Availability: Average lead times for pressure vessels are generally high between 18 - 26 weeks for Small and Medium-Sized Vessels and 60-70 weeks and more for the Heavy Wall Pressure Vessels.
Quality: High pressure and temperature, combined with the variety of chemicals handled in pressure vessels, make these some of the most critical equipment in the industry. Thus, a key objective for this category is to maintain reliability and availability at the highest levels.
Small and Medium-Sized Pressure Vessels: A large number of manufacturers exist globally, and the low cost-base of Asia based manufacturers threatens to lower margins. The ease of developing the know-how of manufacturing these vessels has intensified competition. There is very little spend on spare parts bought from pressure vessel manufacturers, and generally no existing contractual commitments, therefore, switching costs are relatively low.
Volume Forecasting: Take a 2 - to the 3-year view of demand needs in order to develop a comprehensive schedule that allows for effective supply planning for the long lead items. This will enable your “preferred manufacturers” to plan capacity expansions in line with requirements.
Supplier Development: Encourage the development of local manufacturers by improving their access to rolled carbon steel sheets, which are the primary raw material for pressure vessels
Pricing: Volume-based price reductions can be negotiated as a part of a frame agreement. Additional pricing levers such as “early payment discount” could also be explored.