American Water has experienced phenomenal success in implementing its Supplier Diversity initiative. This success comes from relentless intentional strategizing to find diverse suppliers who contribute to and build a stronger community connection. -By Sharon Ross
American Water spends approximately $418M with certied diverse suppliers annually which represent 19.3% of total spend of $2.1B. The success of the Supplier Diversity initiative demonstrates the importance of being intentional in attracting and retaining diverse suppliers. The corporate philosophy is: Supplier Diversity is viewed as a business imperative; it is a strategic initiative that requires the support and accountability of all stakeholders across the business. Supplier diversity is an important initiative that achieves three goals. First, diverse suppliers bring innovations to American Water through problem-solving. Second, our approach provides opportunities for diverse businesses in the areas we serve. Third, and just as important, is the depth of connections with underserved communities that American Water can achieve only through leveraging diverse supplier relationships. Speaking with Vice President and Chief Procurement Officer Josh King, and Senior Manager, National Supplier Diversity Initiative, Supply Chain Diversity Lawrence Wooten at the company’s American Water Pure Momentum Supplier Diversity Summit reveals the true commitment of management to drive opportunities for diverse suppliers. They see such suppliers as key enablers of the company’s ability to deliver safe and reliable water to customers in twenty-four states.
The American Water Summit was only one powerful example of the company’s intentional efforts to identify diverse suppliers to support their procurement needs. The annual summit is viewed as the company’s signature outreach activity. The company is intentional about providing stakeholders an opportunity to meet directly with diverse suppliers in a forum that fosters “doing business.” And the summit provides that opportunity. American Water is no different from Fortune 500 companies who purchase a multitude of goods and services, and the summit provides attendees an opportunity to learn more about what is available and where their company may fit, including construction, environmental services, project management services, electrical services, pipe and fittings, engineering , plumbing , logistics the list goes on. Given the lengthy list of key areas, it is not surprising when Joshua King says, “Innovation is all about problem -solving. Diverse suppliers listen to us, and we listen to them about challenges and opportunities. Those suppliers who are able to demonstrate their prior success in solving business challenges elsewhere, and show how their solution fits our challenges, will find opportunities with American Water.”
The Summit is an example of American Water’s commitment to strong outreach, rather than waiting for diverse suppliers to contact them. Attendance hit two hundred suppliers this year, and Lawrence Wooten considers the Summit a value-add to the entire organization. The short-term goal of the summit is to provide an opportunity for both suppliers and stakeholders to meet and discuss real time opportunities, in addition to continuing to share the message of the importance and benefits of supplier diversity. Wooten says, “We put pipe in the ground every day. This event is about identifying suppliers who can help us do that work. The long-term goal is the growth of our supplier diversity initiatives both internally and externally; we want to build on our success and make supplier diversity a key ingredient in our business processes. The way to do that is to hold events such as this, to demonstrate that supplier diversity is much more than “the right thing to do,” it is a business imperative and value-add to our business strategy.
It always comes back to intentionality. According to King, if the Summit leads to just one diverse supplier being introduced to the right stakeholder at American Water, the event is considered a success. The perspective on the relationships with diverse suppliers goes beyond increasing spend. The Supplier Diversity Initiative is also designed to enrich communities, which in turn, enriches families.
Sound Advice for Small and Diverse Suppliers
The American Water executives offer sound advice for small and diverse suppliers who want to succeed in doing business with the company. King says, “Some suppliers approach us and say they can do everything. That’s not what we want to hear. We want to hear what the supplier can do well.” The Supplier Diversity initiative team approaches the effort and executes it as a strategy. “Having a diverse supplier mix is an important part of the responsibility to communities and customers, but we never lose sight of the fact that the match between diverse suppliers and corporate decision-makers has to be value-add,” adds King.
The Supplier Diversity initiative is not a give away. Suppliers must meet bid specifications and cost requirements. There are questions diverse suppliers should ask themselves before approaching American Water decision-makers. The first question is: What problem does the supplier solve? What is the supplier’s secret sauce? King explains, “Suppliers need to know the recipe to stand out among a competitive crowd. They must articulate their recipe to the appropriate American Water decision-maker. Talk about your most applicable and successful experiences. Starting with a small reasonable scope builds trust, and that trust will grow your business. American Water is open for business, and we are eager to collaborate with qualified suppliers. But you must be a good fit.”
Another piece of advice for suppliers is to make sure they understand how American Water makes decisions for the product and service offered. American Water engineering decisions are usually made at the state and district level by someone in engineering or operations. Decisions about goods and services are normally made by a category lead in conjunction with a cross-functional team of representatives.
Hope is Not a Strategy
The basic philosophy of the American Water Supplier Diversity initiative is “hope is not a strategy.” What does this mean? Once again, it goes back to intentionality. Procurement does not add a diverse supplier to a bid and hope the supplier submits a bid. Engaging diverse suppliers in an intentional manner means helping ensure the diverse supplier has an opportunity to compete where there was not an opportunity in the past. Wooten explains that measuring success by spend is not enough. “So many people measure supplier diversity by spend and spend is an important aspect. But it is more about growth in supplier diversity and not only at American Water but across the country. That is what I see supplier diversity being – a true economic engine for the U.S.”
American Water does not see itself as ‘just a water company.’
King explains “We truly help keep life flowing.” He adds, “Think of the responsibility that goes along with providing a product as important as water. Having a diverse supplier mix is an important part of the responsibility to our customers and providing them the service they expect and deserve. In the case of many of our suppliers, they are also small and diverse companies. Many of these companies and their customers are also customers of American Water. Providing a product as important and essential as ours, it is important to keep in mind the communities we serve.”
Endless Opportunities Across the Country
The passionate commitment to supplier diversity, the communities and customers served is inspiring. With an average annual spend of $3 billion, the opportunities for diverse suppliers are abundant. There is a Supplier Diversity Registration & Supplier Diversity Reporting Portal (www.amwater.com) that suppliers can use to self-register their companies. It is also recommended that diverse suppliers exercise patience and understand the importance of ongoing communication and relationship building with the Supplier Diversity and Procurement teams. A final piece of advice for diverse suppliers is to make sure their information is always up-to-date and provide a comprehensive description of new products and services offered. Sourcing professionals should utilize the portal as a first step in actively reaching out to suppliers.