Guest Editorial
Suppliers at Exelon
Ruth Ann Gillis, 07-11-2010
Whether a corner store or a multibillion-dollar enterprise, every business has a responsibility to reflect the diversity of the communities where it operates. To that end, building a diverse employee population is essential, as is a program to identify and hire minority- and women-owned suppliers, helping them develop and thrive.
In my role leading Exelon’s human resources and supply chain organizations, I have an opportunity to bring employee diversity and supplier diversity efforts under a single umbrella. There is more opportunity for integration than one may realize.
Supplier diversity can weave together a company’s employee diversity and inclusion strategy and its supply chain strategy. It can even become a core business priority. In fact, at Exelon — one of the nation’s largest electric utilities — supplier diversity is part of the corporate vision. In the past five years, Exelon and its subsidiaries have contracted nearly $500 million per year in corporate spending with certified diverse suppliers.
Achieving supplier diversity requires more than ambition. In fact, our journey at Exelon has taught us that four elements are necessary for supplier diversity success:
Support from top leadership: As with any aspect of a broader diversity and inclusion program, a diversity supplier strategy must start with support at the highest levels of the organization. Lead executives must be active in communicating to the entire company its importance and value, both for the community and the company itself. We are fortunate that Exelon’s CEO, John Rowe, walks the talk. At his direction, local minority- and women-owned businesses received a full 90 percent of the dollars spent on our headquarters expansion in Chicago that was completed in November 2009.
Incorporation as a core value throughout the organization: Supplier diversity initiatives are never successful in a silo, separate and isolated from the rest of the business. An effective supplier diversity effort reaches across all operating companies and business units, infuses every part of the organization, and becomes part of the day-to-day practice of every employee and every part of the business. For instance, one of Exelon’s business units built a $62 million urban solar facility that was completed this past winter. Nearly half of the contractors used on the project were certified minority- and women-owned businesses.
Application to all company purchasing: Diversity in the supply chain is often thought of in the tangible goods and materials realm. However, professional services, such as legal, financial and marketing services, represent a significant spend in most companies. These purchases should never be exempted from the supplier diversity process. In the past year, thanks to a focused effort by Exelon’s finance team, we have significantly increased spending with more than 20 minority-owned banks, providing the company with an additional source of credit while offering these banks the opportunity to grow their relationships with a Fortune 500 company. Exelon also continues its ongoing commitment to engage minority-owned law firms and has more than doubled its spend with them during the last three years. We also encourage and measure the amount of legal services performed by minority partners at the majority-owned firms that we engage.
Measurement, monitoring and adjustment: We’ve found over time that a good supplier diversity program includes levers of accountability throughout. This starts with outlining concrete goals over a specified time frame. It follows with communications to and education of the entire company on the purposes and objectives of a supplier diversity program. Lastly, it measures success or failure to meet the stated goals and takes corrective action to address any shortfalls. For example, when the challenging economic environment adversely impacted a number of Exelon’s diverse suppliers, the company broadened its supply chain network to ensure it continued to meet its goals. In doing so, Exelon encouraged its primary suppliers to diversify their own base of minority-owned suppliers and subcontractors, and develop relationships that would be mutually beneficial.
Some of these elements may seem like common sense. But we’ve seen many supplier diversity efforts fail because they lack one of these four elements. Ultimately, a company must consider supplier diversity a “must have” — not a “nice to have.” Exelon is proud of its commitment to diversity and inclusion. But in the end, the true rewards are the business benefits we derive from working with suppliers from diverse backgrounds and viewpoints and the ability to support the communities that we call home.
Ruth Ann Gillis is executive vice president and chief administrative and diversity officer of Exelon Corp. and president of Exelon Business Services Co. She can be reached at editor@diversity-executive.com.
