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Supplier Diversity

The new AT&T Inc combines the legacies of its parents

Two great supplier diversity programs are merging into one, continuing to give diverse suppliers like Group O "a real opportunity to succeed"


Joan Namahana Kerr.

Joan Namahana Kerr.

Gregg Ontiveros.

Gregg Ontiveros.

Joan Namahana Kerr is executive director of supplier diversity programs for the new AT&T.; "We're still merging the best practices of SBC Communications Inc and AT&T; Corp," she says. "We're bringing together two really good supplier diversity programs, looking at all the things we've respectively done and finding ways to integrate everything that's worked well." Kerr came up the SBC side of the ladder. The supplier diversity teams in the pre-merger AT&T; and the pre-merger SBC were both housed in the procurement organization, she says.

"One advantage our current company has is that the supplier diversity programs in both parent companies have existed for more than thirty-eight years. We've had a lot of opportunity to understand the value of encouraging diverse suppliers."

Both SBC and AT&T; were inaugural members of the Billion Dollar Roundtable. "We were there from the beginning," she notes proudly.

Tracing the roots
When Kerr says "more than thirty-eight years," she's talking about pre-divestiture days when SBC and AT&T; were both part of the original Ma Bell.

"The original impetus was pretty much in response to government interest, since we were a federal government contractor," she says. From the beginning, the company understood that programs to increase contracting opportunities for diverse suppliers "also provided a competitive edge for our company, helping us cultivate greater customer loyalty, better business solutions and revenue enhancement," Kerr notes.

Turning to the community
Kerr herself began with the former Pacific Bell. She thinks its program was fairly typical of all the companies making up the present AT&T.; "In the early 1990s we turned to the community to help us design our program," she says. "We established a consumer advisory council and got the input of employees, suppliers, supplier diversity advocates, community leaders, educators, legislatures and regulators, as well as Pac Bell's president of procurement and other officers and senior managers.

"They came up with a list of thirty-one recommendations and we implemented them all!"

The list included very specific ideas: focusing program strategies, ensuring total quality management, measuring both qualitative and quantitative success, and encouraging M/WBEs to self-assess in terms of risk and opportunities. "We were looking at the challenges on both sides, the corporate challenges and the supplier challenges," Kerr notes.

The parent companies were both active with WBENC and NMSDC, and the new AT&T; will continue the tradition. Other acceptable third party certifications are listed at www.attsuppliers.com.

The website also includes a prospective supplier database that's "very helpful to our sourcing team," Kerr notes. "And of course once you're a supplier you are in our internal databases."

Mentoring through the years
"We've participated in several formal mentoring programs over the years," Kerr recalls. "Right now we're engaged in the Connecticut MSDC's program, and another with the state of Texas.

"We don't have a specific mentoring program of our own, but we work closely with our diverse suppliers. Our strategic sourcing and cross-functional sourcing teams work with our supplier diversity group to ensure that our diverse suppliers understand the requirements and have a real opportunity to succeed."

Group O's "positive relationship"
"Our relationship with Group O is very, very positive, and has grown tremendously over time," Kerr notes. "We even nominated them to be in the NMSDC Corporate Plus program, and that's been a very successful thing for them."

The relationship began with small fulfillment orders and has continued to grow. Right now Group O is involved in rebate fulfillment. "It's database work with high transaction volumes and lots of customer contact so it's very important to us that our suppliers are really excellent," Kerr declares.

"Group O has always been focused on the quality aspects of the work."

The group, she explains, was one of the first to get the telecom industry's TL 9000 certification, equivalent to ISO 9000. "Group O has jumped right in there with all the processes in place for total quality management. We know we're working together toward optimizing the supply chain and providing the best products and services to our customers at the best price. They have done a fabulous job for us."

Second tier supplier diversity
The new AT&T;, Kerr says, wants to "encourage the next tier of our supply chain to really commit to integrating diverse suppliers into their operations.

"While we may be consolidating our own supply base," she explains, "we're making sure there will be additional opportunities through our extended supply chain."

Last summer AT&T; hosted a forum about contract manufacturers and supplier diversity for electronic manufacturing services (EMS). Attendees included EMS suppliers to AT&T;'s OEMs, along with the OEMs themselves and a wide representation from the telecom industry. As more and more EMS work goes overseas, "We want to preserve opportunities for the diverse suppliers we've been working with over the years," Kerr says.

"Through our collaborative effort with our OEMs, the EMS community has responded very positively. Many of them have established supplier diversity programs, committed staff, set goals and created a whole new sphere of opportunities for suppliers. It's an exciting thing."

High-tech marketing
Gregg Ontiveros, president and CEO of Group O and Group O Direct (Milan, IL), explains that he first met component companies of the new AT&T; at an NMSDC council trade fair ten years ago.

Several of the SBC companies were interested in consolidating the rebate phase of their work. Group O Direct, which specializes in IT-supported marketing services, "had a very compelling story and business proposition for them," Ontiveros recalls.

"We were one of the first companies to use technology like SQL server database and VB to develop a campaign management platform. In essence we could integrate all the processes associated with rebate offers, from consumer promotion through reporting and tracking.

"We were in a beta situation at the time and the engagement with SBC helped us develop. We were able to build out the platform to handle consumer promotions on a very, very large scale."

Today, Group O is into the third generation of its software. "Our next addition will be predictive modeling to go on the front end, with Microsoft lending us a hand," Ontiveros discloses happily.

Growing Group O
Group O is a family owned and run company operating in the quad-city area of eastern Iowa/western Illinois. It was founded and chaired by Robert Ontiveros, a first-generation Mexican American. His son Gregg is CEO & president, and his son Chris is VP.

The group consists of four operating companies. Group O Direct, the marketing services arm, has clients like AT&T;, Microsoft, Qwest and John Deere. It has 105 employees and 2005 sales of $75 million.

Bi-State Packaging distributes packaging materials and machinery, with Pepsi, Kraft and Bristol Meyers Squibb for clients. It has 60 employees and 2005 sales of $85 million.

R&O; handles industrial services for Caterpillar, John Deere, Mitsubishi and the like. It has 900 employees and brought in $95 million last year.

Pre-Flex just started up this year, focusing on pre-printing for the corrugated box industry. Its customers so far are Procter & Gamble, Coors and HP.

Robert Ontiveros started the original Group O, now Bi-State, in 1974. "He quit his job, got a loan from a friend and started selling packaging materials out of the back of his station wagon," his son recalls with a smile. R&O; began in 1979. Group O Direct began in 1992 and Pre-Flex in 2005.

Minority status
One day in the late 70s the senior Ontiveros was calling on some clients at Caterpillar, his son explains. "One of the gentlemen said, 'Ontiveros: is that name Greek?' When told it was Mexican he said, 'Mexican? Well then, you qualify as a minority.' "My dad said, 'Do I get the business?' and he said, 'Yes.' 'Well, good, I'm a minority, then!'"

Later the company got involved in the NMSDC, the regional MSDC and the U.S. Hispanic chamber of commerce. All the Group O companies are now NMSDC certified. "Because of our national scope we're on a lot of the regional councils as well," Ontiveros adds.

"We're also major sponsors of the Boys & Girls Club. My father was one of twelve kids, so he knows the benefits of such a group. He chaired the fundraising drive that built the local Boys & Girls Club chapter right in the neighborhood where he grew up."

In the beginning, Group O's R&O; unit benefited from a Department of Defense-sponsored mentor/prot�g� agreement with Caterpillar. "We began with twenty-two people doing different logistics functions for one of their facilities, and through Caterpillar's kind mentoring and support we've now grown that to over 700 people," Ontiveros notes.

Passing on the benefits
AT&T;'s Kerr applauds Group O for its "excellent program" of working with smaller diverse suppliers in subcontracting and second and third tier roles." Ontiveros notes that his group has its own diversity coordinator now, "whose sole function is to work with our managers to help integrate minority companies into our own supply chain."

After doing this informally for ten years, they hired the formal diversity coordinator in 2005. "Now it's something we can report and something we can grow," Ontiveros says.


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