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Supplier Diversity

MBEs add strategic value at General Motors

Since 1968 GM has spent over $50 billion with minority suppliers, $6.6 billion of it last year alone. MBE/WBE Systrand is one of 600-plus certified GM minority suppliers

 

GM's V. Diane Freeman: one of the first in industry to have a formal program.

GM's V. Diane Freeman: one of the first in industry to have a formal program.

Sharon Cannarsa, Systrand founder: always involved as a Native American.

Sharon Cannarsa, Systrand founder: always involved as a Native American.

'When we started our supplier diversity program in 1968, our goal was to provide a catalyst for economic growth in the minority community," says V. Diane Freeman, senior manager of the supplier diversity program at General Motors (Detroit, MI).

"We wanted to develop a program to identify ways to create opportunities for minority suppliers, and we were the first in the auto industry to do that."

Today, Freeman says, GM's diverse suppliers "help us tell our story. When we're at one of the minority business conferences, suppliers are there to add credibility with their peers."

Minority supplier development
Freeman notes that GM was one of the first companies in any industry to establish a formal program, identify realistic objectives and monitor progress. "We also provided resources to help the MBEs develop and grow," she says. Motor Enterprises, Inc, a wholly owned GM subsidiary, is designed to help diverse suppliers find funding. It was established in 1970 and is still going strong.

Last year, Freeman notes, GM spent $4.2 billion with direct, tier 1 minority suppliers, better than 9 percent of the company's total U.S. supplier purchases. GM's Tier 1 suppliers are required to source at least 8 percent of GM-related purchases with MBEs, and that amounted to $2.4 billion in 2004.

MBEs, Freeman notes, must be certified by the NMSDC or a local affiliate. And "All our suppliers, minority or majority, must meet our requirements for quality, technology, capability, service and competitive pricing. Minority and majority suppliers compete for business on the same footing," Freeman says.

big3.com
The big3.com website is a cooperative venture which GM shares with Ford and Chrysler. Any supplier that wants to do business with any one of the three companies can register on it, and the information goes to all three, Freeman explains. GM also has its own websites, gmsupplypower.com and gmsupplierdiversity.com, where diverse suppliers can register.

Open system for WBEs
Women-owned businesses are not included in the GM figures unless the women owners are ethnic minorities. "We don't have a formal program or goals for women, but we maintain an open system. We're affiliated with several women's organizations such as WBENC, and its local branch, the Michigan Women's Business Council (MWBC)," Freeman says.

"We attend their conferences and workshops and ask interested members to register on our website. Last year we were instrumental in launching the first MWBC marketplace to help local women network and find business opportunities.

"During the WBENC conference this year, one of GM's WBEs, Sharon Cannarsa of Systrand Manufacturing, helped us tell the GM story and talked about the support she has been receiving from the GM leadership team. WBEs like Systrand help GM remain strong," says Freeman. "The GM system is open to all suppliers that can provide us with solutions that will distinguish our vehicles from the competition."

The mentored forty-three
GM has a special mentoring program which it's currently offering to forty-three of its more than 600 minority suppliers. The mentored suppliers are selected by company execs involved in procurement.

"Deciding which suppliers are going to be mentored obviously involves our own needs and opportunities as well as theirs," says Freeman. "We want to be sure these very promising suppliers will continue to grow and add strategic value to GM."

Each mentored supplier is assigned an executive director as its advocate in the GM procurement structure. The advocate helps the mentored MBE develop a growth plan, and arranges for the MBE to get the resources it needs in managerial, quality, tech support or other areas. The mentee is also assigned a mentor and a manager.

This protocol has been in place some twelve years. "The list is fluid and changes," Freeman says. "The program gives us a lot of insight into how things work with the suppliers and gives them two-way communication with us."

Andra Rush of Rush Trucking and Dakkota IS
One of the mentored suppliers is Andra Rush, a Native American woman who is CEO, president and owner of Rush Trucking, and CEO, president and co-owner of Dakkota Integrated Systems. The two companies have annual sales over $600 million and more than 650 employees. Nearly a half billion dollars of their revenue comes from GM business.

Rush's companies have a long-term relationship with GM, Freeman notes. Dakkota contributes sequencing and subassembly of headliners, instrument panels and door trim to the success of two of GM's hottest-selling vehicles, the Cadillac CTS and STS. Rush Trucking provides transportation services for twenty GM plants.

More critical parts
Freeman notes that other MBEs are also making critical parts for prestigious vehicles. Twenty-two minority suppliers provide parts or services for the Cadillac STS. The Pontiac G-6 is served by twenty-three MBEs and the Saturn Relay by thirty. The Bing Group provides seat assemblies for the Cadillac XLR and Chevrolet Corvette. Others are making fuel systems. And some are supplying the services every business needs, like staffing and IT.

Supplier diversity council: identifying concerns
GM's supplier diversity council meets quarterly with Bo Andersson, VP of GM's global purchasing and supply chain organization, to work on concerns that tend to impact the minority suppliers. Council members include seven GM execs and seven MBEs.

Two of the minority supplier representatives are Dave Bing of the Bing Group, co-chair of the council, and Andra Rush, who represents Native Americans and women.

Sharon Cannarsa of Systrand Manufacturing
Sharon Cannarsa is president and CEO of Systrand Manufacturing, president and CEO of Systrand Korea and president of Systrand Presta. She's a Native American with family roots at the Kahnawake Reservation in Canada. Kahnawake is one of the seven communities of the Mohawk Nation.

"I've always been involved as a Native American," Cannarsa says. "But as I get older I feel a greater involvement of my personal feelings for my heritage."

Her grandfather was an iron worker. He moved his family to Michigan, where he found long-term work building the Ambassador Bridge.

Cannarsa grew up in Westland, MI. In the early 70s, after high school, she worked for Canco Manufacturing (Detroit, MI) which made oil couplings for the drilling industry. "It was a very small company. I started out as office manager and my husband was involved in it also. We worked together to develop the company, and I advanced to president and CEO and then became owner," she says.

Starting small
Systrand was started in 1982. "We began very small, machining small auto components as temporary outsourcing for one of the Big 3," Cannarsa notes.

Her husband and two sons are also involved with Systrand. Both sons have their MBAs, one from Georgetown University (Washington, DC) and one from the University of Texas. "They add a different perspective," she says with a smile.

"They've been working on the shop floor since they were kids. They started off sweeping floors and running machines and worked their way up just as all our people do. We try to give all our employees the opportunity to rise in the company."

Growing Systrand
The company was located in southwest Detroit at first, then moved to Taylor, a suburb. "After a while we had three plants there. Then we bought an old Westinghouse building in Brownstown, modernized it and had two large additions put on."

Systrand's work is all under one roof now, with 220,000 square feet, 200 employees and additional acreage already earmarked for expansion.

Systrand Presta (Danville, IL) is a joint venture with Krupp Presta, a division of Thyssen Krupp. "Krupp Presta is known for some of the best camshafts in the world. Systrand's expertise in machining and grinding makes a great partnership," Cannarsa explains.

Systrand started making material purchases in South Korea in 1997. "In 2001 we purchased a machining company just outside Busan to machine some of the castings we were already purchasing in South Korea. Now Systrand Korea has about fifty employees, and we ship millions of parts a year."

Earning tier 1
Starting in 1982 as "an emergency outsourcing company, we kept proving ourselves on response time, quality, capability and pricing," Cannarsa recalls. "Eventually GM and other OEMs started to offer us long-term tier 1 contracts."

Today Systrand is a tier 1 supplier to all the Big 3. About 80 percent of the company's work is tier 1.

"We are a certified minority company," says Cannarsa, "but we are expected to perform on the same level as every other supplier. I like to judge our performance by our customers' satisfaction.

"We've proven ourselves," she says proudly. "When we go in with our presentation, we push our quality and capability. Being a certified minority business owner is a bonus for our customers."

Helping each other
The Systrand people regularly attend conferences put on by WBENC; the Michigan Center for Empowerment and Economic Development; MWBC, the Detroit chapter of WBENC; the NMSDC conferences; and Michigan Minority Business Development Council, the local affiliate of NMSDC. "I also sit on the board of the Native American Business Alliance (NABA, Bingham Farms, MI)," she notes. And she belongs to the Michigan Hispanic Chamber of Commerce and supports other minority organizations.

"The conferences help you tremendously because you develop a rapport with the people there. We explore business opportunities, and we meet diverse suppliers that we can buy from."

GM has also been very helpful, Cannarsa says. "They've met with us to explore business opportunities there.

"It opens a lot of doors to opportunities and relationships that help us keep growing."

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