Supplier diversity in energy has a
“When all qualified suppliers compete in the sourcing process, the entire community can grow.” – Cheryl Stevens, Energy Future Holdings
“We spent a lot of time up front learning about Alliant Energy’s specific requirements.” – Seaphes Miller, Fusion Integrated Solutions
By Sue Marquette Poremba
The energy industry touches virtually every community and citizen. Residents and businesses alike depend on electricity, gas, oil and other energy sources for everything from climate control to transportation. Companies in the energy industry cover multiple communities and sometimes multiple energy utilities. For these companies, investing in their communities through supplier diversity makes good business sense.
This is a time of change in government energy policies. According to Bridget Reidy, an SVP and the chief supply officer of Exelon (Chicago, IL), many of the new government initiatives provide exciting opportunities for diverse suppliers.
“In Illinois, the state’s Energy Infrastructure and Modernization Act authorizes a total of $2.6 billion for smart grid and system upgrades. It’s a new and emerging area for utilities, but not necessarily something we’ve done before, so we need to bring in new suppliers and different ways of thinking,” Reidy says.
Supplier diversity is ingrained at Exelon
Supplier diversity is ingrained in the way Exelon does business. According to Reidy, inclusion and diversity can bring agility, innovation and a different way of thinking, even to a long-established business.
“Including different viewpoints into the work we do makes us a better company. And that’s true of our supply base, as well,” Reidy says.
Supplier diversity also allows Exelon to support the communities it serves as a utilities company: northern Illinois, southeastern Pennsylvania and central Maryland. “We invest in communities by sourcing from local businesses,” Reidy explains. In one recent program, Exelon identified and invested in several diverse start-up companies in the Chicago area. “We helped them put together a business plan and go through the sourcing process, and introduced them to some of the suppliers we already had,” she says. “We helped them grow and develop.”
Exelon is made up of many different entities, and each one strives for supplier diversity, Reidy says. “Last year, we had $751 million in diverse spend, up from $629 million the year before. Many of those dollars were spent with companies that supply IT, engineering and construction services.” Reidy notes that the recent merger of Exelon with energy provider Constellation has resulted in opportunities for many diverse suppliers to help with continuity projects.
Seeking suppliers who can make an impact
When looking for new suppliers, especially in emerging technologies, Reidy looks for organizations that will make Exelon a better company. “We aren’t afraid to change suppliers to get what we need,” she says, “and the company will expand the responsibilities of our diverse suppliers if they bring innovation and focus.”
Exelon has a team of people who are responsible for the supplier diversity program. They’re located in each of the geographic areas the company serves, and they interview local companies that are qualified to do business with Exelon. The company also reaches out to its larger suppliers for recommendations. “But suppliers also often find us,” Reidy says. “Companies can go to our website and register their areas of expertise.”
Quantum Crossings provides state-of-the-art video surveillance for Exelon
EE Roger Martinez started his company, Quantum Crossings, LLC (Chicago, IL), twelve years ago as an electrical and technology contracting business. Over the years, Martinez added surveillance and monitoring camera installations. One of his expert areas is now camera and video surveillance, and Quantum Crossings provides Exelon with state-of-the-art video detection systems at garages and substations.
Martinez reached out to Exelon right after he started his company, and was directed to its supplier diversity group. It was his camera installation qualifications that got his foot in the door.
“Exelon gave us the opportunity to be one of their prime vendors, and that’s allowed us to expand our business,” Martinez says. “We can create more jobs for our employees. We’re a diverse firm, and we can hire more minority workers and provide their families a sustainable living.”
In return, he notes, Exelon has the opportunity to work with a quality minority-owned firm that can deliver. “Exelon benefits from our expertise in surveillance and video management systems.”
National Grid commits to ambitious goals
Carla Hunter Ramsey, director of supplier diversity at National Grid (Waltham, MA), is looking at the future to guide the company’s supplier diversity program.
“According to the 2010 census, the nation will be more than fifty percent minority by 2050. It’s good business to proactively build partnerships with diverse suppliers so our supply chain reflects the demographics of the communities in which we operate,” Hunter Ramsey says. “We value our relationships with the communities in which we provide gas and electric service, and these communities are becoming increasingly more diverse.”
That’s why National Grid’s supplier diversity program is committed to increasing its spending with minority and women businesses to 20 percent, and spending with all diverse suppliers to 40 percent, by 2015-16.
“To accomplish these goals, we will identify competitive diverse suppliers, create partnering opportunities between large primes and smaller suppliers, make use of mentorship programs, drive change internally, and work with external organizations to help grow and support the minority, women and diverse community,” says Hunter Ramsey.
Most diverse businesses in National Grid’s service territory are small businesses that employ local people in local facilities. “A dollar spent by National Grid with a diverse supplier within our service area has a positive impact on economic development for the communities we serve,” Hunter Ramsey says.
Fifty-year old Keystone Electrical enjoys new partnership
When Fred Buie bought Keystone Electrical (Des Moines, IA) fifteen years ago, the company was already doing business with utilities throughout the Northeast. The company’s relationship with National Grid came about when National Grid bought several of those utilities.
“Our marketing and sales force pursues utilities all over the country. Had we not been doing business with National Grid when I bought the company, we would have pursued them,” Buie says.
Keystone Electrical is a manufacturing company that makes protection and control switchboards and turnkey control centers for the electric utilities industry. Buie describes the equipment his company makes as “the brains of the power grid.”
Buie started his career with General Electric, where he worked in manufacturing and engineering management across seven industries and eight geographic locations. After eighteen years of climbing the corporate ladder, he decided to pursue a long-time entrepreneurial dream. “It was always in the back of my mind to branch out on my own, so I decided to make the break. I was looking for the right opportunity and I happened across Keystone.”
With a long history of success, Keystone Electrical will soon celebrate its fiftieth anniversary. Even though the company is well established, Buie says that working with a client like National Grid has benefited his business. “They are a large customer of ours, and having a large utility as part of our customer base brings credibility to us as a business.”
Alliant Energy seeks suppliers that meet high standards
When working with diverse suppliers, the leaders of Alliant Energy (Madison, WI) want to create a mutually beneficial relationship. But first, says Dan Schoepke, manager of supply chain performance, these businesses must satisfy the needs of Alliant Energy and meet the firm’s high-quality standards.
“It’s beneficial to have a strong positive relationship where we know we can rely on their goods and services to meet our needs. And it’s good for the supplier to know they have a customer who will want to work with them again and again,” says Schoepke.
Alliant Energy recognizes that the current and future challenges of the energy industry will require new ideas and perspectives. That’s why developing and maintaining a strong supplier base is essential to its success, and why it strives to include diverse suppliers in the pool of bidders for every work project.
Many of Alliant Energy’s suppliers work on the company’s power generation plants or distribution system infrastructure. They provide underground electrical construction and maintenance, boiler and turbine material and services, or material and services for overhead and supporting equipment like pumps, motors and air compressors.
“Although we have a specific goal tied to diverse supplier spend, our supplier diversity program is much more about core values, specifically respect,” says Schoepke. “We treat people with respect and strive to create a workplace where people of diverse backgrounds, talents and perspectives feel like they belong. Our supplier diversity program also stems from this value.”
Fusion Integrated Solutions, LLC: learn the customer’s needs
In 2007, Alliant Energy hosted the quarterly meeting of the Wisconsin Iowa and Central Illinois Minority Supplier Development Council (WICIMSDC), a regional affiliate of the National Minority Supplier Development Council. At the event, Fusion Integrated Solutions CEO Seaphes Miller met with engineering and purchasing groups from Alliant Energy and presented his qualifications.
Fusion Integrated Solutions, LLC (Milwaukee, WI) is a full-service engineering and design firm that’s been in business since 2004. The WICIMSDC meeting generated some small projects that have evolved into larger projects.
Miller says his company does a variety of engineering and design projects for Alliant Energy, primarily at the Edgewater plant in Wisconsin. One project involved environmental control and the filtering of water flowing out of Lake Michigan. Alliant Energy hired Fusion Integrated Solutions to study options for improving the filtering system. The company came up with several concepts that would allow water to flow without endangering area plant life.
Miller advises potential suppliers to “take a marketing approach” and develop a solid understanding of the unmet needs at the company they want to do business with, then tailor their offerings to fill those gaps. “A lot of suppliers come to the table with a very strong set of qualifications, but don’t necessarily know what the potential client might be looking for,” he says. “My company has a great track record in engineering, but if we only talked about the wonderful projects we’ve done and the wonderful people we have, we’d probably just get thrown into the pool with the other engineering firms. Instead, we spent a lot of time up front learning about Alliant Energy’s challenges, unmet engineering needs and specific requirements.”
Energy Future Holdings: a diverse supplier base helps the business
Energy Future Holdings (Dallas, TX) is a privately held energy company with a diverse group of businesses in its portfolio: a power generation and mining company, Luminant; retail and electric providers, TXU Energy and Oncor; and the Energy Future Holdings corporate and business services company. Among them, the companies use a wide range of commodities and services.
“At Luminant, we utilize suppliers for day-to-day commodity needs, engineering, construction, surveying and more. TXU Energy, on the retail side, has marketing and advertising needs, printing needs and call center needs. And of course business services, which supports the other businesses, needs everything from security services, office supplies and information technology services to staffing, legal and financial suppliers,” says Cheryl Stevens, VP of supplier diversity.
Stevens points out that a diverse supplier base helps Energy Future Holdings’ success as a business. “Calling on the resources of the entire supplier community lets us make the best sourcing decisions in the interest of our stakeholders and customers,” she says. “When all qualified and capable suppliers have the opportunity to compete in the sourcing process, the entire community has the potential to grow economically.
“Because our customers share our commitment to a diverse supplier base, they have an expectation of inclusion. So our supplier diversity results and progress enhance our competitive advantage.”
Stevens looks for the same qualities in diverse suppliers as she does when contracting with any business: excellent service, competitive pricing, innovative solutions, and a commitment to safety. “We ask that our minority and women suppliers be third-party certified,” she notes.
The company finds potential suppliers through organizations like the National Minority Supplier Development Council and the Women’s Business Enterprise National Council, as well as through networking activities designed to connect with new suppliers.
“Supplier diversity is a business initiative for us,” Stevens says. “A diverse supplier base, inclusive of all competitive and capable suppliers, helps us find the best suppliers and contractors for our needs and support the economic development of our communities at the same time.”
Southern Company: longtime support for diverse businesses
With electric utilities in four states, regional energy producer Southern Company (Atlanta, GA) is committed to the best interests of its customers. A major part of that commitment is cultivating an environment that supports the growth and success of small and diverse businesses.
“Providing opportunities to these businesses maximizes the value of our supply chain and contributes to the overall economic growth of the communities we serve. And it enhances our ability to provide clean, safe, reliable and affordable power,” says Ken Huff, supplier diversity manager of Southern Company’s utility Georgia Power.
“The supply chain team works to develop constructive long-term relationships with diverse suppliers to drive value for Southern Company and our customers,” says Huff.
Southern Company implemented its first supplier diversity initiatives in 1978. Today its supplier portal allows business owners to electronically express their interest in contracting opportunities. Supplier diversity professionals in Southern Company’s Alabama, Florida, Georgia and Mississippi subsidiaries support a range of national and regional small business advocacy organizations. The company also attends trade shows and business conferences to recruit small and diverse businesses.
Southern California Gas Co creates a ripple effect
Reaching out to diverse suppliers has allowed Southern California Gas Co (Los Angeles, CA) to be more competitive with pricing and the quality of its goods and services. This results in benefits to its twenty-one million customers.
The company actively supports its suppliers. “We have case after case of suppliers, many of them based in local communities, who started with us as very small businesses and have grown to be quite large enterprises,” says Rick Hobbs, director of supply management and supplier diversity. “It’s gratifying to watch these small firms grow and hire people.”
Some local communities have had economic challenges, he adds, so as these suppliers are growing and hiring, they’re improving the lives of their neighbors. Some have grown to the point where they’re now doing business with smaller diverse suppliers. “There’s a ripple effect that is felt across the entire economy,” Hobbs says.
Southern California Gas Co suppliers must be nimble, with the ability to be creative and look at things differently, says Andy Carrasco, supplier diversity manager. “A wide range of thinking can change the way we look at our overall business,” he says.
Minority and woman-owned suppliers need to be certified through the California Public Utilities Commission, and companies owned by service-disabled veterans need to be certified by the California Office of Small Veteran and DVBE Certification, Hobbs says.
ENERGY FIRMS ACTIVELY SEEKING DIVERSE SUPPLIERS
See websites for current opportunities
|Company and location
|Alliant Energy (Madison, WI)
|Electricity and natural gas delivery
|Energy Future Holdings (Dallas, TX)
|Electric utilities, power generation and coal mining
|BP America (Houston, TX)
|Oil, gas and alternative energy
|Exelon (Chicago, IL)
|Electric utilities and power generation
|National Grid (Waltham, MA)
|Electricity and gas delivery
|Southern California Gas (Los Angeles, CA)
|Natural gas delivery
|Southern Company (Atlanta, GA)
|Energy generation and delivery
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