SUPPLIER DIVERSITY: A STRATEGIC IMPERATIVE.

But Suppliers Must Be Flexible, Response and Price Sensitive

For minority suppliers, the landscape is changing rapidly. Corporations continue to consolidate, reengineer and streamline the purchasing function. Certain government set-asides have disappeared and technology is moving ahead at a whirlwind speed.

That may sound like a negative environment. However, many minority and women-owned businesses (MWBEs) are thriving in this environment. And membership at the largest organization dedicated to minority purchasing continues to rise. Over a three-year period, for instance, total minority purchasing dollars reported by the members of National Minority Supplier Development Council (NMSDC) grew 9% $30.0 billion in 1994-1995; 11% to $33.4 in 1996 and 8% to $36.1 billion in 1997, the latest available dollar figures.

"Our membership numbers are up," comments Harriet Michel, Executive Director of the National Minority Supplier Development Council (NMSDC). "Corporations realize who the customer of the future is. There are more corporations than ever who have gotten the message. Many of them are finally getting on the band wagon."

What forces are driving these trends? Both globalization and diversity seem to be moving US corporations to expand their minority and women-owned business (MBWE) programs. Companies are fighting harder than ever for customers. They recognize that by the year 2010, ethnic customers will account for 47% of the U.S. population; women will comprise 47% of the workforce. Plus, global markets are more and more important as a greater portion of U.S. corporate profits come from abroad.

"To the extent that we see pullbacks on the public sector side, we see more interest from the private sector," observes Steve Sim, Vice President in charge of government relations at NMSDC. "We see increasing membership in our organization because of forces like the global market and workforce 2000, which will be inhabited by people of color."

For all these reasons, many corporations are expanding their MWBE offices and initiatives, frequently with very good results today. However, there is no doubt that the process suppliers must go through today is more complex than it was a decade or two ago. And large corporations expect more of all suppliers -- not just minority suppliers.

The basic structuring of securing most contracts remains the same: secure third-party certification from one of the standard organizations; contact the company's purchasing office or Minority Purchasing Office with your ideas for service or products; respond fully to a RFP (request for proposal); make sure you fulfill company specifications and can produce the volume the company wants.

Here are some more specific suggestions from purchasing experts:

Make use of tile company's minority purchasing office. "We provide a roadmap for the corporation," says PEPCO's Rhonda Gebicke, Manager, Minority Business Development. "We know what PEPCO buys and where. We will do the paper work, explore the level of opportunity, and find out where .the potential supplier should be targeting their efforts to get started."

Form alliances. "Companies want economies of scale. Survival almost dictates that they [small minority suppliers] must partner. That's difficult," admits Harriet Michel, Executive Director of NMSDC. But that is what purchasing departments are suggesting. "I tell women and minorities they need to form alliances," says Thomas Knott at Federated Department Stores.

Research your target buyer company. "Companies are starting to find their core competencies. This makes the conversation go a lot easier, " says Federated's Knott. "Doing this research and homework, usually means finding the opportunity. Don't try to be everything to everybody."

Be Service-Oriented. "Show us how you pass efficiencies on and show us that you're service oriented," confirms Baltimore Gas and Electric's Anita Jackson, Director, Procurement Opportunity Program.

Think outside the box. "Some MBE's are going to have to do some different things." says Boise Cascade's Paul Ruffin, Manager of Supplier Diversity. He continues, "I can see three companies who provide the same service getting together with each other to bring their strengths and their synergies together to bid on that project together. Now they're larger, they're more competitive with regard to cost. MBE's are going to have to think outside of the box if they're going to survive."

Be creative about your product mix. While the importance of ethnic or special-interest marketing is growing, some purchasing experts urge MWBE's to think beyond that. For example, Excell La Fayette, Manager of Vendor Development at Wal-Mart, says, "We would encourage minority companies not to be so narrow in their focus.... If we have a black company, we would encourage them to market their goods to all people. But we think that we have such a diverse customer base, for better business relations you just don't lock yourself into dealing with just one group of people."

Clearly, large corporations expect their MWBE's to provide both sides of the equation: expertise in these special markets, or competitive products and services aimed at the entire market.

A real sign of progress is the pending creation of a Minority Business RoundTable. Modeled after the old influential and majority-dominated Business Roundtable, this new RoundTable is being organized by the Joint Center for Political & Economic Studies with a $155,000 grant from the Commerce Dept. A steering committee is already in place comprised of African Americans, Hispanics, and other minorities.

This new RoundTable may provide a louder voice for minority suppliers. As such, it will probably be welcomed by major corporations very concerned today with the "voice" and "face" of the customer.

"Minority purchasing used to be a staid social initiative," admits PEPCO's Gebicke. "Now it's become a business imperative. We have to look at the face of the customer, especially as we become deregulated."

W.W. Grainger's Olivia Dorsey, Supplier Diversity Manager, makes the same point another way. She says, "Companies have to make supplier diversity a part of the strategic plan. Because by the year 2010 and beyond, there won't be majority business power as it is today!" These trends and concerns certainly bode well for minority and women-owned businesses who are responsive, service-oriented and price-sensitive, and are thus able to become a supplier of choice for their customers.

BALTIMORE GAS AND ELECTRIC COMPANY(BGE)

As one of the three largest employers in the area, The Baltimore Gas and Electric Company has carved out a leading role for itself in supplier diversity over the past few decades. In 1998, the company's purchases from minority and women-owned businesses totaled $57.8 million - 6.9% of all company purchases.

That is quite a record for any institution. The numbers are the result of a concerted, long-term effort, as well as reorganization of the company's MBWE program in 1989 under the umbrella of Procurement Opportunity Program (POP). Today, all minority and women's purchasing is coordinated through this office, run by Anita Jackson, Director, Procurement Opportunity Program. She reports directly to the head of purchasing.

In 1998, BGE won the Edison Electric Institute's Minority Business Development award recognizing the company for its leadership in awarding purchases to minority business enterprises, giving procurement opportunity procedures and its extensive business outreach efforts.

Today, the new challenge faced by BGE is deregulation. The company is already competing for industrial customers and will face deregulation of its retail market in the year 2000. Has this forced BGE to streamline its supplier base or cut back on MBWE purchasing? "No, we haven't downsized our supplier base," says Jackson. Quite to the contrary,emphasis remains on this program. "We need to do business with suppliers who look like our customers. It's important for the bottom line," explains Jackson.

However, she underscores the company's new emphasis on looking for suppliers who offer cost-effectiveness and greater efficiency. BGE is determined to be a lean, well run company. Thus, supplier -- both large and small, minority and non-minority -- must demonstrate the same mindset to succeed in the purchasing process.

BOEING

Consolidation might just be another word for Boeing. In the last few years, this prime defense and aviation manufacturer has merged with two behemoths- Rockwell International (1996) and McDonnell Douglas Companies (1997). Because of this, it grew from a mere presence in 27 states with 100,000 people to a giant in over 42 states with 220,000 employees.

It has also been trying to streamline its supplier base. "Our number one focus is to integrate our existing suppliers by introducing them to other parts of the company and taking the time to review their capabilities," says Nick Sena, Director, Company Supplier Diversity Programs. One of the initiatives aimed at doing this was a symposium for women-owned businesses, which Boeing held in March at the Renaissance Hotel in St. Louis, Mo. At the conference, Boeing executives made presentations about what the future looks like for the company and its expectations for its suppliers. 'It was very successful," says Sena. "This was the first time them three heritage companies came together to invite heritage suppliers." Over 60 suppliers had goods or services on display and approximately 600 to 700 people attended.

Despite the streamlining trend and this emphasis on existing suppliers, Sena contends there is still room for new suppliers, albeit small. However, potential suppliers must be in tune with the company's future needs and overall strategic priorities such as improving delivery schedules. He says, "Prime contractors look for companies who want to team up, who can really satisfy the customer. These suppliers must also embrace new technologies."

"Some companies have processes in place to reduce cost and improve delivery schedules. Those are the companies we want to sit down and talk to. If these are small companies they will certainly be considered," Sena elaborates.

BOISE CASCADE OFFICE PRODUCTS CORPORATION

At Boise Cascade Office Products Corporation, there is a major emphasis today on second-tier purchasing. As one of the world's premier business-to-business contract stationery companies, the company is very cost conscious. It is interested in winnowing down its overall supplier base. But it still wants to expand its purchasing from minority and women-owned businesses.

"The trend has been to identify prime contractors who are MWBE's," says Paul Ruffin, Manager of Supplier Diversity. "I still stick with my one supplier, but then I use several different minority business enterprises or MWBE suppliers to fulfill those goals."

Mr. Ruffin feels that second-tier contracting has worked out very well over the past few years. These contracts have been expanding substantially. Second-tier suppliers are just as competitive as any other supplier. "Remember, the supplier was decided not because he was a minority but because he had an exceptional product and a fair, competitive price," says Ruffin.

But second tiering is only one part of Boise Cascade's overall supplier diversity program. The company formalized its overall initiatives in 1991. In addition to minorities, the program also targets companies owned by women, the physically challenged and disabled veterans. Recently Boise Cascade set an overall minority purchasing goal of 5%. The company is also making a concerted effort to mentor its Minority Business Enterprises, especially in the marketing and promotion of their products throughout the firm's customer base. Ruffin is proud of these initiatives, as well as the strong support he gets from management. "The diversity program is really pushed by top executives throughout the organization from Senior Vice Presidents to our President and CEO, Chris Milliken," Ruffin says. "I have yet to find a department that argues with senior management."

CHEVRON CORPORATION

Diversity is a core value at Chevron and an integral part of the Company's business plan. Chevron values the uniqueness of individuals and the varied perspectives they provide. We promote diversity within our workforce and encourage an inclusive environment that enables each employee to fully participate and contribute. Chevron is also aware of the role that diversity plays in strengthening the economic base of communities near our operations.

Through our Small Business Program, Chevron strives to ensure that our supplier base reflects the diversity of our customers and the communities where we operate. Having a workforce and supplier base that mirrors the diversity of our customer base enhances our competitive strength and increases our ability to understand and respond to customer needs. Chevron's Chairman Ken Derr expressed the company's philosophy, "We cannot hope to succeed unless our employment, purchasing and contracting practices reflect the diversity of the societies we wish to serve."

DELTA AIR LINES

Although Delta's supplier diversity initiative began under government mandate some 20 years ago, in the past few years the company re-emphasized the program. Like many other corporations, Delta took a hard look at its customer and employee base and concluded that its vendors should reflect the same all-embracing philosophy that has made the airline the world's most flown carrier.

Today, Delta is in the midst of a five-year plan to expand its supplier diversity program. "We're raising the bar to world class," says Valerie Nesbitt, Manager of Corporate Supplier Diversity. "Each year we have initiatives we want to implement and continue to raise the bar."

The ambitious goal must spar with Delta's shrinking supplier base, a refrain heard at other companies. Cost-driven managers are looking for ways to save money, and would rather process five invoices instead of I0 or deal with a shorter list of vendors. Some people might conclude from this that Delta is only interested in working with larger minority businesses.

But Nesbitt disagrees. "Size would not even be an issue," she says. Instead, financial stability is crucial. Financial stability can translate into being able to provide a quality product on time. Or it may help a supplier aid a major corporation in reducing costs, a key corporate goal at many companies across the nation today.

Doing just that helped Atlanta-based EWA Beverage Group win an important contract from Delta - providing bottled water for the 1996 Olympics. "The owner was competitive," Ms. Nesbitt emphasized. "The contract would not be awarded under any other circumstances."

Of course, today with supplier streamlining, it may be harder for many small business owners to compete. They may be better off partnering in order to provide goods and services on a grander scale. Nesbitt admits, that although the bar has been raised today, standards remain similar for minority and non-minority suppliers. "We expect the same out of any supplier, and that is what's important about any program."

EQUIVA SERVICES LLC

Consolidation often more opportunity, not less, according to Darvin Mayo, Director of Business Development and Community Enterprises for Equiva Services LLC, which is part of the recently merged companies of Shell Oil Company, Texaco Inc. and Saudi Aramco. "We have made the company stronger through centralization," says Mayo. "This merger is going to create bigger and better opportunities. We look to minorities and women owned businesses to help drive this process forward."

Certainly, Mayo is working hard at this. And he has a double burden; to expand opportunities for MWBEs in a non-traditional field, and to educate people about the structure of the new company and even its name Equiva.

However, Mayo remains undaunted and very optimistic. He reports that Equiva is very proactive in setting goals for MWBE purchasing this year and in the future. For instance, in 1999, the company hopes to increase its discretionary purchasing dollars with minority and women-owned businesses.

Equiva is actually streamlining its supplier base to improve costs, leverage buying power and create economies of scale. Simultaneously, it is determined to purchase from a wider net of minority and women suppliers. "In certain areas, where there has been a lack of representation, we're not going to let that be the litmus test," he insists.

In fact, Equiva wants to concentrate on expanding its MWBE Tier I suppliers. "We're looking to help minority suppliers to grow with us and become a primary supplier," says Mayo. And with the energy and resources Equiva is putting against this goal, it is no wonder Mayo is optimistic about the future.

FEDERATED DEPARTMENT STORES, INC.

Like many companies, Federated Department Stores, Inc. is streamlining its supplier base. But, according to Thomas Knott, Manager, Vendor Development and Diversity, that does not mean there is less opportunity for aspiring minority suppliers. For one, Federated owns a wide range of retail properties from Bloomingdales to Le Bon Marche, Burdine's, Rich's (in Atlanta) and Macy's. These stores offer opportunities to sell a wide range of merchandise, which is constantly changing with trends in fashion. Secondly, the company actively solicits minority suppliers for services from office furniture to supplies.

This active program has paid off. In 1998, Federated spent $188 million with minority business enterprises and $124 million with women-owned businesses. Knott's office acts as a centralized resource center. It helps pre-qualify suppliers, checks certification and introduces companies to specific buyers around the country. When a company is turned down, Knott and his colleagues frequently stick with the company. "We give feedback, so that they can grow from that."

Today, Knott cites an impressive list of minority suppliers who have sold or are selling their products at Federated stores. These range from Fashion Fair, a $20 million company that sells cosmetics for women of color to Daymon John's new urbanwear fashion line. Knott also points to the example of Sandra James, a former Federated employee, who turned an idea for women's casual sportswear into her Hot Cotton casual sportswear now manufactured by Marcwear, Inc. and sold at Federated Stores.

Knott encourages companies to keep trying if they do not make the grade for one contract. "We are not trying to shut the door on anyone," he says. Fashion changes all the time, and Federated is ready to take a look at companies with the right price structure and product.

GLAXO WELLCOME INC.

Glaxo Wellcome Inc., based in Research Triangle Park, N.C., is a leading research-based pharmaceutical firm. The company employs approximately 8,600 people across the U.S. and operates manufacturing facilities in Zebulon, NC and in West Greenwich, R.I.

Initially launched in 1987, Glaxo Wellcome restructured and re-launched its supplier diversity initiative two years ago. Reinforcing supplier diversity as one of its corporate objectives, senior management increased their support and expanded the program's staff. As a result, the percentage of diversity spending with small, minority-owned companies has more than doubled.

"The increase in senior management support has made the biggest impact in our success," says Denise Gatling, Manager, Supplier Diversity Administration. "We've also increased our outreach within the community and have located more suppliers who have the skills and attributes that we are looking for."

Glaxo Wellcome is committed to fighting disease by bringing innovative medicines and services to patients and to the healthcare providers who serve them. Good science is one of the foundations on which Glaxo Wellcome is built. Good business strategy is another. Critical to both is the diversity of ideas that leads to new innovations.

Business innovation led one of the company's buying teams to build a minority alliance with a major supplier. That alliance was considered a major victory after the 1997 diversity re-launch. Gatling said the process that went into establishing this relationship was an excellent example of thinking outside the box. "That a major supplier is willing to work with us to help us meet our corporate objectives speaks highly of their working relationship with Glaxo Wellcome," says Gatling.

Gatling's goal over the next few years is to ensure that all Glaxo Wellcome employees clearly understand how and why diversity makes good business sense. "Diversity is a benefit to a successful company," says Gatling. "1 want to see diversity become a part of day-to-day operations. It's good for small businesses as well as being good for the company." Learning about and adapting to a diverse marketplace gives Glaxo Wellcome a competitive edge. An effective supplier diversity initiative expands company contacts with a constantly changing customer base.

W.W. GRAINGER

Some companies have a talent for getting things done. W.W. Grainger, which moved swiftly to grow its minority supplier program, started in 1995. "We were a little late getting started," admits Olivia Dorsey, Supplier Diversity Manager, who came on board about a year ago. "But the program has really gained momentum." Accomplishments range from setting corporate goals (5% of Tier I dollars) and support from the chief executive officer and senior management involvement to the creation of a steering committee.

"We were been institutionalizing the process," Dorsey says with satisfaction. Grainger is the country's leading distributor of maintenance, repair and operating products. So it has many opportunities for qualified minority and women suppliers. Customers can make purchases from one of the company's 340 branch locations, online or through its printed catalogue. Recently, Grainger began publishing a separate catalogue on products offered by minority or women-owned businesses. Some of these suppliers are service businesses such as Professional Exhibit People, Inc (PEP, Inc.), a minority-owned business based in Broadview, IL, which runs exhibits for corporations. Recently PEP, Inc. organized Grainger's display at the Chicago Minority Supplier Development show. "We've been exceptionally happy with the shows we've done with PEP, Inc.," explains Dorsey. Grainger plans to use PEP, Inc. for other types of exhibits in the future.

Having top management participate reinforces the entire company's commitment to diversity purchasing goals. "Minority purchasing is a critical part of performance," says Dorsey, "It's part of a trend to make it part of strategic planning."

MARRIOTT INTERNATIONAL, INC.

Marriott

It is often said that small business is the lifeblood of the American economy. At Marriott International, we couldn't agree more. Our ability to partner with the energy and entrepreneurship of small companies has always been a key ingredient in Marriott's success. From supplying us with innovative products that allow us to serve our customers better, to showing us new ways to do old jobs, small businesses have been players in our growth.

We think the future holds even more potential. The worldwide hospitality industry is only in its infancy. The opportunities for growth-oriented companies are tremendous. Marriott International fully intends to be the leader in the industry in the next century.

We've seen the tremendous benefits that come from working with locally-owned businesses in the communities in which we already operate. The challenge is to build on those relationships, and diversify into new ones that can grow with us in the 21st century.

That's where Marriott's Supplier Diversity Program comes in. We know how hard it can be for a small business with good ideas to find the right door to knock on in a big company like ours. The Supplier Diversity Program will make it easier so we can start working and winning together.

To learn more about the Marriott Supplier Diversity Program, please contact:

Marriott International, Inc.
Supplier Diversity program
Dept. 977.01 Marriott Drive
Washington, DC 20058
Phone: [phone]
Fax: [phone]

MCI WORLDCOM INC.

Sometimes consolidation can be a blessing in disguise for minority suppliers, especially when the overall effect is to increase the demand for purchasing - not diminish it. That is probably the ultimate result of the 1998 MCI/WorldCom merger, which brought together two powerhouses.

However, only one of these, already had a major supplier diversity program. In some cases, it might be that a supplier diversity program could stumble under pressures to reorganize and consolidate.

However, not at MCI/Worldcom. Beginning with Bernard J. Ebbers, MCI WorldCom's President and Chief Executive, senior management has been supportive. It put responsibility for all diversity purchasing into the existing program that Vernestine Davis heads. Then, the joint company encouraged Davis and her group to get their hands around the $5.7 billion of procurement spending MCI alone did last year.

Now there is potential for an even larger program and Davis is excited by that opportunity. She started as the program's solo staffer in 1984. Today, she heads a full-time staff of five, plus several contracted employees. The program's largest presence is in Texas, where most of the network group is housed.

Davis reminds potential suppliers that MCI/Worldcom is a highly technical telecommunications company. Its requirements are very strict and suppliers must conform with the latest international standards. Sometimes vendors do not have the resources to compete, especially if the company is small or young.

Clearly, new suppliers need to find out technical specifications before they jump into the bidding process with MCI/Worldcom. They may also try partnering with larger vendors. As Davis explains, "One of the things we have been conscious of and telling suppliers about is they have to be willing to partner because we have been bundling our requirements," Davis said. "They can partner with others just for that requirement." Davis' group will even give out the names of other vendors they have been dealing with to encourage creative joint venturing among suppliers. All in all, it is clear that Davis is opening up opportunity for vendors as her own company expands.

MERRILL LYNCH

At Merrill Lynch, we recognize that a commitment to supplier diversity is not only good citizenship, it's good business. We understand that greater inclusion in the marketplace is the key to economic growth and opportunity for minority and women entrepreneurs.

In 1987 we created a supplier diversity and development program to increase the firm's expenditure for goods and services from minority and women entrepreneurs as well as physically-challenged and veteran-owned businesses. To insure program success, we established accountability for results; benchmarked the best corporate programs; joined and sponsored such organizations as the National Minority Supplier Development Council, the National Association of Women Business Owners and the National Hispanic Business Group; contributed $1 million to the Business Consortium Fund that provides low-interest loans to minority businesses; created minority advisory boards to provide program guidance and support; developed a mentoring program; sponsored an advanced education course at the J.L. Kellogg Graduate School of Management at Northwestern University and provided access to the best financial consultants within our industry.

Our Supplier Diversity and Development Program has dramatically increased Merrill's procurement activity with minority and women entrepreneurs to reflect the diversity of the world in which we do business. It's the right thing to do. It's good business.

JC PENNEY

"My job is to facilitate access and give feedback, where appropriate," says Susan Maxwell, Manager of Supplier Diversity Development at JCPenney. It looks as if Maxwell has done a very good job of it -- judging from the results of Penney's diversity program. In 1998, the company spent around $626 million with minority and/or women suppliers. The company is particularly active in the resale area, through its six merchandise divisions, which make up 70% of its minority or women-owned business purchasing.

Maxwell believes that one reason for the success of the program is the support she receives from upper management. "The message has to come from the top," she says. "Then it will trickle down." JC Penney's diversity program is well structured to help MWBEs include management as part of an advisory group and senior management commitment. She reports to a steering committee representing all key units in the company. She works through 20 advocates around the company, who can help her identify opportunities for minority and women businesses.

Maxwell admits that today the purchasing landscape has become more competitive, especially when it comes to non-resale merchandise. That is because many companies are centralizing their purchasing to create economies of scale. To deal with this, she advises suppliers to form strategic alliances; this can help them compete on a national basis. They should also do their homework such as "visiting our stores" before offering to sell certain products. Doing the homework will pay off in the long run.

PACIFIC GAS AND ELECTRIC COMPANY

At a time when some companies are still just coming up the learning curve, Pacific Gas and Electric's supplier diversity program stands out. Maybe that explains the wisdom of its Supplier Diversity Director, Bonnie Wells, when she advises suppliers who lose out on contracts to "Let it go."

"If a supplier has bid unsuccessfully in a previous bid opportunity at PG&E, I think the best piece of advice that I can give them is, first, to let that go on a personal basis," Wells says. "Take it and learn from it, whether that means contacting the buyer or the supplier diversity director and being a bit aggressive."

Voluntarily begun in 1981, Pacific Gas and Electric's supplier diversity initiative was started before the California Public Utility Commission began to set five-year purchasing goals in 1988. Last year, PG&E purchased $194 million of goods and services from businesses owned by minorities, women and disabled veterans. Nearly 23% of the company's purchasing power. This was over its goal of 21.5% -- a truly outstanding record.

What are the drivers behind this program? One is local economic development. "If the businesses that we service are doing well, so are we," Ms. Wells pointed out. The other driver is that, statistically, California may be the most ethnically diverse state in the nation. Incorporating that cultural environment not only into her company's workforce but into its vendor base gives the energy supplier a competitive advantage.

Now the company has begun posting most of its bid contract opportunities on its public web site (www.pge.com/purchasing). The purchasing process is also being de-mystified by uploading the complete purchasing organization chart which will appear on the site later this year. It will include the names, external phone numbers, e-mail addresses and area of procurement for the company's more than 60 procurement specialists and senior buyers -- thus making the bidding process much easier for everyone.

PEPCO (Potomac Electric Power Company)

At PEPCO, prospects for minority suppliers are very good. Unlike other companies, many utilities are actually expanding their supplier base. Why? Deregulation. For the first time in their history companies like PEPCO are facing competition.

So they are particularly concerned that their supplier base reflect the diversity of customers in their market area.

"Minority purchasing is not just a program," says Rhonda Gebicke, Manager, Minority Business Development, "It's a way of life." PEPCO, the Potomac Electric Power Company, is headquartered in Washington, D.C. It is a utility which serves a 640 square mile service area including Washington, D.C. and Maryland suburbs. It has had a minority supplier program since the 1970s. Since 1987 alone, PEPCO has spent $1.2 billion with minority suppliers.

Gebicke points out that although the program started out as a social initiative, it has now become a business imperative. "We have to look at the face of the customer. We have to look at all our practices as we get deregulated."

She says that in 1992 PEPCO set rigorous goals for 500 services or products where the company thought there was opportunity for minority suppliers. These goals range from 5% to 50% and are tracked monthly. The company has had particular success expanding the number of minority fuel brokers it uses. Today, it also buys a great deal of cable from Washington Cable/Okonite Alliance. Washington Cable is minority owned and PEPCO initially represented 50% of its business.

"I think the lines are blurring between non-traditional and traditional businesses for minorities and women," says Gebicke.

PFIZER

Just as a healthy body requires that all the parts work together as a single, smoothly functioning system, Pfizer's purchasing process includes all suppliers in one open, inclusive operation. For minority suppliers, this commitment to inclusion means direct access to the same values and business processes that have helped Pfizer become Fortune magazine's most admired pharmaceutical company in the world for the second year in a row and Forbes magazine's 1998 Company of the Year.

A key part of our corporate mission is the pledge to achieve and sustain our place as the world's premier research-based pharmaceutical company. We must continue to improve to make this happen. We must work dosely with our current suppliers to find ways of strengthening our operations today, and we must remain open to new suppliers who can contribute new ideas that will add value tomorrow. We see this influx of new ideas as the key benefit of an effective minority business development program. Richer, more diverse ideas lead to better products, which will help meet the second pledge in our corporate mission: to use our continuing business success to benefit patients, our customers, our shareholders, our families and the communities in which we operate.

Formally in existence for more than 30 years, Pfizer's minority business development program is designed to identify opportunities for certified MBEs across the full breadth of Pfizer's business operations. Given the nature of our business, which is itself extraordinarily diverse in the areas it covers, potential opportunities could span the range from scientific and technical support to raw materials to maintenance services.

Structured to ensure an ongoing interaction among Purchasing Managers, the Supplier Diversity Manager and potential MBEs, our program produced a 20 percent increase in the amount of business Pfizer did with minority-owned firms between 1997 and 1998. Determined to build on this momentum, we encourage all MBEs interested in doing business with Pfizer to learn as much as they can about our company and use that knowledge to identify, communicate and demonstrate how they can add value to our business. In combination with our continuing commitment, this approach reflects Pfizer's longstanding belief that in every endeavor "together we make a difference."

PHILIP MORRIS

Like other large companies, Philip Morris has downsized its supplier base over the last decade. But in spite of this, "The business Philip Morris does with minority suppliers has hit record levels every year," says Sharon Patterson, chairman of the company's Diversity Task Force.

This is good news indeed for potential (and existing) Philip Morris suppliers. That is because Philip Morris has become a giant over the past decade. In fact, today it is the largest consumer products company in North America with over 72 brands which sell more than $100 million a year; operations in 178 countries; and 150,000 people.

Fortunately, Philip Morris has a very organized minority and women-owned business supplier program. An umbrella committee oversees direction for the entire company, while individual companies like Kraft Goods and Miller Brewing run their own individual programs. Patterson says it is both a top-down and bottoms-up initiative. There is strong support from top management and businesses on the local level.

To Patterson, purchasing diversity is important for Philip Morris for a number of reasons. For one thing, "Large numbers of people of color buy the company's products. So, therefore, people of color should participate in making the products," she concludes.

Secondly, minorities may bring a unique perspective that is different from that of majority suppliers. And thirdly, since MWBE's are frequently small, they may be able to supply economies of scale or operate with lower overhead.

Protech, Inc., for instance, a minority company headquartered in New York, provides Philip Morris' East Coast operations with office supplies. The company is a good example of "added value" gained by using a smaller supplier. "The owner of the company, Jose Montiel, wants our business," says Patterson. "So he gives us very good service. We enjoy doing business with him, and he is very price competitive." All in all, it's a win-win situation and a good example of success in Philip Morris' supplier diversity program.

SHONEY'S

Shoney's, like other large companies is shrinking its supplier base. So even though it has approximately 1200 restaurants in 28 states, new suppliers may be wary of exactly how to approach the company or look for opportunity. However, Betty Marshall, Head of Shoney's minority and women's purchasing office, says they should not be worried. The program she heads at Shoney's has developed a very strong track record over the past decade. In fact, last year Shoney's was ranked among the top 10 companies most active in MWBE purchasing.

Marshall's office, located in Nashville at the company's headquarters, acts as a clearinghouse to direct potential suppliers to the right buyers. "We schedule and attend the first meetings," says Marshall. "We hold their hand until the contract is signed."

This type of support can have a major payoff. Such was the case with Golden West Foods, a minority-owned company which already did business with McDonald's. But that company's attempts to become a supplier for Shoney's kept failing. Marshall explains that sometimes the manufacturing specifications were not met. Frank Brooks, head of Golden West Foods, demonstrated persistence. Marshall says that after trying to do it on their own, they finally came to her for assistance. She was able to put them in touch with the right buyers, and today Golden West Foods is a major supplier of French Toastix to Shoney's Ripley distribution center.

Marshall admits that it is not always easy to build her program in the face of streamlining the supplier base. She has seen a trend toward majority-owned businesses buying out minority businesses. "I lost my largest minority supplier to a merger recently," Marshall admits wistfully. However, that has not deterred her enthusiasm and persistence. "It just makes you re-channel your energies in today's world. One door is shutting, but another will be opening."

SEARS ROEBUCK AND CO.

Innovation characterizes the diversity initiative of Sears, Roebuck and Company. Sears has one of the most longstanding programs in the country, dating back to the 1960's. Today the program remains as nimble as ever.

"We're always challenged to see where the opportunities lie," said Carol Martin, Director of Vendor Diversity. "Many times the innovation comes from the small company instead of that very large partner that you've been doing business with for the last 20 years. Perhaps we're trying to address the needs of the Hispanic consumer in terms of cooking utensils. Who better to do that than a Hispanic business owner?"

While noting the vendor consolidation trend among purchasing departments, Martin pointed out that not all minority businesses are small. "There are minority businesses that play in the larger markets that can service Sears. They have all of the systems, the capabilities, all of the resources that are needed to do business with us, and indeed, we have vendors like that in our vendor base."

The retailer is moving toward increased second-tiering. To do this, Sears is encouraging primary suppliers to partner with more minority and women-owned businesses. A good case in point was Sears' nationwide search for temporary services firms. During the search, some minority-owned firms were excluded because they only served particular geographic areas. The solution? Sears encouraged first-tier suppliers to utilize minority-owned businesses in this work. According to Ms. Martin, Sears is in the process of setting some targets for those first-tier partners.

While Sears doesn't have set-asides, it does strive toward a goal of 5 percent of purchasing from women- and minority-owned businesses. Potential vendors can check out the company's web site (www.sears.com) to find out more about the Vendor Diversity program and even download a profile sheet. Packages of information can be requested through the site or by contacting the Vendor Diversity Department at [phone].

SEMPRA ENERGY

"Don't come to us unless you're prepared," warns Sempra Energy's Shawn Farrar, Manager, Diverse Business Enterprises. "There are a lot of firms out there that are competitive and do a really good job."

That is the kind of practical advice Farrar is known for. And her aim is to help minority and women-owned businesses successfully compete for contracts in Sempra. Her company is a newly-formed creation, a showcase of how two companies can merge. Sempra was formed last year by the combination of Enova, parent of San Diego Gas & Electric and Pacific Enterprises, parent of Southern California Gas Company.

Both these companies had minority procurement programs. The parent company has not set mandated purchasing levels so far. However, since the company is determined to be an industry leader, prospects are promising for a corporate goal that will match those of its regulated subsidiaries whose own targets are in the 20-25 percent range. Last year alone the company purchased $97 million of goods and services from minority and women-owned companies and from disabled veterans.

Farrar believes partnering is a major way in which minority-owned businesses can make themselves more attractive to large companies like hers. Also, business owners and management should consider joining the local Chamber of Commerce or Urban League as an excellent way to network. "A lot of people in my position sit on boards or are a part of different organizations, and that's where they get to meet people and talk to them one on one," Ms. Farrar explains.

When she sees something unique about a potential supplier, she will bring the vendor to the attention of the appropriate person in her company. "We have found that when we take the time to search out these firms, they are usually very competitive, which puts pressure on our other vendors to be as competitive," Ms. Farrar pointed out. "And they are fairly creative, because they are usually smaller in size, more flexible and they're willing to service the need at a much higher quality level. We found that it just makes really good business sense to utilize these firms to the fullest."

TOYOTA NORTH AMERICA

"We are looking for quality and delivery and a competitive price," says Chuck Hendrix, Assistant Manager for Supplier Diversity and Strategic Planning at Toyota, North America, "And, of course, our suppliers have got to have the capacity to supply to us as well."

These standards remain a tall order in the automotive industry, where major companies have all been working hard to expand their minority purchasing programs. Toyota, for instance, would like to see 5% of its purchases from minority suppliers by the year 2002.

This year, Toyota has seen some exciting new Tier I suppliers come on board. One of these is Mexican Industries, a manufacturing and assembly supplier. The company recently signed a contract to provide cargo nets to Toyota for the year 2000 model Avalon. Hendrix was pleased with the contract, saying that "A lot of times we look for opportunities for African Americans, but we also look for opportunities for other minorities who fall under the guidelines of the NMSDC."

A former buyer himself, Hendrix believes he has an advantage. He knows what will help new suppliers through the process. He usually puts them in touch not just with a buyer, but also with someone in the company's Ann Arbor, MI Toyota Technical Center to get the right specifications for the part in question.

Another major success story for Toyota is its Opportunity Exchange fair, which has been running nine years. It is a Tier 2 opportunity for MBEs, who attend the event to mingle with over 200 of Toyota's largest suppliers. The MBEs can walk around and introduce the products and services they have to offer. What we have seen is the generation of large dollar amounts of contracts just from this Opportunity Exchange alone," says Hendrix. For instance, last year the event generated over $8 million in contracts, and Hendrix believes he will soon seen companies nurtured by the Exchange move from Tier 2 supplier to Tier I. That is a gratifying result of an ongoing Toyota commitment to minority purchasing.

TYSON FOODS

It was more than 60 years ago that John Tyson drove his battered truck from Springdale, Arkansas to Chicago to deliver a load of 500 Arkansas chickens. Tyson had heard that chickens were bringing a better price in the big city, so he cashed in his savings and borrowed the rest of the money he needed to finance the trip. He sold the birds for a profit of $235, wiring home $220 to pay his debts and buy another load of birds. The profit was good, but more important than the $235 was the foundation he laid for one of the world's largest food companies. Out of one man's dream rose a company that now employs more than 65,000 team members, all with one common goal: "Produce Quality Food Solutions to Feed the World."

Today, Tyson Foods processes more than 2.5 billion chickens annually. The products made from these birds are shipped to every state in the US and more than 50 countries worldwide, generating total revenues of almost $8 billion annually. It is important to Tyson that minority and protected class businesses earn a share of our purchasing dollars. Tyson currently has relationships with more than 1,500 of these businesses, representing more than $100 million in business and growing.

If you would like to join us as a supplier, please contact Cindy Carr at 1-800-643-3410. Or e-mail at [e-mail].

WALT DISNEY WORLD

Recently eighty-two minority and women-owned business enterprises (MWBEs) were given the opportunity to present their goods and services directly to more than two thousand end-users and purchasing decision-makers representing the WALT DISNEY WORLD[R] Resort and The Walt Disney Company.

The firms were the selected exhibitors for Disney's 1st Annual Minority - & Women-Owned Business Enterprises Maintenance & Facilities Trade Show. The day-long event, hosted by the WALT DISNEY WORLDr Resort, included an extensive tour of the Central Shops area. As the department responsible for creating sets and other uniquely Disney wizardry, as well as providing various facilities, maintenance, and custodial services, Central Shops is a key purchaser of facilities and maintenance equipment and supplies.

The trade show is just one example of the unique approaches taken by Thomas Flewellyn, director of Minority Business Relations (MBA), and his team to support the growth, development, expansion and increased utilization of MWBEs at the WALT DISNEY WORLDr Resort. "We wanted to bring MWBEs into direct contact with the end-users and also let them see how their products and services are likely to be used. All of the exhibitors gained valuable insight into doing business with us. Many of them have already gained new business," said MBA Manager Jose Nido, the trade show's coordinator.

MWBEs interested in doing business with the WALT DISNEY WORLDr Resort should write to: Jose Nido, Minority Business Relations, Ref Code: BEA, P.O. Box 10,000, Lake Buena Vista, FL 32830. High potential opportunities exist for MWBEs to provide: animal supplies, audio visual equipment, awnings and canopies, casting (molding), food service equipment, horticulture supplies, laundry equipment, key cards (ISO 9002 certified), machining, marble and granite, meat packing, produce, poultry, dairy products, metal fabrication, recreation equipment, simulated rock/landscape, kitchen repair parts, and scenic set design, fabrication and installation.

WAL-MART STORES INC.

"One of the trends I see is that everyone wants to get in," says Excell La Fayette Jr., Manager of Vendor Development at Wal-Mart Stores Inc. "Everyone wants to be a distributor to all stores." Since Wal-Mart has over 3,000 stores around the nation, no wonder vendor competition is keen.

La Fayette's job is to help increase minority purchasing opportunities for minority and women-owned businesses. To do that, La Fayette runs a number of special program including a Support American-Made Program and a WIN program (Wal-Mart's Innovation Network). Suppliers can also examine Vendor Development at www.wal-mart.com or contact local stores to start out on a more localized basis.

The company's formal minority purchasing program started in 1993 and began taking off in 1994. But La Fayette stresses that minority suppliers, like majority companies, must go through a very formal process to qualify. "We don't promise anybody anything in our department," La Fayette says. "They go through a process. Once all the criteria is met, we give the information to the buyer or purchasing agent. They review their criteria and their paperwork, and then make a decision, if there's a fit for that particular product or service."

Since Wal-Mart is consolidating suppliers, like others in the industry, competition is increasing. To better qualify, La Fayette urges new suppliers to be extremely well prepared and informed before they make a presentation or come in to the purchasing office. "I would encourage minority business owner to know their business and industry better than anybody else. When they approach us, they shouldn't say, "I can produce as much as you want me to produce."

Another tip is starting out small. "Everybody wants to be a distributor to all the stores (nationwide)," La Fayette observes. "But if their producing capability is very limited, there's no way that's going to work. So we try to develop companies slowly."

In fact, new vendors usually start out at one local store or several stores in a district. If their product or service works out, they might then be able to achieve expanded placement in stores throughout the region, and finally, after that national distribution. "This is also the path recommended for majority-owned firms too," La Fayette explains.3