Supply chain talent a big issue for the oil industry in Western Canada

I had an opportunity to speak at Mount Royal University as well as the University of Calgary on a recent visit this week. I was speaking on the subject of importance of developing skills and capabilities in procurement, and that this is in effect the “golden age” of procurement.  At no other time in history has procurement had such an opportunity to create value, to drive different forms of engagement with internal stakeholders, to take on the role of a “trusted advisor” and “partner”, and to begin to truly drive opportunities for creating mutual value for both suppliers and their own enterprise.  On the other hand, it is also an opportunity for procurement to disappoint and fall short if the right approach is not taken.

For too long, procurement has complained about “not having a seat at the table”.  As one executive said at the meeting, “there is no reason why we can’t pull up a seat – but we have to give the others at the table a reason why we’re there.”  This means being able to spend the time to meet with stakeholders, and truly understand their problems and issues, and be able to solve their problems.  This in turn requires going beyond the traditional role of “stacking ’em higher and buying ’em cheaper”, but being able to derive true value from supplier relationships and derive solutions that are solving important problems for the business.  As I’ve said many times in previous blogs, price is only one of many different problems that procurement people face on a day to day basis.

One executive, Dave Balson from Suncor Energy, mentioned a case where he was working on a big Oil Sands project, and negotiating with the president of a large crane supplier.  He was, as usual, trying to get the cost of the cranes down, as well as the cost of the service agreement, focusing primarily on price.  The president of this company looked out the window of the ATCO trailer that was on the site.  He asked Dave, “How many cranes do you see outside that window?”  Dave said, “Five”.  “How many of them are operating right now?”  Dave replied again, “Well, none of them right now.”  “That’s right,” said the crane president, “you are beating me up to save a nickel, but you are losing a dollar by not having those cranes operational 24/7”.

In fact, on a major project, ensuring uptime of equipment is a major priority, not the cost of the equipment itself, due to the amount of production revenue being lost for every minute that the site is not operational due to equipment failures.  This principle has since been applied to trucks and other major pieces of capital equipment.

All of the executives I met with in Calgary, including executives from Suncor, Shell, WestJet, Canadian Natural Resources, HuskyEnergy, Hasbro Engineering and others, all mentioned the major talent shortages that exist in the supply chain area.  The local schools, Mount Royal University and University of Calgary, cannot produce enough talented graduates to meet the demand.  This will continue to be a challenge, and represents an exciting opportunity for young talented individuals seeking a promising new career.  It also represents an opportunity for those with technical, engineering, and functional skills to go into an area that was once considered a transactional area, but which has emerged as the hottest place to be in the industry.