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?