Procurement Summitt Supplier Diversity Case Study - PowerPoint PPT Presentation

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Procurement Summitt Supplier Diversity Case Study


A presentation Daryl Hodnett delivered to the Procurement Summit audience on supplier diversity. – PowerPoint PPT presentation

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Title: Procurement Summitt Supplier Diversity Case Study

Supplier Diversity Case StudyPG Alexandria
Plant Expansion2004
  • D.M. (Daryl) Hodnett
  • Director-Supplier Diversity and Small Business
  • University of Missouri System
  • November 17, 2014.

Who is Daryl Hodnett?
  • 30 years as an Executive at The Procter Gamble
  • 10 Years as Media Manager-U.S. Advertising and
  • 15 years-Group Manager, Corporate Purchases,
    Supplier DiversityNA Product Supply
  • 7 years as Managing Partner of Damiho, LLC
  • Supplier Diversity Consulting and Marketing
  • Time-Warner, JJ, Shell, KLEW. Co, Sphinx
  • Lead Trainer for Diversity Information Resources
  • Current Director, Supplier Diversity and Small
    Business Dev - University of Missouri System
  • Lead the process for four campuses
  • Enrollment-77,000
  • Incorporated in 1839-175 years

Why Am I In COMO???
  • University of Missouri is one of the U.S. Largest
    State Systems
  • 77,000 Students, 2BN state economic engine
  • Mizzou in Columbia is Flagship36,000 Students
  • Major Urban Campuses -UMSL and UMKCDiversity
  • Missouri STThe Georgia Tech of the North
  • World class faculty in all 4 schools
  • Supplier Diversity Program in Place ready to
  • ScaleScaleScalemeeting one of my long-term
    goals to teach
  • Supplier Diversity Legacy Track!!!!!!!!!!!

Part of Daryl Hodnett s SD Business Building At
Review Why Supplier Diversity
  • U.S. Big 3 AutomakersBuilding Consumer Loyalty
  • Were losing ground to imports
  • Detroit How do we help rebuild the city?
  • Future and current demographics nationally
  • Toyota, Honda have adopted this effort (Based on
    having U.S. Mfg. plants)
  • All 5 companies spend more than 1BN annually-BDR

Review Why Supplier Diversity
  • Consumer ProductsReaching the New America
  • 204050 America is minority (California/Texas
    already there)
  • Hispanic and AA population boom with birth rates
    1-2x whites (immigration as well)
  • PG is CPG leaderOver 2BN in SD spend, Pepsi
    and JJ 1BN. McD-5BN reported by Fortune

Review Why Supplier Diversity
  • Advocacy GroupsNot why you should do it!
  • Companies that have had significant history
    with discriminatory practices
  • Have had federal government intervention
  • Understood it is bad for business
  • Public PolicyWill Drive Private Behavior

Review Why Supplier Diversity
  • Business-to-Business Pleasing your customer!
  • Major customers ask suppliers to create supplier
    diversity efforts
  • Automakers started the 2nd Tier initiative from
    corporate side
  • Johnson Controls JVs Strategic Advantage
  • Many suppliers (office products, foodservice,
    etc.) have efforts to report spending to
    uscompetitive advantage

Review Why Supplier Diversity
  • Colleges and Universitys Must develop compelling
    reasons for Supplier Diversity Its about BUTTS
    in SEATS for our future!

Case StudyDevelopment to Meet Business Need
IPC/Georgia Pacific Story in Alexandria, LA.

Case StudyDevelopment to meet Business Need
IPC/Georgia Pacific Story in Alexandria, LA.
  • Background
  • PG expanding its HDL Laundry Plant in
    Pineville/Alex, LA for March 2005 open
  • Cant make liquid detergent fast enough at Lima,
  • Will need suppliers for bottle making and
    corrugated box making in the region
  • Fabric and Home Care Business decides on
    Plastipak for Bottles
  • New-to-the-World Corrugated Box business
    Est.20-30MM annually
  • No cannibalization of other corrugated business

Case StudyDevelopment to meet Business Need
IPC/Georgia Pacific Story in Alexandria, LA.
  • Global Packaging Leader decides on MBE as key
    sourcing criteria

  • January, 2004
  • Insure the business (FHC Pres./GM/Purchases VP)
    aligned with MBE strategy
  • Driven by PG 1.5 BN Goal by 20051BN Minority,
    500MM Women
  • Get Corrugated Team enrolled
  • Assign owners to deliver the results
  • HodnettSD
  • Rodriguez-Corrugated Mgr.
  • MBE needs to be in Alexandria (50 Black
    pop)..PG Plant is in Pineville (64 White)
  • Defined the strategy to win with an MBE
  • Must be a scalable MBE supplier
  • Work as part of the team (Plastipak and PG)

Case Study Development to meet Business Need
IPC/Georgia Pacific Story in Alexandria, LA.
  • Process
  • Majority-Owned Companies Selected to bid (6)
  • Meeting focuses on the new business to be awarded
  • 2nd key point is an MBE JV /idea is needed
  • Help is provided if needed
  • Major review meeting at existing HDL Plant in
    Lima to come
  • All PG Incumbents except Pratt (Australian)
  • IPC is only MBE Selected that could perform by
  • Other MBEs PG Identified and referred
  • PG refers to majority companies
  • PG provides majority company info to MBEs
  • Walk through and review of JV partners at Lima,
    Ohio April 2004
  • New plant would mirror Lima
  • Wanted all parties to see each other/MBE is
    biggest discussion point

Case StudyDevelopment to meet Business Need
IPC/Georgia Pacific Story in Alexandria, LA.
  • Bids Arrive at PG August, 2004
  • IPC does joint bid with Georgia Pacific
  • Georgia Pacific bids on its own/IPC does not bid
    on its own
  • Pratt Industries bids a JV with Signature
    Packaging (Dennis Vinson)
  • Smurfit Stone, IP, Inland and Southern Container
  • do not bid any MBE JVVarious Responses to our
  • Both of MBE bids were at an initial 12 premium
    versus the
  • majority suppliers

Case StudyDevelopment to meet Business Need
IPC/Georgia Pacific Story in Alexandria, LA.
  • Process to Decision
  • Close review of all bids
  • Comparison of the two MBE bids
  • Decide which of the majority suppliers can
  • the bid best
  • Fiber Leader reviews data with the Fabric Care
    GM/ Purchases VP
  • Review of Fabric Cares MBE Goals Company Goal
  • Alexandria, LA community issues
  • How much savings is business willing to leave on

Case StudyDevelopment to meet Business Need
IPC/Georgia Pacific Story in Alexandria, LA.
  • Path Forward
  • Management Approved Corrugated Team (with Mr.
    Hodnett) to pursue and work the IPC/GP
  • Mr. Hodnett convenes Sr. Leaders of all parties
    (PG Purchases VP, GP- Sales EVP, owners of IPC)
    at October 2004 Chicago NMSDC Conference to
    review path forward/discuss bid submissions
  • Fiber Leader and PG Purchasing Directors review
    all current GP/IPC business and advise them to
    submit a broader bid based on some give-backs on
    other business and some extended contracts

Case StudyDevelopment to meet Business
NeedIPC/Georgia Pacific Story in Alexandria,
  • Summary
  • IPC and GP sign agreement for Alexandria Plant
  • GP takes a small equity stake in IPC-Alex
  • IPC/GP make concessions in several rounds of
    contract review
  • PG extends existing GP business for 4 additional
    years with significant savings (11MM) over
    contract life
  • GP provides PG significant one-time rebate
  • Helps Fabric Care meet profit commitment FY
  • PG Awards 5 year 150MM contract to IPC
  • Final numbers with all rebates and extension
    provides PG cost saving

Case StudyDevelopment to meet Business
NeedIPC/Georgia Pacific Story in Alexandria, LA
  • IPC leases facility in Alexandria versus
  • Still provides the JIT need for PG and Plastipak
  • IPC hires 50 people, 80 Black, mostly from
  • Helps PGs commitment to diversity at the PG
    site (via the supplier) and with AA Leaders in
    Alexandria area
  • With GP as part of deal, start-up not at risk
  • GP is PGs largest current corrugated supplier
  • Already experienced at PGs Lima Plant
  • IPC gets great training during start-up

Case Study Development to meet Business
NeedIPC/Georgia Pacific Story in Alexandria, LA
  • Summary
  • IPC converts ALL of Alexandria Boxes in their own
  • GP continues to produce their own boxes for other
    sites/provides paperboard to the venture
  • IPC grows scale and has a SE presence
  • IPC wins added 5MM business in 2006 from PG
    NOLA Coffee Plant
  • Award of initial 10MM business to Signature
    Packaging (Pratt JV) on Diaper business in
  • Huge Win for PGs 2005 1.5BN SD Corporate

The Road Forward For Corporate Supplier
  • Capacity Building Big Hit Strategies.
  • Supplier Diversity becomes Supplier Development
    to be successful
  • A way to combat preferred/strategic/global
  • Brings Supplier Diversity into main-stream of
    corporations supply base
  • Focus and work strategically on a few large
    Supplier Diversity projects
  • Easy to track and measure

Questions You May Have(But, did not want to
  • Should we pay a Premium?
  • Do we have a quota program?
  • Why cant we just use our current suppliers?
  • What if I cannot find an M/WBE?

What are we doing at MIZZOU?
  • 4 key focus areasWhere well Play!
  • Increase direct spend of Supplier Diversity at UM
  • Implement a formal 2nd Tier program with goals
    and timetables
  • Expand Missouris educational focus of M/WBEs
  • Leverage SD to increase UMs image and reputation
    for overall diversity
  • Help lead the conversation in Missouri (state
    institutions and private sector) on SD

What are we doing at MIZZOU?
  • 4 key focus areasHow well Win!
  • 15 of total annual spend by FY 2018
  • Design/Construction and ProcurementStrategic and
  • 5 year goal of cumulative 500MM in total spend
  • 6MM annual 2nd Tier spend by 2018 (Less than
    1MM today)
  • Expand/Improve UMs educational focus of M/WBEs
    in MO.
  • If we succeed, market and sell our work in
    Supplier Diversity
  • Can help with minority recruiting of students and
  • UM looks/feels diversity friendly
  • Can/should be part of the Go-to-Market strategy
    to win with ethnic students in the future

Supplier Diversity VideoA Business Case for
America (
  • Daryl Hodnett
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