Supplier Diversity

Impact on the Petroleum

Industry
NPRA - May 9, 2002
Reg Weber
Shell Oil Products US

MC-02-105
 Definition of Minority & Woman-
owned Business
• For profit enterprise
• Physically located in the USA
• Owned, Operated and Controlled by Minority Group
members or Non-minority Women who are US citizens
• Minority group members: Asian-Pacific Americans,
Asian-Indian Americas, Black Americans, Hispanic
Americans, and Native Americans
• Ownership must be at least 51%
• Certified by NMSDC, WBENC, or other generally
recognized certifying body NAPM 2001
 Why Do We Do This ?
Business Case
• Increases Diversity in the Supply Chain
• Supports Company’s Core Values
• Gives Back to the Communities We Serve
• Complies with Government requirements
• Increases Market Share & Brand Loyalty
• Increases Shareholder Value
 Minorities and Women are the fastest growing consumer
segments
Percentage Growth in Population Demographics

Non-Hispanic
Percentage Growth in Consumer Segments by type and by time period
American Indian
African Hispanic
.7% 70
American Origin
12% 60
10.7
% Non-Hispanic
50
3.5% Asian White, Non-
% 40 Hispanic
Women
30
Minorities
20
73.1%
10

0
2000 - 2020 2020 - 2050

Caucasian
Non-Hispanic
American Indian
1996 Hispanic
African .8% Origin
American

12.6% 13.5% Non-Hispanic

Asian
% Growth 5.4%

Asian-American 76.1%
Hispanic 43.1 Source: US Census Bureau
67.7%
African-American 18.8
American Indian 17.4
Caucasian 4.9 2010
Caucasian
 PURCHASING POWER
• In 2001 African American purchasing power was
projected to increase to $572.1 billion.

• Hispanic American purchasing power was projected to

increase to $452.4 billion.

• American Indian purchasing power was projected to

increase to $34.8 billion.

• Asian American purchasing power was projected to

increase to $253.8 billion.

• $ 1,313,100,000,000. That’s over a trillion dollars in

purchasing power. That’s significant. (Georgia Business and
Economic Conditions, Terry College of Business, Selig Center for Economic Growth, the
University of Georgia).
Minority and Women-owned businesses growth is trending up
Minority Woman-owned
4 MM Percent Change 9 MM Percent Change
1982-1997 1982-1997
168.0% 198.1%
6 MM
2 MM Number of
Businesses 3 MM

0 0
1982 1987 1992 1997 1982 1987 1992 1997

$4B
$ 600 Percent Change Percent Change
MM 1982-1997 1982-1997

$ 400
342.8% Annual 637.9%
MM $2B
Receipts
$ 200
MM

0 0
1982 1987 1992 1997 1982 1987 1992 1997

4 MM Percent Change 30 MM Percent Change

1982-1997 1982-1997
362.1% 730.0%
20 MM
Employees
2 MM
10 MM

0
0
1982 1987 1992 1997 Source: SBA Office of Advocacy 1982 1987 1992 1997
 Complies with Government requirements
$$$
Government
Agency

Department of
Report/Monitor
Labor - OFCCP

Department of
Justice - EEOC
Federal Agencies Monitor
Small Business
business practices in the following areas: Administration

• Hiring/Retention
• Discrimination
• Procurement from small/minority/woman-owned-businesses
Business Case NAPM 2001
 Summary
• Minority population is the fastest growing segment in the
US - projected to be at 50% as early as 2020
• Minority consumers are also the fastest growing segment
in the US marketplace
• Minority and Woman-owned businesses represent a
significant and growing portion of the economic pie
• What you gain: Customer Loyalty, Goodwill, New
Sources of Supply, and Value Improvements.

Conclusion
• Companies who embrace diversity and establish early
success in this arena will have a competitive advantage in
the future market place
NAPM 2001
 Supplier Diversity Program Design
EXTERNAL PROCESS INTERNAL PROCESS

Key Relationships
ÿ Strategy Development
NMSDC
WBENC ÿ Supplier Qualifications
USHCC ÿ Certification
NACC ÿ Spend Analysis

↓
ÿ Supply Chain Improvement
Opportunities
ÿ Growth Targets
National
Regional ÿ Trends
Local
ÿ Supplier Mentoring
Economic Outreach ÿ Reporting
Positive Impact ÿ Change Management
Organizational Relationships
ÿ Government Sub-Contracting
Community Relations
Strategic Benchmarking ÿ Prime Supplier Inclusion
Best Practices ÿ Value Improvements
Supplier Contacts ÿ Employee Training & Development
 Supplier Diversity Program Levels
Token Supplier Basic Supplier Traditional Supplier Advanced Supplier World Class Supplier
Diversity Program Diversity Program Diversity Program Diversity Program Diversity Process
•A “contact person” •Program •Visible Program •Dedicated Program •Cross-functional
to Handle Phone Coordinator Manager Resources Process Improvement
Calls Teams
•Program •Supplier
•No •Limited Outreach to Development •Superior
Communicated Minority Suppliers Initiatives Communications
Communication Internally Plan
Materials /Externally •Local & National •Active Local &
National NMSDC •Opportunities Exist
•No Trade Fair •Limited Trade NMSDC Participation in all Business Areas
Participation Fair Participation Membership
•Involved Senior •Integrated with
•No Tracking •Program is •Limited Senior Management Other Corporate
Compliance Management Interest Processes
•No Outreach Driven •Regular, Accurate
Program Tracking •Senior Management
•Subcontracting •Limited Program and Reporting Leadership
Plan for Metrics and Tracking
Compliance •Buyer/Purchasing •Tied to Annual
•Program is Outside Education & Performance
Training Objectives
Core Corporate
Strategy •Integrating Supplier •Advanced Program
Diversity within all Metrics and Tracking
Departments that
buy goods & •Productive Second
services Tier Program
•Program Integration
with Intra-Business
Units
Source: November/December 1996 MBE
 World Class Company-Wide
Supplier Diversity Process
Senior Rewards &
Management Recognition
Leadership Programs

Advanced Focus on Mission Innovative

Program Tracking Critical Supplier Programs (2nd
& Measurement Development Tier, Mentoring)

Superior Effective &

Communication & Proactive External
Marketing Strategies Outreach

Supplier Diversity Process that contributes to Market Share & Share Holder Value
Supply Chain
Management

Strategic Sourcing . . .
Supply Chain Analyzing the
Management existing chain of
suppliers and
Supplier continually
Diversity reducing “total
costs”.
RGMA 1999
Supply Chain
Management

Selecting the Pool of Qualified

Vendors includes:
ÿ Prime
Options to • Joint-venture (Majority + MWBE)
select • Joint-venture (MWBE + MWBE)
qualified • Second-Tier
suppliers

The Sourcing Strategy selected will

ÿþ influence the pool of qualified MWBEs to
supply commodity.
RGMA 1999
 Elements of Successful Programs
• Executive Commitment & Involvement
• Formal Policy
• Dedicated Staff & Action Plan
• Budget
• Buyer Training & Accountability
• Tracking & Reporting Systems
• Internal & External Communications
NAPM 2001