Diversifying one’s supply chain can add tremendous value and security to operations, as well as uncover significant savings. O.T. Wells II, Chief Procurement Officer of the University of California, Los Angeles, discusses the benefits and how to overcome the challenges of partnering with small businesses in order to successfully realize diversity in one’s sourcing partners.
This interview was edited and formatted for clarity.
Tyler Fussner, Managing Editor, Supply Chain Connect
O.T., thank you for joining us today.
O.T. Wells II, Chief Procurement Officer, University of California, Los Angeles
Thank you for having me.
Fussner
Could you please introduce yourself to our audience?
Wells II 0:29
My name is O.T. Wells II. I am the Chief Procurement Officer here at UCLA for campus. I’m responsible for all purchasing, all payables, the P-card as well as subcontracts and business contracts. And when I say business contracts, those are contracts where the university is actually a vendor.
Fussner 0:57
Excellent. We really appreciate you taking the time to sit down and tell us a little bit about what you do. Can you tell me a little bit about UCLA’s strategic sourcing methods? What sort of data analysis or technology is leveraged to help optimize your spend?
Wells II 1:17
We use a variety of tools to look at our strategic sourcing. We have a couple of initiatives. Our power is that we are one of 10 campuses in the UC system. And so, we do leverage the power of the system as well. Though, we account for roughly a third of all the spend, we do still collaborate with our other sister campuses. We leverage OMNIA, a group purchasing organization, and we are considered a lead agency for OMNIA. Along with our Office of the President, we do go out for RFPs, that once they go into the OMNIA catalog, they can be leveraged by other institutions around the country, both public and private. We do leverage OMNIA’s tools, as well as our own. We have what we call a benefit bank. That is a tool that is used across the system as well, where we can see what other campuses are buying, what the spend is for those buys, and then that can help us to determine what type of RFP we want to go out with—whether that is UCLA alone or something where we see, “Hey, there’s a need across the system. Let’s partner with some other campus or campuses to go out and try to target specific vendors and the spend.” We do that quite a bit.
We’re actually in the process now of going through a major procurement transformation. We are replacing some systems that have been in place for upwards of 40 years, and moving to some more modernized systems so that we can be a little bit more robust in our analysis and in our procurement process as we move forward into 2024.
Fussner 3:18
Sounds like a very exciting time for the procurement team at UCLA to get to overhaul the practices that have been in place for so long. Are you going to be implementing some new digital technologies? Can you explain what you’re doing?
Wells II 3:35
We are moving into new digital, more modernized digital procurement software, as well as a new ERP. We are moving from a mainframe that was put in place back in the early 80s to now going to a cloud platform for our ERP. Like I said, it’s a major transformation for the university. We are basically changing how the university is going to be doing business come January of next year. And we’re excited. It’s definitely a big lift but we are ready and have been meeting the task and looking forward to the new year.
Fussner 4:16
Excellent. That sounds like an exciting future and hopefully you get to lead by example for the rest of the UC system and show what that digital transformation can really mean for a procurement team.
O.T., one thing I am very interested in hearing about is UCLA’s Small Business First program. Can you tell me a little bit more about what that program is and how it’s able to deliver equitable opportunities and access for certified small businesses?
Wells II 4:49
Certainly. UCLA, as well as the UC system—so it applies to all of the campuses—we have a program called Small Business First. And what that program does, it requires campus units to award transactions to small businesses that are certified, qualified small businesses, award transactions between $10,000 and $250,000 without having to go to RFP. You do need at least two quotes in order to make the award. And then there are certain exceptions: If we already have a strategically sourced agreement in place, then we have an agreement in place that that small business first requirement doesn’t apply. If it’s a federal grant and the grant requires that we go to a certain vendor, then of course, we can’t deviate from that. And then there are some other exceptions: If there’s some unique situation and there’s a vendor there that really can only supply the services or the goods that we need for that unique situation. There are things of that nature. And the department has to fill out a waiver and has to be reviewed and approved before they can deviate from the program. But we’re seeing some good traction with the program. And our goal is by 2025, the end of 2025, (our fiscal year ’25 would end in June of 2026) by the end of that fiscal year, we want to have at least 25% of our procurement spend with small businesses. And that’s for UCLA and all the UCs combined.
Fussner 6:34
I want to understand the why behind this program. What is the driving force behind that SBF program? What was the need to put this in place?
Wells II 6:42
We’ve found that during COVID, in particular, a number of businesses in the hundreds of thousands went out of business during that time. And it’s a part of the mission of the University of California, UCLA, to support the community, to be there, to uplift individuals in the community. And not only that, but it’s also just the right thing to do and good business to support the small businesses. We put this in place, one, to help our local businesses get into the procurement pipelines, be able to have a significant impact into underserved neighborhoods and allow opportunities for those businesses to thrive. That was the primary driver. And again, when I talk about the mission of the university, it’s right in line with the mission, with teaching, with community, with research, with uplifting our fellow community. This program goes right into that.
Fussner 7:46
And O.T., you just touched on supporting the community: What sort of support does UCLA offer for those small businesses that are trying to engage with the university?
Wells II 7:56
We’re doing a couple of things. Working with our Office of the President, the UC Office of the President, we are aligning ourselves with some investment banks that will provide invoice financing, capital investment and other investment tools for small businesses that need it. We are partnering with them, identifying businesses that we think would be good partners for that, and they are also identifying businesses that they think could use their assistance. We’re partnering with them mostly because they’re offering these services at much lower rates than what we see in our more common institutions. And many times, small businesses say that they can’t get the types of loans, they can’t get the types of financing, that are needed to be able to support customers like UCLA and the other UCs. So, what we wanted to do was put things in place to help with that so that those businesses could support us, they did have the financing the capital investment needed to be able to provide the goods and services that we require on a timely basis.
Fussner 9:16
And say, I’m a small business hearing about this SBF program for the first time, hearing about these avenues of support and the programs that are in place that can maybe make something happen with my business in partnering with UC—how does someone get involved? How do you get involved in the SBF program?
Wells II 9:34
I would say reach out to the campus. All the campuses have a small business officer who is there to help guide the small business through our process to ensure that they’re certified, to guide them through that as well to get the proper certifications, and then also to connect them with the right persons if those types of needs with financing, invoice financing, capital investments are required, to introduce them to those partners of ours so that they could go through their requirements to ensure that they can qualify for that assistance. But first, they would need to just reach out to the campus and reach out to the chief procurement officer there, if they can’t find who the business officer is, and then they will be put in contact with that person. And the primary role of that small business officer is to be an advocate for them. They will look at the services or goods that they’re offering, and then look to connect them with the right units on campus that are looking for that service or good and the procurement person, whether it be a strategic sourcing manager or a contracts manager, to connect them with them to make sure, one, that they’re being looked at for RFPs or they’re being looked at for transactions that are above $10,000 and below $250,000.
Fussner 11:00
Awesome. So, just reach out, get in touch and it sounds like everything’s in place to get the ball rolling.
Wells II 11:06
It is. But one thing that’s important: The firm’s definitely need to be firms that have good standing in the community. They’ve been doing business for a little while; they can’t have been in business for only a couple of weeks. We’ve seen all types of folks reach out to try to benefit from this program and also just to get a contract with us. We do to vet. We do vet them as if they were a Fortune 500 company. We need to make sure that they are legitimate, that they have the wherewithal to at least come into the door and provide the services and then we’ll do what we can to bolster them up so they can provide more. We’ve got some good stories of firms that have come in to do small transactions and from doing good work on those small transactions, they were given a little bit more sizable transactions, to now they’re doing quite sizable transactions in the millions of dollars. And it’s just been a growth period of mutual trust and helping us out and so we’re helping them as well.
Fussner 12:20
Very cool to hear that the program is successful, it is helping, and it is generating results on the initiatives that it was founded upon. But going back to what we touched on earlier, the needs that started that program, the SBF program, are those needs applicable across industries? For procurement teams outside of the UC-sphere, what are some ways in which procurement professionals can address diversifying their supply chain partnering with smaller businesses?
Wells II 12:50
Yes, the needs are across all industries and all categories. Partnering with the various Chambers of Commerce in your locale; partnering with entities like the National Minority Supplier Development Council, or WeBank, or any of the other entities that are out there that have a small business, diverse business membership. You’d be surprised at the quality, the high quality of firms that are members of these organizations and how not only can they bring great work to your institution, but they also can bring considerable savings as well. Not only are you getting a quality product, but you’re also—which is key for procurement is we’re always talking about savings—you also, nine times out of 10, find significant savings there as well.
Fussner 13:51
I think if there’s anything we learned over the past few years is that there’s definitely some strong benefits to having a diverse source. Things can change at a moment’s notice and if you just keep doing things the same old way you might hit some roadblocks. It’s definitely important to be on the lookout for the ability to diversify your sourcing partners. Are there other benefits to diversifying your supply chain? What are the benefits of working with a small business? You had just mentioned finding some savings.
Wells II 14:25
I would also say innovation. Many times, you’ll find smaller firms, just because they are smaller and they’re looking to compete, you find a lot of innovation there. There may be ideas that some of the larger firms aren’t thinking about readily or that you haven’t thought of, but in order for that smaller firm to get noticed, to provide a value add and to show that they can benefit your firm, they will come with some very unique ways of looking at certain aspects of business, or come with a good but it’s a little different than what you’ve seen in the past. And that gives you a leg up.
Fussner 15:08
And conversely, what are some challenges with working with small businesses? How can procurement professionals prepare for such challenges so that they are able to successfully engage with a diverse supplier base?
Wells II 15:23
I think that one big challenge is that many small businesses cannot handle the magnitude of the orders that you may need. I think sometimes it’s key to look at what they can do and find something niche that that firm can do. And then, create the report and slowly but surely provide them with additional work. I think some firms make a mistake of trying to take a bite of the whole apple when they’re really not positioned to do so. And so maybe it’s just giving them a small piece of that apple and then as time goes on, they will start to take more and more of the pieces of the apple and then eventually get the whole apple.
I also would say for those small vendors as well as working with them, it’s beneficial to include them in RFPs even if they’re not getting awarded, because they get visibility. Now I’m aware that there is this other firm out there that can do X, Y, and Z. I may not have awarded them the business this time around, but they’re now on my radar and something else will come across my desk, and I’ll say, “Hey, you know what? This looks like it will fit for that firm that we looked at before. Let’s give them a try on this transaction.”
Fussner 16:45
Got it. It sounds like you definitely want to set some realistic expectations, make sure that, like you said, you’re not giving them the full apple right away and you set up a plan for success. You don’t want everyone to run into roadblocks in that.
Wells II 17:01
Exactly. And not to say that there’s not a firm that couldn’t take a bit of the whole apple. But I think when you’re being realistic with a fairly new firm, a fairly small farm, you want to, again, like you said, set them up for success and not give them too much where they are being set up for failure.
Fussner 17:17
Speaking to the challenge of diversifying a supplier base, how is UCLA addressing that challenge? Is there any work being done to look beyond the normal scope of programs like the SBF? Is there any sort of program in place to address diversifying the supplier base at large?
Wells II 17:36
One thing that we’ve done, and again, this is across the University of California system, not just UCLA, is we have partnered with the XPRIZE Foundation. And so, if you’re not familiar with the XPRIZE Foundation, they were founded to promote innovation in helping humanity. Looking at things to do with rainforests; looking at things to do with outer space and the environment—getting to sustainability.
One of the things that we have approached them with, and they’ve agreed to support, is an XPRIZE around supplier diversity and small business. And what we’re doing there is we are looking to have this devoted to finding ways to ensure that small business and supplier diversity is not something that is a mystery to corporations. It’s not something that people are trying to figure out what to do. This prize will be to figure out what is the best way to apply supplier diversity in your organization. And we’ve identified some Fortune 50 companies that are going to support this with us and come along on this journey.
There will be an announcement that’ll come out around the XPRIZE and how to sign up for it. But what it basically will be is that people can put together their own pitch groups; they come up with a solution, they pitch the solution, and then if their solution is selected, there’s a prize. There’s not just one solution that may be selected. It could be multiple. A good example around this is the inaugural XPRIZE was around space travel and privatizing that travel and making it easier and innovative. And from that you found the founding of SpaceX, Virgin Galactic and other private companies that do space travel. The winners of that pitch competition, their ideas were used to help those organizations get off the ground.
We’re looking to do the same thing around small businesses and supplier diversity with the XPRIZE. Anyone who is interested in finding out more about this, if they want to reach out to me directly, I’m happy to speak with them.
Fussner 20:00
That’s awesome. I think it’s an innovative way to, like you, said unmask the mystery behind how to tackle this problem. Get everyone involved; brainstorm a solution and hopefully there can be more than one solution to this issue.
Wells II 20:15
Exactly.
