology? Or is it a subtle blend of all these factors and more?
Well, I recently had the good fortune to put questions of this nature to Mr Takashi Duke Kiyama, who is Associate Executive Officer & General Manager, Procurement Department, with JGC Corporation.
His name had been forwarded to me by L&T Valves, who thought it would be instructive if I talk to one of their clients whilst preparing a cover story on L&T for the July issue of Valve World magazine.
Indeed, some of Mr Kiyama’s comments were so valuable they were used in a “Customer Feedback” box inside the cover story.
However, as space limitations meant we had to condense his words, I would like to share here in full what he kindly told me about valve procurement, as well as JGC’s relationship with L&T Valves.
DS: In general, what do you look for in a valve supplier?
Mr Kiyama: “JGC looks for the following key points when working with valve suppliers: quality, on-time delivery and price competitiveness. JGC considers that quality and schedule are as important as the price. JGC purchases thousands of valves for various locations. Once a quality issue is identified in one valve during plant construction or operation, confidence about the rest of the supply goes down, and this could seriously affect project cost and schedule. JGC puts emphasis on on-time project completion to ensure that our customers are fully satisfied. JGC cannot achieve such satisfaction without the support of on time delivery by the valve suppliers.”
DS: And how would you describe JGC's relationship with L&T?
Mr Kiyama: “JGC started doing businesses with L&T in 2001. Since then, L&T has over 84,000 valves to 26 JGC projects with a total value of more than USD 135 million. JGC does not have a preference for specific suppliers as we always make fair deal with all vendors. However, looking at the results objectively we may say that L&T is one of our strategic suppliers, who are competitive not only in terms of price but also in delivery and quality. We appreciate the strong commitment of L&T Valves top management toward continuous improvement.”
DS: How close is your relationship with L&T? For example, do engineers from L&T and JGC ever meet to discuss how valves can be customized to better suit specific applications?
Mr Kiyama: “JGC and L&T have seamless communication through face-to-face meetings and telephone conferences for each project to meet each project’s special technical requirements such as fugitive emissions and cryogenic tests. Moreover, discussions between JGC and L&T are not limited to the elemental technologies, and JGC is proud to have introduced the “Quality Culture Workshop”, one of JGC’s unique challenges toward our suppliers. For example, a workshop held at L&T headquarter in Chennai last year gave opportunities to review the fundamental improvements toward L&T’s quality culture for all employees, even to their sub-suppliers, and to encourage their growth as an excellent valve manufacturer by anticipating and excluding potential quality issues. 45 members from L&T including L&T top management, discipline leaders of each factory and casting foundry representatives attended and successfully completed this workshop. Now L&T is taking action by themselves as per the workshop findings to be an excellent quality culture company. JGC wishes to continue working closely with L&T via seamless communication on technical requirements and quality improvements.”
DS: In the oil and gas business there seems to be intense pressure to get projects up and runner faster than ever. Have you considered giving suppliers advance warning of future valve needs?
Mr Kiyama: “L&T’s supply records go back many years and prove that L&T has sufficient production capacity for the categories of valves which JGC is buying. Therefore, it is not necessary for JGC to give advance warnings or engagement during the initial stage of the project.”
DS: What can you say about the types of valves ordered from L&T for your projects?
Mr Kiyama: “JGC’s business with L&T started with commodity valves and has gradually widened in scope. JGC and L&T have faced many challenges, such as special sizes and ratings, special material grades or valves for special services and have grown together, also by collaborating with foundries. Today L&T supplies JGC with a wide range of products from commodity valves to engineered products, including valves with electric actuators.”
DS: Looking into the future, how do you see your relationship with L&T developing?
Mr Kiyama: “JGC is proud of being the number one contractor in terms of safety performance at the construction site. Such performance is not achieved by excess control but by nurturing a safety culture. Once a safety culture has been established, such that all the workers have real safety in mind, then safety performance follows automatically.
The same applies to quality. As mentioned in the discussion about the quality culture workshop, we do believe that a quality culture is in place at L&T. If L&T continue to develop their quality culture and demonstrate their performance in future projects, then L&T will be an indispensable partner.”
DS: Finally, JGC is rightly known as a high-end EPC contractor, delivering top quality and timely solutions to clients. What performance do you expect from your own suppliers in order to safeguard that reputation?
Mr Kiyama: “JGC has experienced numerous instances of quality troubles caused by various categories of suppliers; fortunately we have been able to overcome any such problems which means we are indeed recognized as a leading and reputable EPC Contractor in terms of quality and delivery. If a supplier properly understands the requirements, undertakes all activities in the right sequence and is committed to establishing a quality culture, we do believe that the supplier will always achieve "First Time Right" performance. In turn, this means we can optimize the quality and schedule of the project for our valued clients and at the same time minimize the cost of plant construction. We are therefore ready to support all suppliers to seed and grow a quality culture so that they can deliver "First Time Right" performance.”
So there you have it, and I would like to thank both Mr Kiyama for his insightful and complete answers to my questions as well as the good people from L&T for the kind introduction.
Of course, valve procurement and the supply chain continues to be a hot topic, so if you would like to share your views, then please feel free to contact me.