The Utilities Industry Is Reaching Out to Minority Vendors
While Challenging Them to Be More Creative
By Rosalind McLymont
The utilities industry, with its mega-establishments that provide electric power, natural gas, steam, water, sewage, and telecommunications services, is a multitrillion-dollar behemoth. The electric power sector alone is worth more than $218 billion, surpassing telecommunications and gas, according to the Edison Electric Institute, the sector's premier trade association.
CEOs and managers of supplier diversity programs at some of the nation's largest utility companies are quick to point out, as competition for customer dollars intensifies, the bottom-line, image-enhancing benefits of doing business with minority vendors. Even so, minority sourcing faces enormous challenges, even within corporations whose leadership has embraced diversity. The U.S. Department of Commerce's Minority Business Development Agency confirms those challenges in a 2001 report entitled "Energy & Utilities. Minority Business Development: Economic Value and Benefits." The report raises such issues as entrenched relationships, where buyers prefer to stick with known relationships rather than risk new ones; resistance at the middle-management level; the impact on past MBE sourcing efforts when utility companies divest generating assets; and the difficulty in integrating minority sourcing into postmerger processes.
Advocates of supplier diversity are further frustrated by the fact that many minority vendors are still too small to meet today's volume and competitive-pricing demands. Unfamiliarity with the procurement process, inadequate exposure and the lack of advocacy also are drawbacks for many minority vendors. Moreover, increased competition due to deregulation of the electric industry has put pressure on utilities to streamline operations, maximize the efficiency of operating facilities and decrease overhead in order to remain competitive. This, in turn, places additional burdens of responsibility on diverse suppliers.
Utility top brass insist that their supplier diversity programs, while they may evolve in response to the changing business landscape, will not be derailed by economic or geopolitical pressures. TNJ took a look at some of those programs.