WBEs in technology: good for women, good for business, good for the economy
Diversity and certification can open doors, but it takes persistence and excellent service to make it through to contracts
WBEs must be ready to scale up to meet client demands
By Jon Boroshok
As more companies recognize the value of supplier diversity, more diverse suppliers are pursuing accreditation as minority business enterprises, women business enterprises (WBEs), small business enterprises, HUBZone, or veteran-owned businesses.
Such designations often provide businesses with the opportunity to bid on requests for proposals (RFPs), and help them get into the game.
For a WBE, the best-recognized certification is from the Women's Business Enterprise National Council (WBENC, www.wbenc.org). Founded in 1997, WBENC is the leading third-party certifier of businesses owned and operated by women, with more than 11,000 WBENC-certified WBEs.
Pamela Prince-Eason, WBENC president and CEO, explains that the nonprofit helps WBEs compete effectively and offers skill-building workshops and forums for members. Participation in WBENC helps WBEs learn to think innovatively, deliver reliably and price efficiently.
Many corporations have active supplier diversity programs that include a focus on WBEs. According to Prince-Eason, the best programs start with commitment at the top of the company. "Corporations are investing time, dollars and people to get the best results from their WBE partnerships, and these investments are paying off in more and better relationships," says Prince-Eason.
A number of WBEs deliver technical products or services that are critical to their clients' operations. "Our WBEs are continually expanding their technological expertise to meet the expectations of clients and prospects," says Prince-Eason. Second-tier programs are growing too, as the largest corporations encourage, or sometimes require, their major suppliers to report spending with WBEs and MBEs.
"WBEs are thriving and growing, even in the current economy," Prince-Eason says. "They are expanding their scope, savvy and scale."
These corporations and their WBENC-certified suppliers demonstrate the mutual benefits of working together.
Itron builds its supplier diversity focus
Itron (Liberty Lake, WA) is a provider of energy and water resource management solutions for nearly 8,000 utility companies around the world. Itron's products and services include electricity, gas, water and heat measurement and control technology, communications systems, software, and professional services. Itron has more than 9,000 employees in the U.S. and elsewhere.
Kate Armstrong, Itron's supplier diversity manager, explains that Itron buys electrical components and other items that go into its meters and other products. The industry is evolving, with a trend toward a smart grid that requires smart meters.
The changes in meter technology mean that Itron's suppliers must often increase capacity to keep up. This can be challenging for smaller suppliers. One solution Armstrong uses is to enlist multiple suppliers to help meet capacity.
Itron began its supplier diversity program ten years ago, and formalized it in 2010. Itron's utility customers have diversity-focused demands too: they may require that the Itron products they buy be made from parts sourced from specific diversity groups or locations. One utility in Houston, for example, tracks its second-tier vendors by diversity category and HUBZone. Such second-tier diversity requirements and reports are not unusual.
"It's a wonderful economic approach to get supplier diversity fully integrated," says Armstrong. "It increases competition, is good for business, and helps the economy." To help measure and document supplier diversity, Itron uses benchmarking tools including quarterly third-party audits.
Alfa proves itself as an Itron supplier
Alfa Electronics Ltd (Canton, GA) has enjoyed a long and mutually beneficial relationship with Itron. Alfa is a WBENC-certified WBE providing logistics and sales services to a variety of industries.
Alfa is a "company based on good relationships," says president Bettina Clark. It has been an electronic component distributor to Itron for almost nine years, supplying capacitors, resistors, integrated circuits, memory products, connectors and more.
Nine years ago, Itron needed to fill a component shortage, and was referred to Alfa. Hoping to build a long-term relationship rather than just make a sale, Alfa had the material flown in and hand-delivered its first order. Since then, says Clark, Itron has given Alfa "many opportunities to prove ourselves and grow our company."
Clark co-founded the company in 1993 after nearly a decade in the component distribution industry. Alfa has been woman-owned since 2006, and became WBENC-certified in 2010. Clark says the company pursued the certification after a number of clients suggested it. The process took about a year, and what she calls a "very thorough vetting. When they're through with you, you are who you say you are," says Clark.
Many advantages come with being a WBENC-certified supplier, notes Clark. At WBENC conferences, Alfa connects with other companies looking for diverse suppliers or potential partners.
Identification as a WBE can also bring challenges. She says some companies incorrectly believe that they must sacrifice quality and pay more in order to do business with diverse suppliers. Clark's job is to show them that's not so. "We don't want a handout," says Clark. "All we need is an opportunity so we can let clients know we exist." Although certification has been a plus, Clark still prefers to be thought of as a great supplier rather than a WBE.
At MetLife, diversity is good business
MetLife, Inc (New York, NY) is a global provider of insurance, annuities and employee benefit programs, serving ninety million customers in over fifty countries. Its purchasing needs parallel those of other Fortune 500 companies, says Alfred Richardson, head of supplier diversity in Atlanta, GA. MetLife uses diverse suppliers for IT staffing, hardware, software, and consulting services.
MetLife has a formal supplier diversity policy that includes targeted metrics and internal tracking. Some supplier diversity initiatives are customer driven: MetLife bids for government business and must meet government contracting guidelines; diverse sourcing is required by other MetLife customers as well.
Richardson sees a growing trend toward using small businesses as solution providers for newer technology. These suppliers tend to be faster and less expensive than their larger competitors, he notes.
Finding WBEs and diversity suppliers is never a problem, and the number of WBEs is growing. The challenge is to raise awareness and understanding of supplier diversity as an opportunity for the company," says Richardson.
HighRoad: valued for responsiveness
HighRoad CEO Hallie Satz "knows MetLife and knows what we need," Richardson declares. That helps make MetLife competitive.
HighRoad Press (New York, NY) is an environmentally friendly commercial printing company. With over thirty years of print industry experience, Satz started when the industry was male dominated, doing estimates and sales in her family's print business. People were "curious about a salesgirl," and that helped her get meetings where she had the chance to prove herself. Most buyers were male, but the younger ones were usually open to doing business with women.
When MetLife was adding relationships with new printers, a buyer called Satz's family's business, Barton Press, then one of the larger NYC-area printers. She handled the call. She arranged meetings and called MetLife regularly, finally winning the first contract nearly a year later. The job went perfectly, and the relationship grew. Barton eventually became MetLife's largest sheet-fed commercial printer.
In 1997, Barton was sold, and Satz became president of the new owner's Barton division for the next seven years. MetLife remained her customer.
Diversity was growing in importance for businesses. Some of her customers, including MetLife, wanted to step up diversity spending and encouraged her to start her own company. As other printing companies were leaving the city for the suburbs, she started HighRoad in downtown Manhattan in 2004. MetLife became her customer again in 2006.
WBENC certification has given HighRoad a chance to meet supplier diversity managers in a variety of companies. Satz says it only means "you're invited to the dance. It doesn't mean you get to go on the dance floor." Satz has been active in WPEO, the WBENC partner organization that manages certification for the New York metro area.
She cautions that identification as a WBE is not without pitfalls. "You have to be as good as the best non-diverse supplier," she points out. "One slip-up and word gets around. Supplier diversity is a small world with lots of networking between companies."
In HighRoad's case, its work for MetLife has gone well. MetLife has recommended HighRoad to others in the financial industry, leading to additional business in that area and other industries as well.
While clearly a success story, HighRoad Press has also struggled. Though it grew quickly from 2004 to 2008, growth slowed during the recession. Businesses are printing less and operating costs are up, so the company has taken steps to reduce operating expenses. HighRoad must now do more jobs and attract more customers to maintain its level of sales. "We're determined to stay," says Satz. Being a WBE helps, and she says the New York City economy is very resilient.
United Rentals: diverse suppliers for infrastructure
United Rentals, Inc (Greenwich, CT) is the largest equipment rental company in the world, with over 1,000 locations in the U.S. and Canada.
Jamie Crump, director of indirect strategic sourcing and supplier diversity, says United Rentals does business with diverse suppliers on its infrastructure side, for IT software and hardware services.
"United Rentals looks for diverse suppliers that can provide what's needed at the right scale. We push our suppliers to be competitive," Crump says.
The company implemented a formal supplier diversity program about four years ago. The program is measured and evaluated annually, using an outside partner to validate data.
"I see a trend developing in supplier diversity. Because suppliers are getting larger and aligning with larger companies, they are becoming much more sophisticated," says Crump. United Rentals regularly receives RFPs that spell out diversity requirements for the work.
Crump says that supplier diversity is a natural part of doing business, not a burden. "You want your supplier base to reflect the customer base," she says. "A good sourcing professional does that anyway."
Clever positioning works for TCGi
Technology Concepts Group International, LLC (TCGi, Somerset, NJ) specializes in the lease of tech assets, including large industrial printers and high-end laser printers.
President and CEO Avis Yates Rivers says the company started in 1996 as an IT solutions provider serving corporate and government customers. The company's services included deployment and maintenance, as well as systems integration.
"In 2008, TCGi was approached by Bank of America and offered the opportunity to absorb a small leasing group from the bank. As part of the acquisition, some Bank of America personnel were brought in, and TCGi Capital was formed," explains Rivers. The new company covered the full lifecycle of tech assets, from cost of hardware to services to disposal.
"Companies lose millions of dollars every year in software license management. Through TCGi, companies can lease a license and more easily manage the process and costs."
During the early stages of the recession, as tech spending slowed, Rivers took the opportunity to refine her business strategy, and was well positioned as tech spending bounced back in 2011 thanks to pent-up demand. United Rentals became TCGi's first multi-year client, signing a three-year lease on equipment, and freeing up its own capital.
Being a WBENC-certified company has advantages for TCGi. "It gives us access," says Rivers. "There are always forums and procurement fairs. While it isn't a guarantee of business, it often results in an invitation to bid on an RFP.
"It can also create challenges, such as being pigeonholed when looking for mainstream opportunities, and being seen as just a 'small diversity supplier,'" she says.
But overall, she says, smaller companies bring a wealth of knowledge and experience. Many diverse suppliers have big-company experience but can be more competitive. "The value is clear," says Rivers.
Creative investments at CCC
Another innovative United Rentals supplier is Commonwealth Capital Corp (CCC, Clearwater, FL). This equipment leasing and financial services company was founded more than thirty years ago, and became WBENC-certified in 2007.
CEO Kim Springsteen-Abbott has been with the company since 1987, and explains that the company is an "alternative bank" for Fortune 1000 companies. CCC raises private equity, which is used to develop a broker relationship, structuring leases for medical, telecom and IT equipment.
For investors, it involves an eight to ten-year closed-end fund, which is less volatile due to the longer term investment. Investors also reap the benefits of doing business with big companies.
The same financial strategy that has made CCC an interesting investment and alternative bank has also protected the company during the recession. "Because CCC doesn't have to react to market conditions at the same pace, the bad economy has actually helped the company," she explains. "While traditional financial institutions have tightened credit for corporate America, CCC is more flexible."
The relationship between CCC and United Rentals began at a National Minority Supplier Development Council (NMSDC) conference. It's a win-win relationship; United Rentals can now expand its capabilities and has a bigger piece of the diversity pie.
Wells Fargo reflects its communities
As a diversified, community-based financial services company with $1.3 trillion in assets, Wells Fargo (San Francisco, CA) buys everything from construction to IT staffing.
Derek Cantey, senior supplier diversity manager in Charlotte, NC, says that Wells Fargo seeks opportunities to engage diverse suppliers. The company has a formal process, outlined on its corporate supplier diversity website, that begins with outreach and vetting, and resulted in $733 million in annual spending with first and second-tier diverse suppliers in 2011, up 18 percent from 2010. In total, the company has spent more than $6.8 billion with MWDBEs in the last nine years. Wells Fargo also keeps tabs on the diversity efforts of its non-diverse suppliers.
"Wells Fargo has a target of ten percent of supplies purchased from certified, documented diverse suppliers, including WBEs. While there's no targeted percentage for each recognized diversity category, the company does strive for balance," says Cantey. "Through community outreach efforts, the company tries to use suppliers that reflect the community."
Supplier diversity can also create challenges for a large corporation like Wells Fargo. "A supplier's capacity capabilities can be an issue, and Wells Fargo must ensure the supplier can scale up enough to meet demands," he says. To help suppliers grow, Wells Fargo created the Leaders of Change development program in 2009. It partners with advocacy organizations to offer diverse suppliers educational opportunities for growth and business development, along with strategic planning and leadership development consultations. Wells Fargo also works with WBE partner organizations.
Call One: success rooted in service
Call One, Inc (Cape Canaveral, FL) is a telecom desktop end-point supplier of brand-name telephone headsets, audio and video conferencing, and peripheral devices.
The company has been in business since 1987, and WBENC-certified since 2001. "In 1986 a large supplier of telephone headsets was looking for companies to become self-reliant distributors of its products," says President Dottie O'Daniel. "A small investment was required to participate. It seemed like a lot at the time, but the association got us started."
O'Daniel comes from a finance and sales background. "Staying on top of all new technologies is an almost impossible task: what you do today seems to be outdated tomorrow," she says. "But it is also exciting as capabilities continue to improve."
Call One started with only three employees and today employs approximately eighty-five people. "I have grown my company by surrounding myself with people who share my work ethic," O'Daniel says.
The company's relationship with Wells Fargo began "many mergers ago." In the 1990s Call One worked with First Union Bank, which was purchased by Wachovia Bank. Call One became a preferred vendor for Wachovia until Wachovia merged with Wells Fargo, and became a Wells Fargo preferred vendor in 2011.
O'Daniel finds that small diverse suppliers succeed by providing fair pricing and excellent services. "I believe customer satisfaction is the key to growth," says O'Daniel.
SHI delivers account team consistency
Not all WBEs or diversity suppliers are small companies. SHI describes itself as the largest U.S. minority and woman-owned business enterprise.
SHI (Somerset, NJ) is a provider of IT products and services owned and managed by CEO and president Thai Lee. Lee was born in Korea, and graduated from Harvard Business School (Cambridge, MA) with an MBA and Amherst College (Amherst, MA) with a BA in biology and economics.
She bought the company in 1989 and grew it from a $1 million company with eight employees to a nearly $4 billion international corporation with more than 1,800 employees.
The relationship between SHI and Wells Fargo began when SHI responded to an RFP in 2006. Today, SHI helps Wells Fargo standardize its technology and manage large volume software licensing deals, and provides data center management, says Ed McNamara, SHI's marcom director. He attributes much of the relationship's success to SHI's account team consistency. "Many SHI employees have been with the company for more than ten years, allowing them to truly understand the customers. The management structure is flat, and employees are empowered to make a difference." Lee herself is very active in SHI's day-to-day operations, he adds.
SHI's diverse status helped initially in the relationship with Wells Fargo, but McNamara says that today SHI simply focuses on being a beneficial partner. It competes on the same playing field as "non-diverse" vendors; as a world-class supplier. He notes that SHI's private ownership is one of its current differentiators. Although a multi-billion dollar company, it "does not have to answer to Wall Street."
Despite being in a business with low margins, SHI has not only survived the current economic downturn; it has actually prospered, according to McNamara. Since 2008, the company has opened twenty-three new offices and increased revenue. Today, SHI continues to grow by targeting smaller and medium-sized clients.
Alcatel-Lucent needs flexible suppliers
Paris, France-based global telecom solutions corporation Alcatel-Lucent has its U.S. headquarters in Murray Hill, NJ. Alcatel-Lucent operates in more than 130 countries, and calls itself a "local partner with global reach." Its local efforts include a commitment to supplier diversity.
Alcatel-Lucent uses suppliers that do warehousing, logistics and transportation, IT hardware and software, telecom installation, metal fabrication, and temp labor, and keeps a database of registered and certified diversity suppliers. Senior director of supplier diversity Mark Artigues explains, "We have formalized our policy and practice to assure diverse suppliers that they will be able to compete on an equal basis with all suppliers."
"When our internal customers and procurement organization contact the supplier diversity team, we are able to search for suppliers that fit their project needs," says Artigues, who is based in Plano, TX. The company tracks the utilization of diversity suppliers, and Artigues' additional efforts raise internal awareness of their capabilities.
Artigues says that new technologies and changes in business strategy drive new needs, and this requires suppliers to be flexible. "As Alcatel-Lucent has grown and changed, many of our existing suppliers have been able to change with us and continue to support our needs."
Argent capitalizes on experience and diversity
Minority and female-owned Argent Associates (Edison, NJ) was founded by president and CEO Betty Manetta in 1998. Argent is a certified supply-chain management and IT service provider focused on government, enterprise and telecom markets.
Argent provides value-added services to Alcatel-Lucent, and is also a reseller of Alcatel-Lucent products and services to other carriers, enterprise customers and municipalities.
The relationship between Argent and Alcatel-Lucent developed through Manetta's work in the telecom industry, starting in what used to be the Bell system. After the breakup of the "phone company" in the 1980s, she worked for AT&T and Lucent Technologies, conducting business in the telecom sector in the Middle East and Latin America.
When she decided to start her own company, the combination of her experience and her status as both a woman and minority proved helpful. Diversity efforts were growing, and her first job, in 1998, involved both AT&T and Lucent.
While Argent has had success working with Alcatel-Lucent, some larger corporations don't see the value in supplier diversity. Sometimes diversity suppliers "get sent to a different gate," says Manetta, where they don't always get asked to compete for new business. "Corporations need to understand that innovation can come from small business."
Argent has felt the sting of the economic downturn, and has diversified to other industries. Argent has also changed gears toward a more "balanced portfolio" of clients and industries.
ORGANIZATIONS WITH ACTIVE SUPPLIER DIVERSITY PROGRAMS
Check details on the web.
|Company and location
|Alcatel-Lucent (Paris, France)
|Networking and communications technology,
products and services
|Itron (Liberty Lake, WA)
|Energy and water resource management solutions for nearly 8,000 utilities
|MetLife (New York, NY)
|Insurance, annuities and employee benefit programs
|United Rentals (Greenwich, CT)
|Wells Fargo (San Francisco, CA)
|Diversified, community-based financial services
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