Supplier Diversity Update 2012 Supplier Conference

Joan Kerr

Director, Supplier Diversity and Sustainability

October 24, 2012

PG&E Supplier Diversity: 5-Year Performance Trend

$268.4M

54.4%

*Not Adjusted

$599M

$755M

$928M

$1.1B

$1.6B

21.7%

23.9%

25.6%

32.7%

36.6%

15%

20%

25%

30%

35%

40%

$250

$450

$650

$850

$1,050

$1,250

$1,450

$1,650

$1,850

2007 2008 2009 2010 2011

(M$)

In 2011, PG&E spent over $1.6B will CPUC-certified diverse suppliers.

In Perspective: PG&E Prime Supplier Program (PSP)

Prime Suppliers = key to PG&E’s supplier diversity goal achievement and to expanding opportunities for DBEs

Prime Suppliers = 46.2% of SD Results via subcontracting and business solution alliances

46.2% was accomplished through

our prime suppliers

$744.6M $1.65B

2011 PG&E Supplier Diversity Spend

The World of Supplier Diversity…

• Chris Johns spoke at CPUC Supplier Diversity En Banc 10-year anniversary

• Celebrating $32 billion DBE spend

• CPUC asked CA Utilities to help expand supplier diversity leadership across other industries

…is expanding • AB-53 requires insurance firms to

report SD results to the CA Insurance Commission

• Illinois requires energy utilities to report supplier diversity performance

• NMSDC Utility Industry Group

• EEI Supplier Diversity Group

Increasing Focus on PSP Performance

• Are you building aggressive Supplier Diversity goals into your contracts?

• Have you submitted a robust Supplier Diversity plan?

• Are you reporting your Tier 2 Supplier Diversity performance?

• Are you meeting your Supplier Diversity goal?

• What is your forecasted year-end performance?

Contract Goal

Setting & Tracking

Engage All Primes

Diversity Inclusion

Plans

>$500K Primes

required to report

1-2-3 Tier

PSP

Dashboard Reporting &

Metrics

Prime Supplier Program :: Goals

Goal: Prime Supplier development and utilization of DBEs throughout entire value chain with PG&E

Sub-contracting goal management

• >$500k goal validation

• Monthly 2&3 Tier reporting

• Annual audit

VAR and Business Solution Partnership Development

The Value of Diverse Supplier Development

Innovation & Leadership

Economic Development

& Job Creation

Supply Chain Optimization

Customer Satisfaction

Sales & Brand Enhancement

How do you achieve your Supplier Diversity goals?

Investing Resources

Collaboration

&

Engagement

Supplier Development

&

Mentorship

Supplier Development Program

• Executive Mentorship

• Cross-Functional Team support from Sourcing, Supplier Diversity and Line of Business

• Value Chain and Business SWOT Analysis

• Customized Business Development Plan

OEM Hardware &

Software

IBM

Dell

HP

Microsoft

SAP

ZONES

-----

Value Added Reseller

-----

Takes Title of Hardware &

Software

PG&EProvide HW & SW Product

Provides HW &

SW Product

$20M

Contract

Contracts

Negotiated OEM Contracts for innovation, pricing, warranty, service, maintenance, etc.

Supplier Review:

· Value-Added/Authorized Reseller model in this space has been an industry

standard for many years

· Zones negotiates volume pricing levels with HW/SW OEMs

· Zones purchase products and takes title of HW/SW and sells to PG&E

· Single point of contact addressed business problems

· Source and warehouse products as appropriate

· Configure HW per customer requirement

· Manages/coordinate PG&E’s asset coordination (i.e., directs

employees to internal surplus products instead of placing order for

new HW/SW.)

· Cost management ( e.g., electronic SW, instead of physical SW delivery, to

provide tax break for PG&E)

Value-Added/Authorized Reseller Model

Objective: One Stop Provider of Computer

Hardware and Software

Problem: Multiple OEMs for IT Hardware &

Software product

Solution:

· Centralize the ordering of

computer HW and SW

products

· Address various business

service requirement/

challenges

Technical Assistance Program

• DBE Trade Missions to Industry Tradeshows

• UC Advanced Technology Management Institute - Engaging DBEs in the Smart Grid future

• PG&E Signature Initiatives - Diverse Suppliers Go Green

- Diverse Suppliers Go Global

- Diverse Suppliers Are Safe

• External Community Partnerships - UCLA Management Development Program

- Inner City Advisors 10-Week Business Development Program

- Small Business Administration

Join us in Supplier Development

SEVEN Areas to Increase Your Participation:

1. Set supplier diversity goals of at least 37.3% and report subcontracting results monthly

2. Mentor DBEs by sharing operational experience and technology transfer

3. Support development and execution of opportunity gap-closing strategic initiatives to build DBE capacity

4. Financial sponsorship of DBEs for technical assistance training programs and attendance at trade show missions

5. Assist in finding diverse business partners and business solutions to fill a gap or add value to the supply chain

6. Engage with DBEs by participating in diversity trade shows (matchmaking, booth, table sponsorship, etc.)

7. Become corporate members in supplier diversity organizations like SDVOB Elite, NMSDC, WBENC, WE Connect International, etc.

Supplier Diversity is an Ongoing Strategic Initiative

Economic Development & Job Creation

Supply Chain

Excellence

Community Collaboration

Public Policy Support

Customer Satisfaction

Brand Enhancement

We are grateful to all those suppliers

that are fully engaged with us!