“Recently we’ve actually been working on a kind of a purchasing matrix… We’re just trying to streamline those rules and guidelines so they’re not reinventing the wheel every time.”
Warren Lehr – City Manager at City of Owasso, OK
Warren serves as the City Manager of Owasso Oklahoma, and before that served as Assistant City Manager. Previously he had a career in the golf business.
Could you kick us off by giving a little background on yourself?
Warren: Sure, I’d be happy to. Thank you for having me. I’ve actually been in this position as City Manager for the last four years. Prior to that, I was an Assistant City Manager for about the same length of time. Prior to that, I was in the golf business for 25 years, so both private and public sector in California, Texas, Oklahoma, and New Mexico. I am a PGA member. I come to city management from a golf background, and there are certainly some similarities there.
What are some of the continuities between City Management and the golf business?
Warren: I used to say about a golf business, it’s a little different than opening a jewelry store at the mall where you have to negotiate a lease and buy a product and display it and sell it and provide customer service and reorder according to you’re hoping to buy. In a golf operation, you’ve got a merchandising operation. You’ve got a golf shop with its own space, its own building, its own staff. You’ve got a golf course maintenance operation with its own building, its own equipment, its own staff. You’ve got a food and beverage operation with its own space and the building and its own equipment and its own staff. You’ve got a driving range and teaching operation with its own area and staff. You’ve got a golf cart operation with its own building, equipment, staff, and maintenance. Then you’ve got the lifeblood of it, which is at the golf shop where somehow you sell golf. Somehow you sell rounds of golf.
You’ve got multiple operations operating under one umbrella with in many cases very different goals. You’re managing multiple priorities with an end product, an end experience in mind, but some different hats to wear.
A city’s the same thing. You’ve got public safety, you’ve got police and fire, emergency medical service operations with its own space, its own building, its own leadership, its own specific goals. You’ve got your internal operations, HR and IT and support services that cover things like building and vehicle maintenance. You’ve got a public works operation that handles water, waste water, storm water and so forth. You’ve got a parks and recreation operation. You’ve got a community development operation. You’ve got about a dozen different departments under one umbrella with one overall goal, great core services to the citizens, but completely different cultures within those departments, completely different goals. If you’re familiar with “Good to Great,” really different hedgehog principles within one overarching principle of quality consistent service to the citizens.
There’s diversity in the management and to oversee many, many areas where you’re not an expert. In the golf business, where I grew up, I’ve done everything. When I got my first head professional director golf job, I’d worked on the golf course, I’d worked in food and beverage, I’d worked in merchandising. I taught, I played – I had done everything. In this business, you can’t possibly be a finance professional, an IT professional, a police officer, a firefighter. You’re overseeing a very diverse operation.
How did you feel like the role of procurement and supply chain changed between the golf business and city management?
Warren: Sure. Along those lines, really one person can only be an expert in purchasing in one or two or a few areas. Just like with the rest of the management, you’ve got to empower the professionals within those different departments to make those important purchasing decisions often without much of your oversight. You just have to develop trust in their competence. We have great leadership, and sometimes I have very little to no input in procurement.
Where do you see the trade off between centralizing and decentralizing procurement playing a role in your city?
Warren: Oh, sometimes it’s going to be centralized purchasing. It’s going to be advantageous for some times and impossible for others. Part of the challenge where your objectives for your organization may be different from ours, we’re a community of about 35,000 so we have overall about a $50,000,000 budget. I’m not saying that we couldn’t be a decent end customer for some businesses, but being smaller than Boston or San Francisco or any of the large metroplexes, our purchasing becomes even a little bit more splintered because we don’t have products across the operation that allows us to do decentralized purchasing.
How do you generally come in contact with the procurement process?
Warren: It puts a premium on my relationship with each director to build that trust relationship that I feel like they’re making good common sense decisions in negotiating purchases and also in closely following our state statutes. In local government, you’re governed by either state or local statutes that dictate a bid process or at the very least for smaller things, obtaining three quotes or two quotes or just negotiating a price. It depends on the size of the purchase. We’re always fighting that bureaucracy of, okay, we really like this product, we really like this source. Can we just do it or do we need to get more quotes? Is this something that we need to put out a bid depending on the size of the purchase? The bottom line, I’ve got to trust my directors to be professional in their ability to make smart purchases.
What are some of the challenges that you’ve encountered when it comes to procurement?
Warren: Broader and broader sources. They’ve always been almost innumerable, but with the Internet and social media there’s many more avenues for companies like yours and others, many more avenues to get your attention. There’s a lot more, there’s just a barrage of daily e-mail or if we pay attention to any of the other social media there’s a lot more to sift through to determine whether this is the message we need to be listening to or this is a relationship we need to develop. Is this a potential supplier for us or not? Oftentimes you’re looking for a local or in state supplier. That’s not always possible, that’s not always the best route, but those are challenges.
What are some goals that you have for the role of that procurement function and process in your organization?
Warren: Again, because we’re not that large, you end up having directors overseeing different supervisors or department leaders. The goal is always to make an economic, smart purchase, and to put in place some guidelines to make sure that, especially in your larger choices, there’s careful deliberation. Several years ago we changed out our whole, I don’t even know exactly what to call it, but we changed out our software program. We use SunGard at the city of Owasso. It was about nine years ago that we purchased that operating system software. It was many months of receiving proposals and deliberating on whether this municipal software fit our needs as opposed to another. It was a lengthy process. When we buy vehicles, it’s a little simpler than that. The goal is just always make the best purchase.
One of the things we have a hard time with, as I’ve mentioned before this might not be pertinent to your question, but it’s difficult sometimes to wade through our bureaucracy to make sure that we make legal purchases. That’s kind of first and foremost and sometimes that makes things sticky. Sometimes we like to, on the private side you can just make a decision. It was pretty simple, but on the public side it’s a quagmire and it takes longer to do everything. It’s very difficult to really streamline the process when you’re following all these rules and regulations and statutes and the checks and balances.
The goal is to do it as efficiently as possible and to have all of your key people in purchasing positions understanding. Recently we’ve actually been working on a kind of a purchasing matrix, something that says, okay, over $50,000 for capital or building or construction, there’s one set of rules. Under $50,000, another set of rules. Under $25,000, another set of rules and under $5,000, another set of rules depending on whether it’s a capital item or an equipment item. We’re just trying to streamline those rules and guidelines so they’re not reinventing the wheel every time.
What have been some of the obstacles that you’ve come across in trying to achieve that simpler, more streamlined set of rules?
Warren: Just the bureaucracy of government. You can put it all on a spreadsheet but there are qualifying questions for each different scenario. Sometimes that’s difficult to simplify. Private side versus public side, it’s one of the most frustrating things. Checks and balances are needed but sometimes they get so much of a quagmire that it just takes time to work through.
Don’t get me wrong, I’m emphasizing this one subject. It’s not that hard, we get through it, but it’s not as simple as, “Here’s who I want to make our purchasing decisions.” Oftentimes there’s, “Here’s what we’d like to do,” but the timeline is going to be quite a bit longer because we’ve got to get other bids, get other quotes, have pre-bid conferences. It just depends. That’s more on the construction end.
Are there other areas of procurement that you’ve been thinking about improving in?
Warren: Really the main focus is the funding stream. In Oklahoma for operational funding, we rely on one source, and that’s sales tax. Oklahoma’s the only state in the union that we cannot make use of property tax, we have no income tax, municipal funding of any kind. Property tax is only for capital projects. We’re totally reliant on sales tax and what happens if your sales tax dips and you need a dozen police vehicles, which you can’t afford any, then the next year you’ve got to buy 18 vehicles just to get by. Now all of a sudden, at 35, 40,000 dollars a vehicles, you got a significant purchase that seven years later you’re going to need 18 more. It’s difficult sometimes to get your funding stream in line with your needs stream. That’s really the biggest thing in Oklahoma’s diversification of municipal funding.
That kind of constricts everything. This year we’re looking at a flat budget, so you put off certain capital and equipment and supply needs. You don’t even have a choice. We’re not in the procurement mode at the moment except for absolute necessities, which obviously move
When budgets are slim, getting the most out of each dollar is really important. Do you have any kind of advice or strategies on that note for other folks that might be helpful?
Warren: Sure. In government, especially in municipal government, it’s where the rubber meets the road. Your taxpayers, your citizens, your customers are right there. Everything you purchase, every dollar you spend for travel or training or for sand and soil, it doesn’t matter. Tractors or vehicles, it doesn’t matter. Every dollar you spend is scrutinized in terms of efficiency. It’s just a continual process of purchases according to whether their ability or efficient function or whatever the case may be. You just get better and better at that if you’re going to be good and not waste taxpayers’ money. You’re constantly refining with the changing products. You’re just constantly having to re-educate yourself on the benefits of new technological developments in the products that you’re purchasing.
Once you buy a software system, you’ve made that commitment. So far it’s been a nine year commitment. You can’t just switch it out because you don’t like this one because you don’t have the money to make that change.
In closing, what are one or two pieces of advice for other city managers?
Warren: Really care about your directors and key supervisors, and develop a trust relationship so that when important purchases are necessary, and every purchase is important, when those come up you can pretty much put faith and trust in your key people to make those decisions.