Spending with small business doesn't have to suffer in recession
Rockwell Collins describes strategy and benefits of spending with small and minority-owned businesses
By David Hannon -- Purchasing, 9/17/2009 2:00:00 AM
As many companies have learned throughout the recession, there are some things that are "must haves" and some things that are "nice to haves." For aviation electronics firm Rockwell Collins, spending with small businesses and suppliers is a must have, no matter what the economic situation.
In a recent interview with Purchasing, Amber Janey, senior project manager for small business in Rockwell Collins' purchasing organization, says that roughly half of the company's total spend comes from suppliers that are classified as small businesses according to the North American Industry Classification System. And while the company's overall spend has declined in 2009, its commitment to small and diverse suppliers has not.
Why so much spend with small suppliers? Well for starters, "Small businesses react well to our requests since we are typically a bigger percentage of their business than a large supplier," says Brian Ross, director of enterprise sourcing.
Cedar Rapids, Iowa-based Rockwell Collins has grown its small business team from a single part-time position four years ago to a two-person team—of which Janey is one—today reporting into Ross that is focused on getting small suppliers included in RFPs. Janey says the efforts range from working with plant-level commodity managers to set and review small business goals to updating the company's executive team on small and diverse supplier initiatives.
"We give quarterly updates to our executive leadership team on our initiatives and progress," says Janey. "We want to make sure we provide good visibility and communication about what we're doing to incorporate small businesses in the supply chain."
The small business team also works on recruiting and registering new small and diverse suppliers by going to conferences and networking with others in the government contracting field. Since Rockwell Collins does much of its work on government contracts, "Suppliers need to understand how it may be different working with us than other companies," Janey says.
As a government contractor, Rockwell Collins is a participant in the Department of Defense's Mentor/Protégé program, which has helped it share best practices with some small suppliers. The program teams small businesses (protégés) with large government contractors like Rockwell Collins (mentors) for specific projects aimed at growing the small businesses and making them more competitive suppliers.
When a supplier is approved for the program, "We put a plan together with the supplier and find out where they need the most help," says Ross. "So if the supplier tells us they can't afford a full-time Lean expert, we teach some of the Lean concepts to their team in that place."
Right now, Rockwell Collins has three suppliers in the program and is working on qualifying a fourth. One of those suppliers, for example, had seen a decline in its on-time deliveries, but was a valued supplier that the company wanted to keep in its supply base. "We got them approved as part of the DoD program which let us work closely with them to build a program to investigate and work on their specific issues," Janey says. By helping the supplier implement Lean and streamline their service delivery, on-time deliveries improved from 96% to 99.8%.
Other projects in the program involve developing quality systems and getting suppliers ISO-certified before moving into more advanced Lean strategies.
Beyond the Mentor/Protégé program, Rockwell Collins is continuously looking for ways to attract and develop small suppliers. Some of them, in fact, are more subtle, but nonetheless effective, Ross says.
"At a meeting after our last government audit of our small business program, the auditor asked us this question: 'When small businesses walk into our lobby, do they feel welcome?' I said I thought so, but he pointed out that there was nothing in the lobby that welcomed small businesses specifically."
Ross agreed, and the company has since posted quotes from its steering committee which welcomes small businesses in the lobby of every Rockwell Collins manufacturing facility in North America.
Of course, with such a successful program in place, small suppliers typically win more contracts and grow their business, which provides Rockwell Collins a more stable supplier. But in some cases, the supplier grows so much it no longer qualifies to be counted in the company's small supplier spend.
"Then our executives ask us why our small business spend dipped in a certain category and I have to tell them it's because we did too good of a job at developing a certain supplier," Ross laughs. "But we do track that and report that to the executives. We will point out which suppliers graduated to the larger category."
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