First complex puzzle solved -Solution to Sulphuric Acid problem!!!!

Well i was fresh out of college and learning. So could not think too much -i got three quotes from dealers of Sulphuric acid with same approved makes (since could not give advance due to management stand) and declared one vendor L1 ran around with purchase proposal file with butterflies in my stomach (thinking if any one of approvers reject my proposal how will i face user department head. Plant operations will be disrupted because of me and thinking about all escalations which will follow.)

I reflected and told myself- Cant keep running around all the time with this same problem. This is a logistic problem not a procurement problem.( Seller has leverage here- they dictate price and with my small procurement volume I can't get much support)

I scout for dealers who have fleet of tankers. A nice gentleman- Mr. Shah who is acid dealer with own fleet of vehicles comes into picture by chance. I pitch to him an unconventional solution.

1. He can buy from any of three approved manufacturers (preference for cheaper one) on any given day. He can add his margin and quote me a freight amount. So price would be Price of acid + Margin i.e.(freight+ profit) per MT.
2. He has flexibility to buy from three of makes which ever is cheapest on given day and as per my lead time requirement. He can quote me three freight +profit charges since manufacturers were from different places and we can agree for certain period of time say 6 months.

Mr. Shah agrees since he too has flexibility to supply any makes without worrying about plants going into shutdown and on any of his vehicles breaking down . He can keep a customer and increase his business volume for 6 months. He happily agrees.

Now i have another problem to solve. In public sector " Variable rate contract" is seen with suspicion and was never tried out for acid. Its more for cement, steel, cable and diesel .

How to make it attractive to my management. I come up with a tender proposal to convince management. Below were major points:

1. Original invoice of manufacturer should be attached with dealer invoice on supply. Based on the same company will pass invoice of dealer. Invoice will mention bill to to dealer and ship to "My factory address". (This will ensure transparency)
2. Three dealers will bid on freight charges alone which includes margin. (Competitive bidding)
3. Will fix total value of contract beyond which i cannot take supply. Contract value shall not exceed eg 10 MINR for this variable rate contract which is valid for 6 months. (Management control on value and time)

This proposal got approved and i went ahead with "variable rate contract with fixed validity and fixed value". Mr. Shah got this order after a competitive bidding process. User department was happy they too had pressure cooker moments because of our procurement process. Mr. Shah was happy and needless to say i had peaceful time handling this commodity. This practice continued till i left this company. I am not sure if it still continues.

I loved this challenge and still remember as it happened yesterday.