How Often Do Your Dams Break?

Lake Oroville, the poster child for the California drought, is now literally bursting at the seams.   The spillways failing,  people being pulled out of their homes, the beautiful Feather river being damaged, and more rain on the way.

Some facts are jumping out at me related to the situation.  There was a knowledge of the issues with the spillway and the repairs needed.  The capital request was $6M that was submitted and rejected years ago.  Now, just to repair the spillways, it is estimated to cost $200M.  This is not including the costs associated to the evacuations, or the lost of business in the area, or the repairs to the downstream impacts.

Beyond feeling horrible for the people living through this, I can't help but think about how this is an example of what occurs so often in businesses.  So often, we op't to be reactive.

Think about the Procurement professionals dealing with the contracting for the repairs of the dam.  Do they have any leverage at this point?  Nope.  Do they really care about the value of the services, the quality of product, or are the rightly focusing on just getting the repair done as quickly as possible?  Contractors working rain or shine, through the night, to get out of a dire situation.

How often are we in these situations?  Back up against the wall and money and quality going out the window.  We try to make the best of it, but it still really stinks.

So, you could learn from the apparent moral of the story about preventative maintenance and the real importance such programs.  But, there is another lesson here.  Within Procurement, we are always talking about adding value to the companies we support.  Not just saving money but adding real value.

One way to add such value is to help your customers focus on being proactive.   If you can help your companies avoid the dire, back up against the wall situations, we can drive a ton of incremental value.

My questions for you.  How much time are you planning with your customers about how to make small investments now to prevent larger investments later?  Do your goals support or incentivize your teams to take this approach?  Are you having conversations about items that are going to be end of life soon and what to do now?  Do you know the mix of new spend in their budgets vs maintenance/refresh costs?  Do you strategize, consult your stakeholders on how to maximize their budgets now?

I have heard that the best way for Procurement really thrive in organizations is to be great problem solvers.  I 100% agree as long as we are proactively solving problems vs being reactive.  Think about if we can prevent 3-4 of these aggravating situations each year.  We could possibly avoid accidents with our employees and customer complaints.  We could negotiate holistic contracts and make our stakeholders be superstars. How satisfying would that be?

Sourcing Accelerated

Let's talk about Sourcing being stuck.  Being stuck in the mid 1990s.  Being stuck in the same 6, 7, or 8 step sourcing process that was designed before there were concepts like category management or supplier relationship management.  It was designed before technologies like Ariba even existed.  The Sourcing process was designed when Full House, 90210, and Clueless were the rage.

Now, I loved the 1990s - I got jiggy with it for sure.  But, it is 2017!  It is time to fast forward, literally.  Many other areas in business have been focused on speed to value where we have been focusing on periphery, needed, improvements like P2P solutions, CLM, Spend Analysis, outsourcing, cost savings through FTE reductions in source through pay.  We have also done brilliant things like integrated supplier management and proving that we can add more value than cost savings.

However, there are few that are focusing on the core, sourcing process.  This is our achilles heal.  How often do you experience this:

• Hey Procurement, we have already negotiated this agreement, but can you sign the contract?
• Sure Procurement, you can help us, but you only have 3 days to get this agreement signed?
• We are trying to get this new product to market ASAP and we do not have time to take it to bid.
• Ummm...yeah...your goal is $25M more than last year.
• Or - my favorite - How long will this RFP take?  Procurement professional - well, our average SLA is anything between 4 to 6 months.

What in business today takes 4 to 6 months???  Really?  No wonder stakeholders do not want to use Procurement.  

What if we accelerated the sourcing process?  What if we reduced the cycle time dramatically?   Think about this.  If we were able to accelerate the sourcing process, we would be able to get more spend under management.  We would be able to offer faster solutions to meet business needs.  We would be able to drive compliance by taking away a large excuse.  It would be speed to value.  (By the way, I am not talking about e-auctions.  They have a time and place, but in a different article.)

There are technologies out there that somewhat help with this need.  They help with complex scenario analysis and provide templates that can be used to reduce development time of the RFP itself.  If deployed correctly, they can help create this acceleration.  

However, there still could be so much more with the technologies that are emerging in the market.  There could also be so much more if we, as Procurement professionals, actually focused on this.  

It could make your 2017 more like 2017 vs 1994.  Are you all in?