Creative Sourcing Solutions for UVM- The Power of Collaboration

1. Creative Sourcing Solutions for UVM
Utilities and contractors harnessing the power of collaboration
October 2022 Wade Myers/Jim Downie

2. Current Market Realities
Job openings have remained around 11 million for the last year
Approximately 6 million unemployed
“…There are 11.3 million jobs chasing just 5.9 million unemployed
Americans. Hiring confidence remains strong as employers navigate
tension between two narratives about the economy—fears of a possible
recession stoked by inflation are eclipsed by the simple reality that
employers can't hire fast enough to meet demand. This puts workers in all
sectors firmly in the driver's seat.“
- Becky Frankiewicz, president, ManpowerGroup

3. Current Market Realities (cont’d)
Frankiewicz added that the empowered worker has spread from offices
and cubicles to factories and frontlines:
"Truck drivers, not bankers, are the ones scoring big bonuses," she said.
"Across the board, employers must get creative and offer more flexibility
and opportunities for development. To attract and retain the talent they
need to grow, employers must focus on three key areas: flexibility,
employee wellbeing, and training and reskilling."

4. Current Market Realities (cont’d)
Utility Vegetation Management Workforce Report (UAA & DRG):
“The industry needs to look at the problem with workforce resources
differently. The dynamic and perspective of new workers has changed. There is
a need for utilities to work more closely with contractors on retention and the
industry at large.”
“It appears that the most important trends in retention focus on job
satisfaction, appreciation, and a feeling of being valued and contributing to a
worthwhile effort.”
“Younger workers are much more focused on having a career that provides
intrinsic benefits that didn’t seem to be such a concern for older generations.”

5. Holistic and Triage Solutions for UVM
1. VM proactively partnering with vendors, procurement and
executive leadership breaking “business as usual” approach to
sourcing (i.e., strategic sourcing initiative).
2. Triage opportunities for today’s social and business environment.

6. Holistic: UVM Strategic Sourcing Initiative
Recognizing the merits of the current state but be willing to step
back and “break all the rules”.
Trust, integrity and transparency the foundation upon which the
“house” will be built and maintained.
Overcoming current challenges requires thinking “out-of-the-box”
and being willing to sacrifice “sacred-cows”.

7. Executive Leadership Buy-in
Fundamentally shift the utility/contractor relationship from
commodity-based, micro-managed, decentralized, low-bid
and non-strategic program to a long-term managed
business relationship in order to achieve true cost savings
and productivity breakthroughs.

8. Goals and Objectives
Step out of the box and develop creative ways to collaborate
and solve the major challenges of the day:
Tree worker recruitment and retention
Supply chain (vehicles, tools, equipment, shirts)
Stable program budgeting

9. Goals and Objectives (cont’d)
 Identify creative ways to reduce cost of the entire
operational relationship, acknowledging that it is critical
that the contractors receive a fair profit, with assurance for
the utility that operational results will be achieved.
 Establish contractor/utility relationship based on trust,
integrity and transparency.

10. Holistic Strategic Sourcing: Key Components
1. Opportunity Identification
2. Assess Current State
3. Develop Strategic Sourcing Strategy
4. Select Contractors
5. Implementation
6. Reporting
7. Continuous Improvement

11. Opportunity Identification Exercise:
Target improvement areas where 80% of the cost exists
Identify re-work, redundancies and waste
Identify quality issues and their impact
Evaluate potential innovations (technology, equipment, etc.)
Identify cost savings opportunities and workflow improvement

12. Opportunity Example
A market analysis suggested that the tree worker wages/benefits
were 20% below similar jobs in the area.
The difference in crew productivity between experienced crew
foreman (3 year minimum) and inexperienced crew foreman (less
than 1 year) was approximately 20%.

13. Opportunity Example (cont’d)
Further calculations suggested that reducing foreman turnover
from ~50% to less than 25% would result in a 20% improvement
in productivity. (An exercise in logarithms suggested that for
every 1% reduction in turnover, we could expect a 1.4%
improvement in productivity).

14. Utility Client Risk Assessment
Contractor T&C Perspective
Risk Tolerance
 Indemnification
 Warranty & Performance Guarantees
 Insurance Requirements & Cost of Coverage
Pricing Flexibility
Contract Length
Payment Terms

15. Utility Client Risk Assessment
Contractor Operational Perspective
Resource Availability
 Potentially limiting regulations or requirements
o Warranty & Performance Guarantees
o Insurance Requirements & Cost of Coverage
Utility Interpretation of Specifications
Information Tracking and Project Monitoring
Production Target Requirements
Access to Utility Information and Historical Data
Technology Requirements

16. Utility Client Risk Assessment
Overall
Considerations
Growth plan alignment
Alignment with values
and mission

17. Utility Client Risk Assessment

18. UVM Triage Opportunities for Today’s Social
and Business Environment
Make Wages Competitive in the Local Market
Strategic Use of Overtime
Strategic Use of Per Diems

19. Utility and Vendor Collaboration is the Key!

20. Our Current Challenges - Not New (1914 example)!
PBS Edison
Documentary

21. Questions?