Whether it is a new installation or a replacement situation, the time from establishing need to obtaining approvals to actual delivery can easily approach two years.
Imagine being the person within an electric utility who is responsible for electric substations and the power transformers within them. The weather forecast calls for severe thunderstorms and tornadoes. That evening it begins to rain heavily. Lightning is flashing everywhere. The phone rings in the middle of the night. The foreman of the transformer maintenance group is on the other end of the line giving word that a power transformer has failed. Questions begin cascading through the mind: Is there a spare transformer available to use? Where is it located? How long will it take for crews to place the spare transformer in service?
Luckily, there is a spare stored at another substation across town. Problem solved.
Now the spare is going into service, but what if there is another failure? What are power transformer lead times, 52 weeks? A purchase that could approach a million dollars has to go through a large number of approvals before a purchase order can be issued. Instantly, prayers are said for good weather in hopes the phone does not ring again, at least for another year.
What if there was another easier way? What if one could just fill out a requisition and instantly have a purchase order with a transformer manufacturer? Better yet, what if the transformer manufacturer actually came to that person with available production slots within its plant? What if pricing levels for multiple years could be handled once on the front end?
Long Lead Times
It takes a long time to write the engineering specifications for a power transformer, prepare a requisition, send out bid invitations and evaluate bids. The process also has budget ramifications. With the long lead times on these steps, a two- or three-year budget is almost required. For a municipality, the purchasing process is dictated by law. Once a requisition is received in the purchasing department, the request for proposal is advertised and sent to various prospective bidders. The bidders are given four weeks to prepare their proposals. At the end of that period of time, bids are opened in a public forum.
The evaluation process then starts and can take up to 12 weeks depending on the complexity of the equipment being purchased. Once a recommendation has been received in purchasing, a three- to four-month process begins for approvals.
Memphis Light, Gas and Water Division (MLGW; Memphis, Tennessee, U.S.) answers to a board of commissioners. Expenditures above a certain amount also require the approval of the Memphis city council. Both approvals are required before an order for these expensive items can be placed. This means the total process to place an order for a power transformer can take up to 8 months.