Supply and procurement of equipment

The supply and purchase of equipment is the responsibility of several divisions:

  • Procurement of equipment is the responsibility of procurement officers,
  • The technologists are responsible for creating the operating parameters,
  • Production staff operates the equipment,
  • Repairs are the responsibility of the mechanics in the maintenance department.

It follows that equipment often becomes a topic of discussion in the interaction between the units concerned. Some of the principles of the equipment management and procurement process are similar for both manufacturing and service enterprises. Some of them differ. The procurement of complex high-tech equipment also has its own specifics. But since equipment is one of the most capital-intensive items in the business, it is advisable to take all the nuances into consideration when making the purchase.


Macro-process for the supply of equipment

Specifics of equipment supply contracts

Tenders and their implementation

How to accept equipment from a supplier

Analysis of the need to purchase equipment

The type and parameters of the equipment are dictated by the technological requirements and standards imposed by the quality of the finished product. It is therefore an assessment of the equipment’s ability to ensure a quality result and to meet the requirements of the service or product. This means that all relevant factors must be analysed and the process parameters for production must be clearly defined. This usually involves a meeting of experts where, in addition to technology, other factors are discussed which will then form the basis for preparing the terms of reference for the procurement:

o the cost of alternative procurement options,

o qualifications of service personnel,

o performance,

o tolerance range,

o time-consuming maintenance and repair,

o ease of use, etc.

o To ensure that no relevant factors are overlooked, all stakeholders are involved in the analysis.

Preparation of the terms of reference and design

The analysis report and equipment procurement plan become the basis for the technical specification, which is prepared by the chief engineer or mechanic and, if necessary, coordinating the requirements with the technologists. At the same time, an error check is carried out. The terms of reference becomes the control point in this process, which, if planning flaws are detected, will avoid high costs. At the same stage, the design for the installation of the equipment (or line) is prepared with the involvement of their responsible units or subcontractors.

Purchase of equipment

A number of problems arise in the procurement of equipment due to a seemingly elementary process that is not followed through to completion. For example, it is a common practice to purchase equipment with accompanying documentation in a foreign language, but without a quality translation or a contract without clauses on installation and commissioning. As a result, bringing the equipment into working order requires additional resources (time, labour, financing), which disrupts project implementation deadlines. An alternative to this option is the procurement option, where a representative of the supplier company is involved in the installation. However, as this option is always more expensive, it is more common for buyers to try to negotiate a payment scheme in which the full cost of the equipment is paid after a trial batch has been produced. In this case, the suppliers themselves try to support the procuring party with as much information as possible.

Equipment acceptance

The terms of reference become the basis not only for ordering, but also for acceptance of the equipment. It should be accepted by representatives of the department responsible for its installation, not by suppliers. Specialists are more likely to detect inconsistencies in completeness and can professionally assess the information content of accompanying documentation.

Equipment installation and commissioning

The installation is based on the design of the plant, which is the responsibility of the service headed by the chief mechanic or engineer. If the installation is outsourced to a subcontractor at this stage, the mechanic and engineer will supervise the work. It is not uncommon for changes to be made already during the installation process, which need to be reflected in writing in the project and, at the same time, agreed with all the departments involved, so that it does not come as a surprise to the technologists later on.


Until it has been confirmed that the equipment is capable of fulfilling the entire technological scope of requirements, it cannot be considered to be reliably operational. To check the equipment under the supervision of representatives of the host party:

– the declared in the manufacturer’s documentation and the actual parameters are checked,

– The equipment is tested in different modes, at different speeds and in the manufacture of various types of products,

– The quality of products produced in different modes, at different levels of performance.

A separate step is to record the performance of the equipment during testing.
The data obtained becomes the basis for the creation of technical documentation and rules for the use of the equipment in mass production.
The final step is the equipment acceptance report. As the responsible persons put their signatures under the document, they take more responsibility for the inspection itself.
The next stage in the work with the equipment is the development of technical documentation, which collects operating instructions, work instructions and technical regulations.
In the following stages, before the equipment is decommissioned, it is usually subjected to preventive and routine maintenance, in-service maintenance, and operational analysis.

Peculiarities of Equipment Supply Contracts

In addition to the standard clauses, a number of important factors must be stipulated in the equipment supply contract in order to avoid future disputes to the greatest extent possible:

  • The subject matter of the contract shall include a guarantee from the supplier that the equipment is free from third-party claims, is not under common ownership, is not under attachment and is not pledged at the time of handover.
  • It must be separately stated (if important) that only original spare parts or components approved by the manufacturer are used in the equipment.
  • In terms of the calculation, it should be specified whether delivery, installation and assembly are included in the „delivery“. In some cases (especially when purchasing high-tech equipment), technological debugging of the equipment becomes an integral part of the delivery, and sometimes service for the entire running-in period is added to it.
  • The terms of delivery should specify who will deliver the equipment and how, especially if the quality of delivery has a direct impact on the performance of the equipment.
  • It is advisable to specify the packaging requirements as a separate clause. Generally, the manufacturer packs his products in such a way that the packaging material can protect the equipment from damage. However, this does not always happen (the manufacturer saves on the quality of cardboard, foam, metal protective elements), which leads to damage at the time of movement of the equipment.
  • If packaging requirements are raised, the contract should stipulate who will pay for additional packaging (e.g. crating).
  • The issue of acceptance of the equipment on receipt should be specified in detail, irrespective of how the delivery will be made (by self-delivery, trucking, etc.).
  • Usually the acceptance is done by signing a delivery note, but in many cases, where the integrity, functionality and even availability of parts cannot be ascertained on inspection, the procedure for signing the instrument of transfer should be discussed in more detail with the possible control of both parties.
  • Often the supplier is given a contractual deadline, after which the recipient has no right to make a claim for completeness.