Michels Blazes Trail In Inclusion Of Diverse Businesses Among Suppliers

May 2013, Vol. 240, No. 5

Michael Reed, Managing Editor

Michels Corporation has further bolstered its already sterling reputation for both technical and personnel innovation over the past five decades with its ongoing development of a broad and diverse network of suppliers and subcontractors, which began in 2005.

To that end, Herb Miller became the Brownsville, WI company’s first full-time Supplier Diversity Program manager in 2012 and has kept busy ever since, working with all of Michels’ operating divisions, subsidiaries and the procurement team members in achieving the company’s external supplier diversity initiatives. Michels and Miller approach the program as a means of strengthening the company’s supply chain and meeting increasing local federal diversity requirements while giving back to the community.

Prior to taking his new position, Miller worked in the operations and industrial business development sections of Michels’ Pipe Services Division. He has nearly 25 years of experience in construction management in commercial and industrial sectors in the U.S. and Europe. He got his start in the construction business with Turner Construction Company in Louisville, KY while still in high school, working on the city’s first high-rise.

P&GJ: What is a formal supplier diversity program, and how long has yours been in place?

Miller: In general, supplier diversity programs solicit and promote increased business with certified and qualified diversely owned suppliers, vendors and subcontractors. Michels’ program was established in 2005 under the direction of our purchasing manager, Kevin Schafer. Under Kevin’s guidance, the program has grown to provide a clear path of working with and developing diverse businesses and suppliers to support the growth of Michels’ business model. Michels is committed to our Supplier Diversity Program for many reasons, including our understanding that a robust supplier diversity initiative ensures that our customers receive the highest quality materials and services at the best available prices.

P&GJ: How has the importance of having a documented diverse supply chain grown in recent years?

Miller: Many of our utility customers have specific diverse spend goals or requirements. These can range from 10-40%. Quite simply, if we are to help them with their goals, we have to have a documented, organized program. By Michels establishing a formal program, we are able to meet their requests while continuing to deliver quality products and reliable services at a competitive price. We also believe a supplier diversity program is about more than spending dollars to meet requirements.

We understand its importance in strengthening our supply chain and giving back to the diverse businesses in the community. This is one of the reasons that we have an annual Supplier Diversity Symposium. We need to communicate to our current and future diverse suppliers and subcontractors what the HSE (health, safety and environment) and quality expectations of our customers are and how that dovetails with Michels’ way of doing business. The client, Michels and our suppliers all have to be on the same page.

P&GJ: Is this something your bosses feel strongly about?

Miller: Yes. The senior and executive management at Michels recognize that we need to support our divisions by helping them meet their internal and external diverse spend goals. There was full support when the Supplier Diversity Program manager was created.

P&GJ: Do you see supplier diversity requirements continuing to grow across the U.S.?

Miller: Yes. Many municipalities, states and regions have supplier diversity requirements that prime contractors must meet to be allowed to bid on projects. There is also the federal government program aspect with small business, 8(a) [guidelines to bolster minority and other disadvantaged businesses through federal contract and other preferences]; Hub Zone and DVB that often have specific set-asides for projects.

P&GJ: Are there certain regions where this is particularly significant due to state or local laws, for example?

Miller: Definitely. California and its utilities have a very well-established Certified State Clearinghouse that contractors and suppliers must be certified through. This is a great resource in helping us meet our customers’ needs.

P&GJ: How important is it to build a network of diverse suppliers who have confidence and trust in you?

Miller: It is very important. When someone understands without question our goals, our HSE culture, the way that Michels does business, it makes the business relationship that much easier. Also, they need to understand that Michels has made a commitment to them, so we can both continue to grow and develop.

P&GJ: Has this issue of trust and confidence been a problem in the construction business in the past?

Miller: It can be a problem. Having businesses work together and trust one another says a lot about relationship building and understanding. It is successful when one of our partners supplies a good product or service at a fair price and we can sustain a long-term business relationship. However, if a company gets into the construction business just to make a quick dollar on short-term services or products, it will not result in a sustainable relationship or business growth. Obviously, that is not the goal of our program.

P&GJ: Do you share your leads and diverse suppliers with other businesses?

Miller: Yes, we do. It adds value to our supplier and is an assurance of the trust we have in them. It also demonstrates the commitment we have to helping them continue to grow and develop.

P&GJ: Do you have a tip or two for contractors looking to establish or improve their supplier diversity programs?

Miller: Get help from your Regional or National Minority Supplier Development Council (NMSDC) representative who can help you get started. You need to make a lot of connections to make sure you have the right fit for your business. Of course, they can also give me a call.

P&GJ: How do you develop leads on suppliers?

Miller: One of the main ways Michels develops leads on diverse suppliers and subcontractors is by attending different industry functions such as the Elite SDVOB (Service-Disabled Veteran-Owned Businesses) networking events or NMSDC events. Then, whenever possible, I like to have a follow-up meeting with the supplier or subcontractor, meet their team, and visit their operations. With Michels’ diverse operations, we need support in many different areas. I am always thinking down the road of how can we use these services in the future?

When I get a solid lead on a business that could be an asset to our supply chain, I work with the owners to make sure the business is properly certified to meet our client’s standards. Kevin Schaefer, the other members of the purchasing team and I also train and mentor those businesses to help them in many respects from certification, to business operations. Sometimes we are just being a person to talk with about a problem.

P&GJ: How do you see your role growing and changing in the future?
Miller: As the landscape of America changes so will the field of supplier diversity. I anticipate tougher certification requirements and more stringent requests from our clients.

P&GJ: How will you know if you have been successful with the Supplier Diversity Program?

Miller: The Supplier Diversity Program can be considered a success when it experiences continual growth. As contractors and suppliers become successful, new suppliers and subcontractors are looking for assistance and guidance from those who have been successful with their program.

P&GJ: Tell us about one or two of your success stories. Do you have a most satisfying or memorable moment in working toward achieving supplier diversity?
Miller: Michels Supplier Diversity Program has had many successes. When our program was first getting started, Kevin Schafer was instrumental in the development of one women-owned business and Native American business in Wisconsin that fit into our supply chain. Kevin, his team and Michels Corporation provided support and businesses to these businesses and played a pivotal role in our growth and development.

Initial successes like that were critical toward the development of our program because it showed that Michels, our supply chain and the specific businesses we were supporting could all benefit from it. Also, for pipeline operations in California, we recently achieved over 40% diverse spending. This was a great example of operations working together with purchasing and supplier diversity to help exceed our clients’ diverse spend requirements.

Herb Miller can be reached at hmiller@michels.us

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