This document outlines a 3-step process for companies to receive proposals from industrial gas service providers to optimize costs. The steps are: 1) Establish an internal program team, 2) Identify current baseline industrial gas costs, and 3) Manage an RFP process to solicit proposals from providers. The goal is for providers to take over more of the industrial gas supply chain functions and reduce a company's total costs.

2. 2
PHASE ONE - 3 Steps to Receive Request for Proposal (RFP)
– Case Industrial Gases
1. Establish Program Team
2. Identify Baseline Costs
3. Manage RFP Process Successfully
Introduction
Every time you reduce industrial gas use, you reduce cost and
exposure to liabilities.
Beyond tangible expenditures, there are not so quantifiable benefits
to well-managed total cost ownership programs:
• Reduced accidents
• Maintaining a good reputation in the community
• Staying clear of environmental agencies’ spotlights etc.
Stakeholders are paying attention to the environmental, safety and
health impact of companies.
Savvy companies start optimizing safety, health, environmental and
total cost ownership of the entire industrial gas supply chain.
How to get started?
To execute this in practice you’ll need a proven, practical process.
Here is our proven 3-step process to receive RFP from would be
industrial gas service providers rapidly (see graphic next page)

3. 3
Step 1 Establish Program Team
The first step is identifying a team leader charged with development
and leading the program.
The leader must have an intimate knowledge of the facility and
industrial gas management systems, be influential with upper
management and his/her peers; and have strong leadership and
communication skills. (see graphic)
Next the team leader will define team roles and responsibilities.
The team will develop goals and objective:

4. 4
• Reduce total cost of industrial gas supply
• Improve production quality and efficiency
• Using know-how of industrial gas suppliers (logistics,
application, safety, health and environment, liability)
Step 2 Identify Baseline Costs
The team’s first task is to identify baseline costs of industrial gas
supply.
You’ll select a facility and start documenting industrial gas use.
The goal is to generate a list of industrial gas used in the last 12
months and their volumes.
Industrial Gas Consumption last 12 month (in tsd m3/t)
Gases 1 2 3 4 5 6 7 8 9 10 11 12
Oxygen 100 110 120 125 130 135 140 110 100 90 80 70
Acetylene 50 52 55 54 55 40 55 45 40 30 25 35
Ar-Mix 20 30 35 40 60 65 70 20 25 23 22 23
Next, your team will document industrial gas purchase costs.
The purchasing department will provide the unit prices of gases and
related services (cylinder rents, tank rents, manifold rents etc.)
The value of this documentation is that it provides a baseline for
measuring future price reductions when consolidating your
entire industrial gas purchase.
Step 3 Manage RFP Process Successfully
Next, you’ll present your findings to the top management champion
or steering group to determine portion of the industrial gas range
and supply chain should be transferred to an industrial gas
service provider.

5. 5
Industrial Gas Supply Chain
Procure Inspection Inventory Use EHS
Now the team will develop a request for proposal (RFP).
The request for proposal is developed from your team’s original
objectives, baseline data, required scope of services and industrial
gases.
A TCO service provider (bidder) will need sufficient information
about your objectives, needs, and specified scope of services to
accurately estimate the industrial gas service costs.
See sample RFP next page
Deliver
Industrial Gases
The Provider will own all
industrial gas inventory.
It will become the property of
company x upon receipt of
industrial gases and services
requesr
Manage
Inventory
Regularly industrial gases (as
defined) will be delivered to
designated points within one
business day of the request
items (e.g. specialty gases) will
be delivered within 5 days

6. 6
Elements of an RFP
We found the broad elements to be essential in clearly and
systematically describing your industrial gas service requirements:
• Cover Letter
• Introduction
• Scope of Services
• Scope of Industrial Gases
• Performance Metrics
• Compensation and Incentives
Develop a List of Suppliers
With the text of the RFP complete, your task will shift to determining
who should receive the RFP.
Begin your list by naming current suppliers with whom you have
had positive experiences.
These three criteria will help you narrow your list:
1. Experience providing industrial gas services that optimize
entire supply chain costs
2. Capability of assuming liability for stock-outs
3. Multi-regional presence if you want standardized services
across geographical areas and business segments.
Inform key facility personnel that an RFP will be released
Through your earlier communications, you have already informed
people affected by the new program of the team’s progress.
Once the RFPs are distributed, however, its public knowledge that
your company has intentions of significantly changing your
industrial gas management operations.
Therefore, it is important to inform a broader circle of people within
your company that they may be receiving inquiries about the RFP.
Facility personnel should direct all inquiries to the team-designated
point person.

7. 7
Convene a Bidders Conference
One challenge in managing the RFP process is ensuring that all
bidders are provided the same information.
The agenda for the conference should be flexible and include:
• Introduction
• Industrial Gas Service Provider Program Goals & Purpose
• Company & Facility Overview
• Facility Tour
• RFP Discussion and Q&A
- General
- Scope Elements
- Compensation
- Concluding Remarks and Restatement of Schedule
Receive Proposals and Send Out Conformation of Receipt
As you receive proposals, you should carefully log what you have
received and scan the proposals for completeness.
For each RFP recipient, you should send a written communication
following the proposal submission deadline.
Use these simple letter formats:
Thank you for your proposal. We will contact you on __________
We have received your proposal and found it to be incomplete in
the following areas: ___________________
We have not received a proposal from you.
Please let us know if you plan to submit one or, if not, why you
chose not to submit one.
Once you have received all the proposals, you’re ready to begin the
difficult task of evaluating them.
The challenges at this stage are to evaluate each proposal on the
same basis and to determine if the response is credible.

8. 8
Ask the critical question:
How likely is It that the bidder can support the response in
practice?
After analysing the costs and benefits of the proposals, you’ll start
selecting your primary industrial gas service provider.
Our next RAPIDKNOWHOW report will deal with how to select a
primary service provider.
Optimizing Total Cost Ownership Blueprint
You want to optimize your total cost of ownership of the entire
industrial gas supply chain & get out in front.
Here is our total cost ownership optimizing blueprint to optimize
your entire industrial gas supply chain costs.
July 2017 – Josef David www.rapidknowhow.com