PG&E embraces supplier diversity and mentors suppliers
Mentee S&S Supplies and Solutions has grown, become certified, and increased its penetration of the lucrative California utility industry
Pacific Gas and Electric Company (PG&E, San Francisco, CA) is one of the largest natural gas and electric utilities in the U.S., serving over 15 million customers across northern and central California. Its purchasing power is substantial, and with a strong supplier diversity program in place, the company has a considerable impact on the communities it serves.
"Diversity is integral to PG&E's core values and our strategy. Our supplier diversity program was established thirty-one years ago. California is a diverse state, and we are very engaged in the communities where we operate," says Joan Kerr, director of supplier diversity and development at the utility. Kerr, who has twenty-four years of leadership experience in supplier diversity, serves on the board of directors for the National Minority Supplier Development Council (NMSDC) and was formerly the board chair for the Women's Business Enterprise National Council (WBENC). She also serves as the current chair for the Institute for Supply Management's supplier diversity group and co-chair of WE Connect International.
PG&E is regulated by the California Public Utilities Commission (CPUC), a promoter of supplier diversity and inclusion. "California utilities have the best percentage of diverse spend among all the utilities in the country. At PG&E, we have a focus on continuous improvement in processes, programs and results, to ensure more diverse suppliers are integrated into our supply chain. Not many companies have a higher percentage of spend with diverse suppliers than we do," says Kerr.
Stepping up the spend with diverse suppliers
The company has made remarkable progress in improving its spend in recent years. In 2007, the diverse spend was 21.7 percent of the total. By 2011, PG&E was spending 36.6 percent, or $1.6 billion of its total, with third-party certified diverse suppliers, a 69 percent increase in only five years. In 2011, an all-time high of $1 billion was spent with minority business enterprises (MBEs), $514 million with women business enterprises, and $80 million with service-disabled veteran business enterprises.
Kerr reports that the program is working to strengthen the capabilities of diverse suppliers so they can work with PG&E in new technology. "As the technology shifts, our supply needs change. We want to ensure that diverse suppliers are taking advantage of this and that they continue to participate. As we increase the amount of renewable energy we sell, different opportunities arise for suppliers. We've started taking diverse suppliers with us to renewable energy trade shows and introducing them to large suppliers that they may be able to partner with," she says.
PG&E also hosts webinars that encourage its first-tier suppliers to include diverse suppliers in their own spend and encourage them to establish supplier diversity programs of their own.
The utility is associated with many diverse community organizations, and sponsors four of its own matchmaking forums each year. Kerr's team attends, among others, events held by the Black Economic Council and the California Hispanic Chamber of Commerce. As a California utility, PG&E requires CPUC clearinghouse certification, a process that is easier with a current certification from NMSDC or WBENC.
Three levels of mentoring
The company has a three-level mentoring program. The first is open to everyone and includes many different training opportunities, some in partnership with the Small Business Administration. The company has developed its own "Diverse Suppliers Go Green" training initiative as well. This includes workshops and an online green business toolkit.
Second-level mentoring is for diverse suppliers already working with PG&E. Here, the company watches the supplier's performance, identifies gaps, and tracks ongoing growth. Scholarships to business training programs, such as the UCLA Management Development for Entrepreneurs program, are available.
The third level is the supplier development program, aimed at successful PG&E suppliers who demonstrate a potential for significantly greater growth. Suppliers in this program get an officer as a formal mentor.
"Our supplier diversity program offers us a competitive advantage and gives us access to innovative solutions. Many diverse suppliers are extremely competitive and prepared to do things faster, better and cheaper than larger companies. They don't have the large overhead and it makes them more nimble," says Kerr.
S&S Supplies and Solutions
"Our work with PG&E has helped S&S Supplies and Solutions grow significantly to $80 million in revenue with 111 full time employees. We're an example of PG&E's ongoing effort to invest in the communities it serves," says Tracy Tomkovicz. Tomkovicz is chief executive officer of S&S Supplies and Solutions, a national supplier and service provider specializing in technical safety, tools, maintenance, repair and operations supplies, industrial garments, technical services and contract labor services. Headquartered in Martinez, CA, S&S is both minority and woman-owned.
Although her husband founded the company, Tomkovicz, whose father was a Chinese immigrant, currently owns 51 percent. She joined S&S in 1995 as director of operations and to manage the financial end of things. She has a double BA in economics and Chinese from the University of California Santa Barbara (1989). In 2004, Tomkovicz was made CEO.
PG&E remains S&S's largest customer. In the early 2000s a bid went out for a project to be done with Accenture for PG&E. "We bid on a piece of the business and won it. We hit a huge growth spurt because we were successful with that job," says Tomkovicz.
The value of being certified
In 2008, PG&E asked Tomkovicz why S&S had not yet become certified as a diverse supplier. "They knew about my involvement in the company. Getting the certification has opened up additional opportunities because we can help our clients reach their diversity goals. We hadn't looked at that as a business strategy before. PG&E helped guide me through the process. As a result, we are growing in the utility marketplace," says Tomkovicz.
S&S is also a part of PG&E's "green supply chain" team. "PG&E is very cutting edge and a leader among utilities, particularly in the area of environmental stewardship and diversity," says Tomkovicz. "The company is trying to spread the green initiative to all of its suppliers. It is also a leader in the Electric Utility Industry Sustainable Supply Chain Alliance (EUISSCA). At a EUISSCA conference, Joan Kerr asked me to be a panelist on the subject of how diverse businesses are advancing in the green economy."
S&S employs safety and repair technicians, and has an IT department that customizes the software programs sold with its vending equipment. "For example, we place vending machines that dispense safety equipment in prime locations throughout a refinery. The software programs track who takes what. That creates accountability, eliminates waste and makes sure the right tools and safety equipment are close to the job site, and helps our customers keep their costs down," she says.
S&S offers the same products and services that many very large distributors do, but is able to customize the software programs for each customer because the company owns the rights. "We're very flexible and knowledgeable. Our rule is you never say no to a customer. That is one of our core values, and as a result we can go head to head against some very large firms," she says.