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Supplier Diversity

Programs and companies propel veteran-owned businesses

“A military background imparts a work ethic that results in workers who are organized, are focused on task, and have integrity.” – Fred Phelan, Drexel Hamilton

The Small Business Administration offers a variety of programs designed to open doors for VOSBs and SDVOSBs

The federal government recognizes veteran-owned small business (VOSB) and service-disabled veteran-owned small business (SDVOSB) as supplier diversity categories along with women-owned small business, small disadvantaged business, minority-owned business, and historically underutilized business zone (HUBZone) business.

There is no government-wide federal certification for businesses owned by veterans; most agencies rely on VOSBs and SDVOSBs to self-certify. Rhett Jeppson, associate administrator for the U.S. Small Business Administration’s (SBA) Office of Veterans Business Development, notes that the Department of Veteran Affairs does have a VOSB & SDVOSB verification program for its veteran set-aside programs.

Based on existing certifications, “For the first time, the goal of three percent of SDVOSB spending on federal contracting was met in fiscal year 2012,” Jeppson says.

There are several federal programs designed to help veteran-owned businesses, including Veterans Advantage (sba.gov/about-offices-content/3/3142/resources/786161), a loan initiative intended to facilitate lending to VOSBs. But companies should work quickly – the program began on January 1 and will run only through September 30.

Another program is V-Wise (Veteran Women Igniting the Spirit of Entrepreneurship, whitman.syr.edu/vwise), an online training program and three-day conference offering exposure to entrepreneurs and educators across the country. “Since V-Wise began, 1,066 female veterans, spouses and companions of veterans have been trained,” says Jeppson.

Jeppson reports that the SBA has many other online and local resources tailored to veterans looking to grow their businesses. The Veterans Business Outreach Program (sba.gov/content/veterans-business-outreach-centers) provides entrepreneurial development services like business training, counseling and mentoring, plus referrals for eligible veterans who own or are considering starting a small business.

Support by the private sector
The government is not alone in encouraging veteran-owned businesses. Supplier diversity in the private sector, and even among diverse vendors themselves, is also thriving.

Here are stories of corporations and veteran-owned businesses that have benefitted from supplier diversity efforts.

Allstate: insurer and mentor
The Allstate Corporation (Northbrook, IL) is a publicly held personal lines property and casualty insurer. Kimberly Turner, supplier diversity manager, says Allstate has a formal supplier diversity program that includes a category for veteran-owned enterprises (allstate.com/procurement).

Allstate’s supplier diversity exchange is held each October. Suppliers attend this forum to get information and insight into the procurement world of large organizations. It includes education, panels, showcasing, and one-on-ones, though Turner warns, “being invited or accepted to the exchange doesn’t guarantee that you’ll do business with Allstate.”

Allstate also offers webinars to help educate suppliers on basics like how to prepare to leverage their certifications, respond to a request for proposal, and see how to do business with a particular Allstate department or division.

Allstate participates in the Financial Services Roundtable for Supplier Diversity, an organization made up of financial services companies with formalized supplier diversity initiatives. Companies get together to share best practices and diversity vendor contacts.

“Diversity brings new thoughts and different ideas to Allstate. It helps make the company more competitive, and allows it to support the community where customers and employees live and work,” says Turner.

Challenges for diverse suppliers
Rose Golembieski, supplier diversity advocate on Allstate’s sourcing and procurement team, says, “Diversity also brings challenges. Some new suppliers may not know how to get started as vendors. Sometimes they don’t understand the rigors of competing at the corporate level.” Allstate requires diverse suppliers to register and electronically present their capabilities.

Turner adds, “Some smaller vendors can’t always supply products or services at the level we need, so Allstate will help them understand how to scale up their offerings or even partner with other smaller vendors to meet our needs.”

Trends in supplier diversity
Using a third-party database, plus tracking and reporting systems, Allstate closely monitors the metrics of its supplier diversity program using capabilities information that all suppliers present electronically.

By 2015, the company estimates that 9 percent of supplies and services will come from diversity vendors. Allstate also keeps track of tier 2 diversity spending by its majority vendors.

Allstate is continuing a twelve-month supplier mentoring program that it started in 2012. Ten companies, mostly small to mid-sized, are invited to participate each year. “They work on their businesses, not just in them, to help them grow,” says Golembieski. Companies are paired with Allstate officers and meet quarterly as a group for developmental sessions in leadership, marketing/sales, financial analysis, strategic planning and workforce development.

Two veteran-owned businesses are participating in the 2014 program. One is Quality Innovative Solutions, Inc (QI-Solutions, Oxnard, CA), an engineering and technical/professional services provider to the federal, state and commercial markets.

SDVOSB QI-Solutions: growing in the Allstate mentoring program
QI is an SDVOSB with eighty-nine employees, roughly 64 percent of whom are veterans.

The company was started in 2004 by Bobby Mullins and Carl Seastrand. Mullins served in the U.S. Navy for almost thirty years. Today, he leads QI in providing systems engineering and analysis, testing and evaluation, IT and IT training, and program operations and management. QI recently won a large Navy contract, not its first, for engineering instructional services.

“I hope the Allstate supplier mentoring program will help us grow the business. The down economy of the past few years hit the federal government hard, resulting in a drop off of business for QI,” says Mullins. “I’m hopeful that we can attract new business to help us take care of our employees.”

Allstate doesn’t promise new business to mentored companies, but it does help entrepreneurs like Mullins. Mullins and Seastrand look forward to being mentored and setting an example while they learn. “I’m helping to pave the way for other veterans who follow me,” he says.

As part of the program, Mullins will travel to Allstate’s Northbrook, IL headquarters four times a year and put in at least four hours a month on coursework. “It’s a wonderful service. I’m excited to get started,” he says.

Information about the Allstate mentoring program for 2015 can be viewed online at allstate.com.

Prudential: committed to diversity and inclusion
Financial services firm Prudential Financial, Inc (Newark, NJ) operates in more than thirty-five countries. The 138-year-old corporation has more than 48,000 employees worldwide, and some of its needs are met by outside vendors.

Hiring veteran-owned businesses is part of the company’s commitment to diversity and inclusion, says Beth Canning, Prudential’s supplier diversity manager. Veterans are involved in Prudential’s technology infrastructure: hardware, software, services and supplies. “We want Prudential’s supplier base to reflect the diversity of the marketplace and our communities,” says Canning.

A champion for veterans
The company’s diversity effort includes veteran initiatives. Prudential received a U.S. Chamber of Commerce Foundation “Hiring our Heroes” award in the category of post-9/11 veterans employment. The company has also been named to GI Jobs’ Top 100 Military Friendly Employers list, and was recognized by Military Times as a Best for Vets Employer.

Prudential’s supplier diversity program includes two veteran categories: veteran business enterprise (VBE), run by individuals who have served on active duty in the U.S. military; and service-disabled veteran-owned business enterprise (SDVBE), run by individuals who were disabled as a result of active duty service.

“Prudential formally tracks its supplier diversity efforts and requires certification to ensure integrity,” says Canning. “The company prefers that veteran-owned businesses have a Veteran’s Administration certification. Self-certification may be acceptable if the business is at least fifty-one percent owned, operated and controlled by veterans.”

For the last eight years, Prudential has hosted an annual diverse supplier summit to deepen suppliers’ understanding of the company. Diverse suppliers have an opportunity to meet with Prudential commodity buyers and managers and attend sessions that help them add value to their relationship with the company.

Being a large corporation creates great opportunity when it comes to supplier diversity, Canning says. She notes that Prudential “casts a wide net” to find firms. Prudential also looks at tier 2 supplier diversity spending by its majority prime vendors and larger diversity vendors as well.

Drexel Hamilton: financial services provider that also helps veterans get jobs
Drexel Hamilton (Philadelphia, PA) is a full-service institutional broker dealer and investment bank. The company underwrites debt and equity securities for companies seeking funding.

In 2012, Canning reports, Prudential updated its diversity banking program with the goal of establishing a more select group of strong, engaged relationships. Prudential selected Drexel Hamilton to participate in a bond deal.

Drexel Hamilton is a service-disabled veteran-owned business. Fred Phelan of Drexel Hamilton institutional sales says, “The firm makes a point of emphasizing its veteran connection and background.” On its website (drexelhamilton.com), Drexel Hamilton is described as “a full-service institutional broker-dealer founded on the principle of offering meaningful employment opportunities to disabled veterans desiring a career in financial services.” Several company officers, in addition to the founder and president, have served in the military.

Connecting with Prudential
The relationship between Drexel Hamilton and Prudential started in 2010, when Phelan attended a veterans’ event at the U.S.S. Intrepid Museum in New York City. There he met Stephen Robinson, who works in veterans’ affairs at Prudential.

Since its first bond deal, the relationship continues today as Drexel Hamilton helps underwrite Prudential transactions and helps raise debt capital. Drexel Hamilton also did a stock buyback program.

Being a veteran-owned business has challenges, Phelan admits. Many legislated incentives are targeted toward women-owned businesses and other disadvantaged categories. He also feels that veterans are sometimes overlooked because many businesses don’t specifically include them in supplier diversity programs.

But business is steady at Drexel Hamilton. The company started in the down economy of 2008, but “has been blessed with nothing but continued growth since we started,” says Phelan. The company had twelve employees in 2010 and now has eighty-two. It aims to keep the firm staffed with 50 percent military veterans. Half of the current veteran employees are service disabled.

In 2008, Drexel Hamilton’s majority owner Lawrence Doll, a disabled Vietnam veteran, started the Wall Street Warfighters Foundation (wallstreetwarfighters.org/web/), a nonprofit that identifies and places service-disabled veterans in careers in the financial services industry. In 2010, Phelan completed his MBA and an associate training program with the foundation.

The military experience offered by vendors like Drexel Hamilton is an asset to clients. Veterans bring the discipline needed to implement plans, Phelan says, as well as a combat background, which hones the ability to respond quickly and decisively to crisis. These characteristics subsequently fit well in an IT environment. Military experience also matches up well for electronic trading and routing orders. “A military background produces workers who are organized, are focused on task, and have integrity. They often form a military-like bond with the client.”

Wells Fargo: financial giant with growing supplier diversity
Wells Fargo & Company (San Francisco, CA) is a $1.5 trillion financial services company. Founded in 1852, it has offices in more than thirty-five countries and was ranked number twenty-five on Fortune’s 2013 list of America’s largest corporations.

The company’s formal supplier diversity program (wellsfargo.com/about/diversity/supplierdiversity/overview) targets certified minority, women, disadvantaged, and small business enterprises.

Demond Richardson, senior supplier diversity manager, says Wells Fargo is committed to diversity in the procurement process. He notes that Wells Fargo treats veteran-owned businesses as diverse vendors, and finds them to be a reliable source, particularly in areas such as engineering and computer security. Some of these IT and tech capabilities come from skills learned in the military.

Wells Fargo strives to achieve 10 percent diversity spending across government-recognized categories. This has translated to $8 billion over the last ten years, clearly a growth area, with second-quarter 2013 diversity spending coming in at 30 percent higher than the same time frame in 2012. Richardson notes that Wells Fargo has also seen increased tier 2 diversity spending by its prime contractors.

Where the opportunities are
“Innovative banking technologies and processes can provide a competitive advantage. I see a trend toward mobile banking, cloud computing and security solutions. These may be areas of opportunity for veteran-owned businesses with transferable military experience,” says Richardson.

New technologies will also increase the demand on vendors to stay on top of education and technology certifications. Security is critical. “We have to be excellent stewards of our customer data,” he says.

Wells Fargo recognizes the business advantages to supplier diversity. “Diverse, smaller firms are more customer focused and agile. This can lead to a better return on investment and higher customer satisfaction.”

Richardson notes that all vendors must meet specs and bid requirements. Diverse status is “icing on the cake.”

PSSI International provides wireless business management and more
PSSI International (Glendale, CA) is a provider of management and electronic security for government, financial and commercial industries. PSSI specializes in security, ATMs and airport detectors. The company does installations, often subcontracted to larger entities.

Since 2008, PSSI International has provided wireless building management and earthquake restraints for safe deposit boxes. Wells Fargo buys the equipment, and PSSI International designs the system and custom installs it.

Owner Dennis Hamm, a Vietnam-era veteran certified by the Veteran’s Administration, has been a Wells Fargo vendor since 1992. His relationship with Wells Fargo started at a previous company; when he sold that company and started PSSI International, his relationship with the financial giant continued.

“There are some business advantages to being VA certified, as some projects are set-asides for diversity vendors,” says Hamm. He adds that certification helps his clients fulfill their diversity goals.

Looking forward
He sees growth ahead for a company like his. “Airport security work is up, and although banking work is currently down, I see that changing. Banks are reshaping and resizing and want more automation and technology.”

Hamm predicts in the near future, banks will look at solar-powered kiosks and green power. Some newer ATMs already bring up an interactive remote teller. Hamm and PSSI International are also involved in developing retail banking centers.

Currently, PSSI International has about sixty workers, and that sometimes expands to 100 depending on need. The business also does supplier diversity of its own, including, of course, working with other veteran-owned companies.


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