WBEs succeed in business by filling niche tech needs
Companies look for a track record and risk management capabilities, but subcontracting can be an entry for newer suppliers who lack history
“For those with entrepreneurial spirit and fortitude, there are tremendous opportunities,” says an SD director
By Claire Swedberg
'The business climate for diverse suppliers is on an upswing,” says Joan Kerr, director of supplier diversity and sustainability for Pacific Gas & Electric Company (PG&E, San Francisco, CA). She sees more opportunity opening up in corporate America as well as globally. PG&E continues to “work on improving our infrastructure in IT and in gas and electric operations. That means we need IT and engineering services.”
The utility giant has opened a new data center, which, she says, involved a lot of participation from diverse suppliers. The company also has a long-term business plan that includes a number of upgrades. Projects include a complete revamping of gas operations, replacing hundreds of miles of pipe, and increased pipeline testing. “A lot of engineering is involved, and diverse suppliers have helped us on that,” she says.
PG&E is focused on improving cost and speed of its services. “We believe that bringing diverse suppliers onto the playing field increases competition and helps us meet those goals,” says Kerr.
At PG&E, Kerr sees the convergence of many services that might have been separated in the past. For example, IT is now part of nearly every aspect of the business, from gas pipelines to data centers, and engineers are involved in solving problems in house and out in the field.
How to get in
Kerr urges new diverse suppliers to consider how they approach large corporate clients. “I think if you’re just starting up, you need to be looking at opportunities to subcontract,” she says. Fortune 500 companies are reviewing their costs carefully and taking a close look at the potential risks of engaging with a new supplier.
“Any supplier without a proven track record can’t demonstrate that they can protect against risk,” Kerr says. Risk management is a big focus in supply chain management today, she notes. “Would-be suppliers must ask themselves, ‘How do I look from the perspective of risk management, customer satisfaction, financials, track record?’ The goal should be to prove that they will provide value and not increase risk.” Suppliers who successfully perform a task as subcontractors get an opportunity to establish a track record and prove themselves.
“Standards for performance are very high. We have an integrated value chain, so the influence a supplier can have across that value chain is tremendous. One problem can stop the whole project, and one solution can save it. You can have a very big impact on a project even when you’re small,” says Kerr.
PG&E is a sponsor of the Advanced Technology Management Institute (ATMI) at the UCLA Anderson School of Management (Los Angeles, CA). ATMI helps qualified diverse business enterprise (DBE) leaders learn about new technologies that make their work valuable to their corporate customers. The program is sponsored by major California utilities, including PG&E, Sempra, Southern California Edison and Verizon. UC-San Diego, UC-Davis, UC-Berkeley and the Lawrence Livermore
National Laboratory helped develop and deliver the curriculum. DBE participants also receive mentoring from the sponsoring corporations. “We’re seeing our industry change, and want to make sure diverse suppliers have some run room to be able to lift off when the time comes,” Kerr says.
PG&E management takes diverse suppliers to trade shows focusing on areas like hydropower or distributed technology. Diverse suppliers can see the latest ways to engage corporate clients in the technology arena. “The rate of change and innovation is huge. We’re doing what we can to involve diverse suppliers in those conferences where we know the latest info will be shared.”
At these events, PG&E often makes introductions to its prime suppliers. “For those with entrepreneurial spirit and fortitude, there are tremendous opportunities,” Kerr says.
Alliant Energy seeks suppliers with the highest standards
Alliant Energy (Madison, WI) turns to its suppliers for a wide range of technical services, including boiler and turbine maintenance, mechanical and electrical design, environmental engineering, and anything else involving power generation and distribution. “We also have four wind farms that require a special set of technical skills to maintain,” says supply chain performance manager Dan Schoepke.
The amount of spending with diverse suppliers is one of the company’s key performance indicators. Alliant Energy management attempts to identify at least one diverse supplier for every bid event. “We find suppliers through the organizations we belong to, as well as at events that allow us to network with diverse suppliers,” says Schoepke.
In the business of energy, he says, the future mandates fresh ideas and high-quality goods and services. “We believe that a variety of supplier perspectives is a priceless resource and key in achieving economic opportunity and growth.”
Schoepke invites companies interested in doing business with Alliant Energy to register at the company’s supplier portal. Alliant wants to work with suppliers who work safely, provide high-quality service, and uphold the highest standards of ethical conduct and legal compliance. “This represents the heart of how we do business and is critical to our company’s reputation and success,” he declares.
Humana seeks the best niche suppliers
Technical services are important in many industries, including insurance. According to Kevin Regenhold, technology procurement manager for health insurance company Humana (Louisville, KY), diverse contractors provide a variety of services, including IT asset maintenance and disposal. Suppliers also serve as resellers to Humana for both hardware and software products, and provide IT professional services like consulting, system design and build-out. In addition, they offer cabling installation services and network support.
“It makes good business sense to strive for a diverse supplier base,” Regenhold says. “It’s a reflection of the nature of the business and of the diverse customers, associates and business communities Humana serves. Because we consider our suppliers an extension of our company, mutually profitable relationships with diverse suppliers are vitally important to our success and the success of the suppliers.”
Humana works with national, regional and local certifying agencies to identify qualified diverse suppliers, and invites them to participate in its RFP processes for products and services. In addition, the company provides online registration for diverse suppliers where they can identify themselves and the types of goods and services they provide for future consideration.
Humana also participates with advocacy groups to promote supplier diversity and match qualified diverse suppliers with appropriate corporate buyers. Humana is active with regional affiliates of the National Minority Supplier Development Council, and attends trade shows and local SBA business fairs. It also holds training seminars for small business owners.
Regenhold recommends that organizations demonstrate they have one unique capability and perform that function really well. “Far too often, I have technology companies tell me they are the best at everything, and they can do anything and everything we need them to do. I need to know who is the best at very specific things.”
Diverse suppliers used everywhere at Ingersoll Rand
Supplier diversity is a key metric for Ingersoll Rand, a diversified industrial company. The company launched its supplier diversity program in 2012. It does business with minority, women and veteran-owned businesses in virtually every category of procurement, from machined parts, tubing, rubber products and mechanical sub-assemblies, to engineering, facilities management and IT services, says supplier diversity manager Jackie LaJoie.
“Our supplier diversity manager works closely with our procurement teams to identify qualified diverse suppliers for inclusion,” says LaJoie. Ingersoll Rand is also a member of the National Minority Supplier Development Council (NMSDC), the Women’s Business Enterprise National Council (WBENC), the U.S. Pan Asian American Chamber of Commerce (USPAACC) and the National Veteran-Owned Business Association (NVOBA).
Ingersoll Rand aims to “grow and expand its global business and shareholder value by aggressively focusing on and developing minority, women and veteran business enterprises as a part of a value-added strategy,” according to the company’s mission statement. “By working with these businesses, we are tapping into the skills and talents of a broad range of people. Supplier diversity isn’t just the right thing to do, it’s good for our business,” LaJoie says.
“We encourage suppliers to include their business descriptions in databases of groups like NMSDC or WBENC and incorporate key words that describe their core capabilities,” she adds. This will increase their visibility to major corporations who use these tools to locate diverse suppliers.
Ingersoll Rand selects suppliers who respond to RFQs, RFPs and RFIs in a timely manner. Also, LaJoie says, “If a particular opportunity with our company is not a good fit for you, let us know, and tell us more about your company so we might consider you for future opportunities that match your capabilities. Suppliers who meet expectations have the opportunity to grow with us.”
Brazeway: engineering firm and WBE
Engineering services company Brazeway (Adrian, MI) serves Ingersoll Rand as well as other customers in the appliance, HVAC and automotive industries. The family company is woman owned; its head is Stephanie Hickman Boyse. “We don’t think much about being a female-owned company,” says Boyse.
Brazeway began as a partnership between two men, one of whom was Boyse’s grandfather. Eventually Boyse’s family purchased the company. Now ownership has shifted to the third generation, Boyse and her sister, putting the majority ownership of the business into the hands of the two women. Boyse has been president since 2000 and CEO for six years.
The engineering-based business serves global OEMs and tier 1 companies. Brazeway does product development and component design for customers and for use in the manufacture of its own products.
“In many cases, we are designing products that we will produce for them, and in other cases, we are using our engineering and technical expertise to solve their operational issues in product quality, product design, or process design and control.”
Focused on innovation and the customer
The company has an unusual motto: “Obsolete everything we do,” indicating that it measures its success by the constant redevelopment of its own products, processes and innovation. Most Brazeway competitors are very large global companies. “That means we have the advantage of speed, agility, a long-term view and a willingness to take risks in order to innovate,” Boyse says. She adds that, “We have also been told we are ‘insanely customer focused,’” which she calls a benefit of being a connected company of people who are passionate about what they do.
The company’s 2013 core sales were up 11 percent, and Boyse anticipates double-digit growth in 2014.
Saumin Mehta, Brazeway director of sales and business development, agrees with Boyse’s assessment. “Because the company is smaller than others, we can make quick decisions on things that could impact customers’ products and offerings.
“Pretty much everyone here is an engineer,” he says, pointing out that even the head of human resources at the company has an engineering background.
SHI: WBE and IT products and solutions provider
SHI International Corp (Somerset, NJ) is a global technology reseller and IT solution provider. Its clients include corporations including Kraft Foods and Mondeléz, a Kraft snack and convenience food spinoff.
SHI partners with its customers’ procurement, IT, finance and other business areas, says Joseph Negron, SHI’s director of enterprise sales in the central region. SHI has a close relationship with Microsoft as well as other large and small software publishers.
Negron reports that SHI, established in 1989, is the largest minority/woman-owned business enterprise (M/WBE) in the U.S. The company has more than 500 account executives throughout the world. Thai Lee, the company president and CEO, has led SHI for almost twenty-five years.
Increasing need spurs growth
Companies such as Mondeléz, says Negron, can have 500 to 1,000 different software solutions in place, each with its own licensing agreement and use rights. “Companies of this size can only spend so much time managing these software packages,” he explains. To provide software management services to its clients, SHI has partnerships with thousands of software solutions providers, he notes. SHI customers can also manage their maintenance and support portfolios in real time via SHI’s cloud-based graphical user interface. In the past decade, SHI has expanded into the hardware lifecycle and cloud computing marketplaces.
The company has also expanded its client base. “Initially, SHI focused only on the largest corporations, but today we also offer our services to small and medium-sized businesses. We have experienced tremendous growth in the past five years,” Negron says, which has allowed SHI to reach out to the small and mid-sized business marketplace. “There are about 120,000 companies that could potentially be our customers,” he says.
To serve them, the company has been aggressively hiring qualified people. “We’ve grown to this size organic-ally, no acquisitions, no mergers,”
CSMI: a global engineering WBE
CSMI (Schaumburg, IL) provides project management, packaging, electrical and controls engineering to companies worldwide. The company is owned by Karen Eng, PhD, and was founded by Eng’s father in 1983. Karen Eng went to work full time for the company after getting her degree in optometry. “The deal was, I would work for five years, and if my father felt I was qualified, he would let me take over,” she says. She became president of the company in 2000 and purchased it outright in 2008.
“Our growth has been exponential in the last few years,” Eng says. Initially the company served only food and beverage companies, but has since expanded to include clients in chemical, pharmaceutical and other industries. CSMI got its MBE certification in 1997 and WBE certification in 2009. “It helps us as an introduction point,” she says, but that’s where the leverage stops. “I want to be known first as a great engineering firm, not an M/WBE,” she emphasizes.
Meeting needs, quickly
CSMI has about thirty-five engineers on staff. “Because we are a smaller organization,” she says, “we’re very nimble and responsive.”
She notes that the company is moving with market needs by, for example, helping clients work toward sustainability. “There is a lot going on in industry with sustainability. For instance, packaging is changing, plastic is getting thinner. We have to be able to respond quickly to customers’ needs for new packaging products and processes.”
As a woman in a traditionally male business, Eng knows she sometimes stands out. That doesn’t bother her. Part of her job is travelling to customer sites, and she is as comfortable on a plant floor as in a conference room. She often carries a pair of work boots with her, so she can change out of her business shoes when she needs to shift roles. She sums up, “Our job is to get a customer’s stuff running.”
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