Procurement Best Practices Flourish in Public Sector

By John Hall

July 08, 2014 at 5:12 AM

Most procurement professionals aspire to have a place at the table on the top floor. Cathy A. Martin built the table, then invited her executive peers to join her at it as active members of a Supply Chain Management Steering Committee (SCMSC).

In 2010, Martin took on the role of Chief Procurement Officer (CPO) for the Washington Suburban Sanitary Commission (WSSC), one of the nation’s largest water/wastewater utilities, after seven years as Deputy Chief Procurement officer for the City of Atlanta and a 23-year career with increasing responsibilities for BellSouth Telecommunications. 

She laid low the first six months on the job to learn, observe, assess and ask a lot of questions. WSSC had always been one of the most successfully managed public utilities in the country before Martin arrived in 2010. It’s the largest water and wastewater utility in Maryland and the Washington Metropolitan Area serving 1.8 million residents with a service area spanning nearly 1,000 square miles in Montgomery and Prince George’s counties.

The executive team was expecting Martin to improve procurement. The processes had become antiquated and slow and costs needed to be driven out of the system. Not soon after, she introduced what was then a radical concept to WSSC – a complete transformation of the organization’s supply chain designed to drive down the total cost of operations. As an early part of that effort, the Commission adopted a comprehensive set of new procurement regulations and subsequently, new procurement business policies and procedures. By 2014, Martin and the SCMSC continued to implement WSSC’s first-ever Supply Chain Management Initiative – a major transformation of the Commission’s supply chain – reaping both financial and non-financial benefits.

CathyMartin.jpgDrawing on decades of experience in both the public and private sector, Martin’s maverick-like approach to transformation brought remarkable energy to the WSSC. She bucked conventional public sector wisdom and brought in outside expertise to train and coach her procurement staff and their internal clients on the latest supply chain methods, and re-invigorated a growing base of local, minority-owned businesses and engaged them in working as WSSC suppliers.

Shortly after she started her job, she spotted a logo in the procurement office that read “We are the go-getters.”“I immediately told them to throw that away,” Martin tells My Purchasing Center. “We are not just the go-getters. We add value. We do things differently. We are bias to action. We are bias to results. We understand your needs. We understand the procurement world so we can go out and do market analysis and bring back market intelligence so you can strategically get that good or service you need. That’s a little different than just telling us today you need something next week. We can do that. But that doesn’t necessarily bring the kind of value that’s needed now.”

The “table” Martin built was a governance board – the key driver for the supply chain transformation she started several years earlier. “I said I need more than just me supporting this initiative,” she says. “If I’m helping the operations people, I need those executives on this team. If I’m helping IT, I need the IT executives on my team. If I’m trying to build a relationship with finance, I need the CFO on the team. We pulled everyone together and said, ‘Look, we’re going to do more than just shorten the cycle time. We’re going to drive costs out of the business. By driving costs out of the business, we can eventually get to a shorter cycle time because we can take those costs we’ve eliminated and use that to get the technology we need to be successful. That’s what I had to do. The governance board allowed the executive team to really buy into the concept of supply chain management and into things we could do differently and still provide drinking water and wastewater but to do it at the lowest and most effective cost possible by bringing in best value procurement. These are things they had heard about but never tried.”

Martin and her executive peers are already seeing the benefits as the new plan and approach increases internal collaboration and cost-saving opportunities. 

Overseeing ‘Paper Clips to Pipes’

Today, Martin is responsible for “everything from paperclips to pipes” in the planning, developing and directing the operations, processes, and procedures of the Procurement Office, overseeing contracting for architectural and engineering, construction, professional services, technology, energy services (wind and solar), facility services and general services. In fiscal year 2013 alone, her office managed more than 1,100 contracts worth in excess of $700 million.

In addition to contracting, Martin’s Procurement Office staff is working with their WSSC internal clients to meet a series of challenges nearly every public utility in America today faces: an aging infrastructure and the growing need to secure it.

In 2013, WSSC replaced 55 miles of smaller water pipes across a vast service that includes Andrews and Bolling Air Force bases. By FY15, WSSC expects to replace 55 miles of water main pipes per year.

Meanwhile, ongoing security concerns with our nation’s power and water has raised the bar for utilities. In 2013, the U.S. Department of Homeland Security reported that 23 gas pipeline companies had been targets of cyberattacks from late 2011 to mid-2012. Data stolen from the companies by a foreign hacker reportedly included the information necessary to blow up thousands of gas compressor stations simultaneously, as reported in My Purchasing Center.

Such threats have not been lost on Martin. The WSSC recently conducted a vulnerability study to determine any potential weak points in its treatment and administration facilities and pipelines. A series of security measures have been implemented and anyone doing business with WSSC, including contracted suppliers, must meet rigid background security. Vendors must submit to security checks before they participate in the bidding process. “This is painful, but everyone understands we want to ensure that anyone who has access to our treatment plants and water facilities have gone through that level of security,” she says.

WSSC also has implemented a five-year IT security strategic plan that incorporates heightened measures to ensure data is secured. This includes sensitive electronic information in contracts such as engineer’s drawings and any documents based on the GIS, or geographical information system, which shows the locations of critical underground and above-ground infrastructure.

Martin acknowledges these kinds of measures also are vital to procurement. “To ensure financial stability and ensure we can integrate supply chain management and supplier diversity, we’ve got to have that type of security to make this happen,” she says. “The need for security has changed not only because of 9/11, but because technology plays a whole different role in how we do business – particularly how we do contracts. We have to be careful how we share that information.”

Tapping Training and Coaching Expertise

Martin’s many successes so far have been tempered by difficult challenges her peers in the private sector don’t particularly face. Everyone in procurement today talks about “spend visibility,” but that’s exactly what Martin and her staff face every time money is spent.

“When I think about working in the corporate or private sector, we had deep pockets,” she recalls. “In the public sector, you have to be very careful with every rate-payer dollar you’re spending. In the public sector, you have a narrower opportunity to get things done.

“In the private sector, there was much better access to training and technology, and attracting candidates was easier because salaries were higher,” she adds. “Implementing best practices was also easier because we generally had access to better trained and skilled people.”

Two years before she arrived at WSSC, that was never more evident. After the collapse on Wall Street in 2008, the Commission’s budget took a hit. One of the first things to get cut was training. Martin was accustomed to the restraints on training dollars during her time in Atlanta, but she didn’t have the perspective in her deputy procurement role. But just like Atlanta, WSSC had traditionally relied on internal resources only to provide staff training.

Shortly after assuming her role at WSSC, Martin decided to buck convention and recruited training resources from organizations like the Institute for Supply Management (ISM) and the National Institute for Governmental Purchasing (NIGP)

“I started bringing people in,” she says. “I didn’t know everything and I knew lots of people needed to know more things. The procurement department here hadn’t had any training the last five to 10 years and you know purchasing and supply chain has changed tremendously in the last decade and a half. I knew that we had to bring in outside expertise.”

Her success hasn’t gone unnoticed. “Just like any procurement office you come to, people will say, ‘things are too slow, can you speed it up?,’” she says. Part of the solution was to provide staff with a toolkit. “With the understanding that even though this is government, we can use those best practices that have been both effective and efficient in the private sector and apply them to a public sector environment,” she adds. “I convinced people it’s OK to do that.” 

One of her earliest ground-laying projects, in October 2012, was a complete overhaul of procurement’s policies and procedures. “The procurement regs we were using when I started here were so old and antiquated, it was too difficult to follow because they had job descriptions of people who didn’t even exist anymore,” she says. “So, following the re-write of those regulations, for the first time in our 93-year history, we had a procurement regulation that covered everything we bought.”

Within the next 12 months, Martin had assembled her procurement team and officially launched the supply chain transformation in November 2013. As part of that effort, she brought in key advisors who work with large and medium sized companies in all industry sectors, and who know best practices regardless of industry. “By this time, I’m a part of the team now,” she says. “Our transformation partner, Greybeard Advisors LLC, came in and showed me – showed us – ways that we could drive costs out of the business by doing some of the sustainable things like strategic sourcing and negotiations management and other things I had been laying the groundwork for.” 

Minority Suppliers Key to WSSC Success

Another key accomplishment Martin beams about is her participation in re-invigorating the commission’s Small, Local Minority Business Enterprise (SLMBE) office. Martin’s work included significantly improving engagement of potential SLMBE vendors and improving procurement process cycle times and enhancing procurement practices through contract management training.

When she arrived on the job in early 2010, the Commission had already initiated a study to uncover any potential disparities in the SLMBE vendor community. Part of the study was designed to determine if SLMBE vendors weren’t aware of or gaining access to available contracting opportunities the Commission offered. One thing the study resulted in was convincing the Maryland Legislature to provide authorization for a SLMBE program.

By 2013, the Supplier Diversity office with Martin and her team helped to spearhead a public awareness campaign, conducting trade fairs and public information meetings.

The campaign included responding to complaints of unsatisfactory compliance, validating subcontractor compliance, attending monthly contract compliance meetings, and providing monthly training to ensure bidders were informed about the solicitation process. Also that year, WSSC hosted and participated in approximately 125 procurement fairs, corporate round tables, supplier development trainings, and conferences. Its “How to Do Business with WSSC” events attracted more than 300 new suppliers, and more than $185 million in minority/women business enterprise contracts were awarded that year, up $57 million from the year before.

“In doing a supply chain management transformation, we make sure everyone understands that this is not just because we have a SLMBE office, this is what’s best for our rate payers,” Martin says. “Vendors that approach our community assume all we need are pipes and all we do is build stuff underground. We let them know we handle everything from paper clips to pipes. Even our legal office needs contracts. That’s the a-ha moment for them. We play matchmaker. They have access to all the information to see who has contracts, who’s registered in our database, and where the minority suppliers are in the area they’re competing with. We have this spirit of transparency and openness and fairness and equity in our procurement process now. We have to do that because we’re in the public sector, but I think we do it because we know it’s the right thing to do.”

Maximizing SLBME vendors’ access to Commission business is good for everyone, as Martin explains. “If we can teach our small, local minority suppliers how to be successful in business, then guess who will benefit from that in the long-run? We will. This includes developing strategies that will help our community, help our supplier base to help themselves so they can help us because their success is our success.”

In the end, the supply chain initiatives Martin has spearheaded would not have been possible without top-level executive buy-in. “We’ve even changed our WSSC strategic priority to integrate supply chain management principles with supplier diversity and have the Commissioners on board,” she says. “It was really their idea. They recognized something had to change. Our Commissioners have to be able to support any rate increases we ask the public for,” she says. “We know we have to upgrade and replace the infrastructure and people get that, but they also want to understand we are not throwing away money and we are operating as efficiently and effectively as we can.”

Procurement Perspectives

After her more than three decades in procurement, Martin possesses the same zeal of a twenty-something college graduate. “If you have a passion for something, you are excited,” she says. “And if you are excited, you can motivate. If you can motivate, you can inspire. And if you are driven, you can make a difference. It’s been wonderful to watch the changes in our profession. Thirty years ago, we all started out being just buyers and purchasing agents and now we have a seat at the table.”

When she guest lectures at Clark Atlanta University, Martin finds it easy to sell students on a procurement career.

“I tell them all the time that supply chain management is a profession that you can go into when you are not sure what you want to do,” she says. “Because you are going to be able to touch it all. You can touch finance. You are going to be able to touch legal, operations and technology. Thirty years ago, procurement wasn’t the nucleus that it is today because we didn’t outsource as much. Today, those dollars – whether you are in the private sector trying to make money or in the public sector trying to keep the rate payers happy – are going out the door and need to be managed carefully, and the only way they can do that is through supply chain management processes. 

“In supply chain management, you have the opportunity to make a difference one little step at a time,” she adds. “I love those a-ha moments that people have when you explain why things have to be a certain way, why the cycle time is what it is, or why we have to buy this particular pencil versus the one they sell at the store next door. So having that knowledge and getting people excited about saving money is wonderful. It's been an awesome career for me and after 35 years, I'm just getting started.” 

 



Tags: purchasing Supply chain management Careers Procurement sourcing transformation Security public sector minority vendors
Category: News Article

John Hall

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John Hall is a freelance writer who reports on commodities markets and procurement and supply management topics for My Purchasing Center. His website is jhallmedia.com


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