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Supplier Diversity

Supplier diversity is part of the DNA at P&G

Procter & Gamble favors holistic diversity. It helped bring a startup MBE venture into a P&G spend pool where no minority supplier had been before

 

Icy L. Williams at the mike:

Icy L. Williams at the mike: "You can think about it as holistic diversity."

Icy L. Williams is associate director for corporate supplier diversity at Procter & Gamble (P&G, Cincinnati, OH). She has a team of supplier diversity leaders "out in the various P&G businesses," developing and implementing action plans to achieve the company's supplier diversity goals.

Supplier diversity at P&G started in the late 1970s. It's come a long way.

In May 2005, the company was inducted into the billion-dollar roundtable, a group of fourteen corporations that spend more than $1 billion annually with diverse suppliers. "Our spending in fiscal year 2004/2005 topped $1.5 billion, and our goal for fiscal year 2005/2006 is $1.6 billion," Williams notes.

Since 2000 the company has seen supplier diversity as a fundamental business strategy, "looking for ways to be a part of the DNA of the corporation," Williams says. "We believe that the suppliers we do business with are also our consumers and we want them to buy our products.

"You can think about it as holistic diversity," she adds with a smile. "We execute it through our purchasing organization to ensure that diverse suppliers become part of mainstream procurement."

Supplier diversity goes hand in hand with workforce diversity, she notes. "We make sure that we are modeling it inside the company, and then we want to do the same thing externally. We want to touch the lives of individuals in communities where we have presence and even where we don't have presence. If there's a place where we don't sell our products now, we want to find a way to be in there."

Starting with the NMSDC
In the early 1980s it became clear to P&G management that the supplier diversity program needed to be linked with a national organization. The National Minority Supplier Development Council (NMSDC) was chosen. At the same time a fulltime manager was put in place, "so we'd know exactly what we needed to be doing in the arena of supplier diversity.

"It just grew from there to where we are today," Williams says. P&G is currently a corporate member of NMSDC, Women's Business Enterprise National Council (WBENC), the Native American Business Alliance, U.S. Hispanic Chamber of Commerce, U.S. Pan Asian Chamber of Commerce and more.

Reorganization
In 2000 the company was going through reorganization, Williams says. Management wanted to be sure that supplier diversity was getting the same attention as the rest of the corporation. "It was time for P&G to be a leader in the area of supplier diversity, and to be a member of the billion dollar roundtable.

"We said that within five years we would reach $1.5 billion, and here we are."

Mentoring
P&G's mentoring of diverse suppliers involves the company's supplier diversity managers, as well as company buyers who have relationships with the specific suppliers. "We need to be sure we have a pipeline of diverse suppliers, so that today and tomorrow we'll have capable suppliers who have the capacity to do business with P&G," Williams says.

In the area of packaging, for example, P&G's carton council, which oversees carton purchases, noticed that there was only one capable MBE supplier of the products they look for. "We wanted more then one diverse supplier in that area to provide options for future bids," Williams explains.

"When diverse suppliers come to us we get to know them, understand their capability and capacity now and what they might do for us in the future. "Through that process, working closely with the buyers, we continue to develop them and make sure they're included in future bids."

Second tier diversity
Part of the P&G procurement process is to ask the prime or first tier suppliers about their own supplier diversity programs. "Over the last year we've embedded diverse supplier spending language in our commercial contracts," Williams notes.

"We ask for a minimum of 5 percent and it can go higher depending on how well the supplier has done in the past. We'll even work with them or provide a list of M/WBE suppliers if they need it."

The training symposium
Recently Williams joined two supplier diversity events into one. A traditional training symposium was combined with P&G's gala annual supplier diversity awards luncheon. It turned into a full day of training and matchmaking as well as recognition for some of the company's key suppliers.

The training, Williams notes, includes helping M/WBEs "learn how to navigate the P&G buying structure."

The diverse attendees included current suppliers, local suppliers, potential suppliers, and prime/first tier suppliers "that we wanted to encourage to improve their own supplier diversity programs." More than 500 suppliers and P&G employees attended.

Spend areas
In the nearly four years Williams has been associated with corporate supplier diversity at P&G, goals for spending with M/WBEs have been set by the business unit, based on total spend. Over the years, most of the spending was in raw material, contract manufacturing, plant buying, and packaging and packing material.

"But today our spend with M/WBEs is more balanced across all categories. That includes direct spending with vendors whose products become part of ours, and indirect spending, to purchase the supplies and services we need to run the business."

Nonwovens: a new spend pool
Amantea Nonwovens LLC (Cincinnati, OH) is one of P&G's newer suppliers. Kevin Lynch, its president and CEO, "has ventured into a P&G spend pool that no minorities have ever been in before," Williams says.

This is the area of nonwoven fiber manufacturing. Today, these unwoven fabrics go into everything from diaper padding and other hygiene products to insulation in the roofs of automobiles.

Nearly three years ago Lynch came in to talk to Williams. His company was just in development then. Now, with some mentoring and other help from P&G, it's reached the commissioning stage. Amantea is starting up a 77,000 square foot research and manufacturing facility employing thirty-five people in Cincinnati's empowerment zone area.

"This is historical"
"This is historical," Lynch proclaims. "We believe this is the first time a major company like P&G has enabled a diverse supplier to become a new entrant in a very competitive marketplace, one that has been closed to new entrants and especially minorities because of the cost of capital."

P&G, he explains, "identified majority suppliers in their supply chain who were willing to do creative structuring to help bring us on line."

Diverse partners
Amantea is led by some interesting and diverse people and organizations.

Lynch himself has a background in finance. A native New Yorker, he worked for Mario Cuomo in the executive division of the New York State budget authority, then worked on Wall Street at Standard & Poors and JP Morgan Chase, "putting deals together as a banker and a high-yield analyst.

"What I brought to the picture was the financing side of it, being able to pull all the pieces together," he explains.

His partner is Sorin Crainic, a ChE from France who has been in the nonwoven industry for fifteen years.

Another partner is Albis SpA, an Italian company with facilities in Europe and the Middle East, which also offers technical support to the new firm.

Finally there's Ernie Green of Ernie Green Industries, a plastics manufacturing company. "Ernie brings a wealth of support and insight into the manufacturing process," Lynch says.

And, of course, "The support provided by P&G has been tremendous."

Truly multinational
"One of the things I really enjoy about this business is that it's truly multinational and we can explore global opportunities," Lynch says.

His Cincinnati facility is multicultural. "We have African Americans, Hispanics, Asians and women doing everything from production to research." Amantea is a certified member of the Ohio affiliate of NMSDC.

Managing growth
"We're managing our growth because we're focused on one product and one customer," Lynch explains. "But at the same time we realize we have to be efficient in this process, adopting technological innovations and streamlining the costs."

Minority companies and minority entrepreneurs, Lynch concludes, have to use the resources they have. "We have to say to the big companies, 'Here's our plan.'

"And that's what we did. We brought a plan to P&G, and they believed in our business. The relationship is working for everyone's benefit."

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