Fauquier Gas Company Case Study

Topics: Procurement, Construction, Supply chain management Pages: 5 (1547 words) Published: April 22, 2012

Fauquier Gas Company Case Study

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Case Name: Pacific Healthcare
I. Major Facts
Fauquier Gas Company is one of the largest supplier of gas in the United States. Bill Murphy is the manager of Supply Management and is responsible for purchasing of materials used in distribution of gas such as pipes, meters, and fittings as well as other various materials. The supply organization falls directly under the vice-president for operations. II. Major Problem

Fauquier Gas Company is slated to begin a new project to turn an area once used for agricultural work into a residential and commercial property. This means that new gas lines must be installed. In January, Mr. Murphy overheard Mr. Byers, the project manager, discussing the requirement to add 3.5 miles of new gas lines slated to begin in June with an estimated completion date of September (3 Months). Having worked with the procurement of gas lines before, Mr. Murphy knew that the mills needed substantial lead times in order to accommodate Fauquier Gas Company's timeline. Mr. Byers advised Mr. Murphy the purchase request would be sent as soon as the design engineer was finished with the specifications and the project engineer approved it, both work areas fall under the vice-president of operations. When Mr. Murphy contacted Pat Wilson, the design engineer, he learned that the specifications of the pipes being ordered were changing from past orders. Instead of 3/8" wall thickness they were drawn at 3/4". This was done because the operation of the line would be governed by less stringent specification. The length of the pipes was also extended from 40'(+/-5') to 57' in order to reduce cost of welding. Lastly, the wrapping has yet to be determined which is supplied by the mill. As of April 14th, the purchase request has not been received by Mr. Murphy and no order for pipes has been made. Construction is scheduled to start in 6 weeks. III. Possible Solutions

A.One possible solution for Fauquier Gas Company to install the 3.5 miles of gas line is to re-evaluate the timeline. As it is now, Mr. Murphy has yet to receive the purchase request and with the project expected to begin in 6 weeks, this does not provide the mills sufficient lead times in order to produce the gas lines. Fauquier Gas can shift timeline in order to allow the mills enough time to fulfill request. This does delay the project and can ultimately cost money in stand-still operations

B. Another solution for Fauquier Gas Company is resort to past specifications on gas lines. By changing the dimensions of the gas lines, the mills may have to alter their production line which could delay the production of gas lines even farther back. With only 6 weeks to expected start date, this could have detrimental effects on production. One of the biggest complexities could be the logistics of the lines. By extending the gas lines from 12' to 22', transportation must be coordinated to transfer pipes to wrapping location. If Fauquier Gas resorted back to normal specifications of 3/8" thick and "random double normal" in length (40'(+/-5')), this could allow the mills to produce the gas pipes within the timeline established by project manager. This would eliminate the savings planned for by design engineer in welding costs as well as cause more stringent specifications in the governance, but the system is all ready in place in order to produce these specifications since Fauquier Gas ha placed orders in the past.

C. One last solution I can foresee as an option is going with alternate suppliers of gas pipes. Mr. Murphy can seek supplier elsewhere if no contractual agreement is made with specific mill. By searching for alternate mills, Mr. Murphy may be able to find producers of gas pipes that have the dimensions all ready in place or one that can accommodate a short order to keep timeline on...
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