By Danny Swalley
As a manufacturer who has served the waterworks industry for 25+ years, I can honestly say nothing compares to the supply chain disruptions we are currently experiencing. Contractors, utilities, and ultimately our fellow citizens are having to pay more while waiting longer. But manufacturers are not happy either. Most organizations are built to say “yes.” Delays, backorders, rapidly increasing costs, etc. are not normal operations. So, what happened in 2021 and what can we do to fix it?
To start, there are no silver bullets and most issues like port congestion, trucker shortages, and trade policy transcend the water industry. But there are areas within the procurement process that can be streamlined to create more resilient supply channels. The collection of products, vendors, and solutions available (or not) in a market are a direct result of a utility’s purchasing policies. But many of these polices have not kept up with modern buying practices. So, what can be done? I’d like to offer utilities three practical solutions:
- Streamline your product approval process. I rarely come across an up-to-date Approved Products List (APL). Instead, APLs are usually outdated documents created many years prior. While this is a big problem at smaller utilities, even large utilities are guilty. As a result, utilities gain inaccurate reputations… “They only like this” or “They never approve anyone.” Any manufacturer faced with this challenge has two choices: invest in salespeople to navigate this process or go somewhere else where business is friendlier. Either choice delays quality products from entering our market. Utilities should instead eliminate APLs and adopt performance standards that mirror AWWA standards wherever possible. Then allow without exception any product that meets your performance standard. This will encourage manufacturers to invest resources such as inventory, staff, and facilities in your area.
- Suspend bidding 12-month contracts. Annual bids work against your best interest when supply is constrained. Requirements to hold pricing for 12 months or reluctance to guarantee minimum purchase quantities create risk for suppliers. Instead, bid several smaller contracts with firm purchase quantities. The most aggressive pricing comes on contracts with guaranteed quantities and predictable (i.e., shorter) delivery schedules. More frequent bidding also allows utilities to benefit from suppliers who may have temporary excess capacity or extra inventory.
- Be open-minded. New vendors should be welcomed. It is usually a very large investment for a vendor to bring a new product to market. It is even more risky when that vendor is new to our industry. But these are the entrepreneurs, risk-takers, and businesspeople who ultimately create the robust supply chains utilities need. Avoid barriers to new participants such as narrowly defined product requirements, restrictive specifications, or unclear products review processes. Make the default position acceptance of any product that meets AWWA standards and your performance standards. Exclusion of a product should require proactive action, not the other way around.
None of these suggestions will fix our current supply chain issues overnight but with time they will bring new investment and new manufacturers to our industry. Imagine if over the past 10 years your utility had added just one new vendor for every critical item to your system. Would you be better off today? The world is full of quality, capable suppliers. Roll out the welcome mat!
Danny Swalley is Managing Director of Electrosteel USA. Swalley serves on the Water and Wastewater Equipment Manufacturers (WWEMA) Board of Directors as well as the WWEMA Legislative and Regulatory Committee. WWEMA is a non-profit trade association that has been working for water and wastewater technology and service providers since 1908. WWEMA’s members supply the most sophisticated leading-edge technologies and services, offering solutions to every water-related environmental problem and need facing today’s society. For more information about WWEMA, visit www.wwema.org or follow us on LinkedIn at https://www.linkedin.com/company/wwema/.