Question

You are the Supply Chain Manager for a Midstream natural gas company. Your latest customer is an E&P company active in the Eagle Ford Shale in a remote area of South Texas.

The company plans on drilling ten (10) gas wells over the next year with at least three (3) coming online in six (6) months. Your company has been approached to build the necessary gathering and processing facilities to get this gas to market.

You have now compiled a list of potential Vendors for the necessary major plant components based on various criteria. You have made your recommendations to the Project Committee. While awaiting their approval, the next step in the process is to formulate draft letters for bid proposals from the top two (2) suppliers you have selected. These letters are to be formal, business style letters requesting the following:

1) Availability of equipment
2) Purchase price per component
3) Delivery charges
4) Delivery timeframe
5) Warranties
6) Maintenance contract option (?)
7) Lease option cost
8) Deadline for submission (you decide this)
9) Date by which bid will be awarded (you decide this)
10) Copy of their Purchase Order (PO)
11) Any additional terms & conditions which are part of the transactions

These do not have to be in the order presented here. Do whatever makes sense and is more logical to you.

Again, this is to be a draft formulated to request the information above but, you must state No. 8 &9 as those are your bid deadlines. Make sure to attach a list of the equipment you are requesting from each supplier.

In addition, you are to complete a Gantt Project Schedule Chart for your part of the process (procurement through delivery to site). Use the dates for the Case Studies as the timeframes for those functions (risk evaluation, vendor research and recommendations). Then, insert the timeframes for sending-out your RFP letters, deadline for submission and, when you will award the bids (per your letters).

From there, you need to show when the PO’s will be submitted to the successful Vendors. Then, using a 12-month delivery time for the process skid and compressors, back into the other items for delivery using whatever timeframe you choose since you really don’t know at this time.


Use May 1st as the date you will actually submit the orders to the Vendors and go out from there. (Obviously, your part of the Supply Chain should be finished on April 30, 2016.) This will allow the Project Committee to determine completion and operational dates.

For example:

Week of February 9th – Project Risk Evaluation (the deadline was the 15th so, this week was spent on this).

Week of March 2nd – Vendor Evaluation (deadline was the 8th so, this week encompassed that task).

You will put this information on the Gantt Chart, not in narrative form as I did above. Once you see a Gantt Chart, you should be able to fill it in with your process timelines.

Solution Preview

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Name
Natural Gas Company
Texas.

March 29, 2015

The Suppliers
Name of company
Location.

Dear Mr./Ms.,
This is an invitation for submission of bids for supply of equipment needed for distribution of drilled gas. We are working with E&P Company in the Eagle Ford Shale that is located in South Texas. It plans to drill 10 gas wells in the following year and 3 of these would be operational within 6 months only. Therefore, we have extensive requirements for equipment so as to get the drilled output to the market. The equipment needed are:
• Pipes for distributing gas
• Rotary drilling surface equipment
• Valves, fittings and tubing
• Tube and pump accessories (Darnay & Piwowarski, 2003)....

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