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DTE’s Supply Chain is a vital part of its commitment to provide safe, reliable energy for its customers. Beyond the basics of delivering high-quality, cost competitive services, supply chain specializes in ensuring suppliers operate efficiently, safely and ethically. DTE also uses its procurement dollars to support local economic growth, provide opportunities for diverse businesses and build strong, vibrant communities.
In 2019, supply chain spent $3.4 billion with 4,381 suppliers located in 47 states.
The vast majority of the items purchased by DTE are services organized into more than 25 areas. A complete list of buying categories is available on our web site.
2019 highlights
- $2.1 billion spent with Michigan suppliers, exceeding our goal and creating and sustaining more than 9,800 jobs across the state.
- At least 65 percent of every non-fuel purchase stays within the state of Michigan.
- Spent $609 million with certified diverse suppliers and earned 14 industry-wide supplier diversity achievement awards.
Supplier pre-qualification and risk management
All DTE suppliers must undergo a rigorous pre-qualification process before they begin doing business with us. This ensures we are creating and maintaining a high-quality, cost competitive supply chain we can count on.
The pre-qualification process includes legal, safety and risk management review. The amount of insurance required depends on the risk. We also review two years of financials to determine risk and liability.
Code of conduct
We value the business relationships we have with our suppliers and view them as strategic business partners in our success. Our supplier code of conduct outlines the values and principles that we expect our suppliers to share. In general, suppliers must embrace ethical business practices beyond what is required by law and understand that their actions define their company’s character and ours.
Supplier safety
The safety of our customers and employees is our first priority and we require our suppliers to embrace the same commitment. Through our supplier safety program, we hold ourselves, and our external partners accountable for prioritizing safety above everything else.
Our supplier safety handbook details each supplier’s responsibility for working safely.
At the organizational level, suppliers must submit three years of safety-related data and have a safety training plan and manual in place as part of the pre-qualification process. High risk suppliers must register through Avetta, a software system that allows us to track, maintain and verify supplier safety performance, and understand what suppliers processes to close gaps in performance.
Supplier Performance Management
DTE is committed to reducing costs and driving continuous improvement by managing, analyzing and measuring supplier performance. This practice, called Supplier Performance Management, has saved hundreds of millions of dollars over the past several years.
At the foundation of this work is our philosophy that contracts are a company asset which must be managed by strong processes and a workforce with the right skillset.
Our SPM program includes:
- Standardized metrics and 141 scorecards focusing on safety, cost dependability, quality and timing for a critical set of high-risk suppliers.
- Training courses that employees throughout DTE can use to increase their skills in contract administration, structuring and other areas. SPM is defined as a “foundational capability” for DTE employees.
- Periodic executive reviews that include leaders from DTE and supplier companies. These face to face meetings are invaluable in addressing gaps to performance and building on strengths.
For example, the Corporate Real Estate team holds quarterly meetings with nine of its largest suppliers. Discussions always include metrics reviews. Additional topics range from upcoming projects to industry trends and new product development. Team manager John Erb says the consistent cadence and open dialog builds relationships, reduces challenges and allows everyone to work more effectively toward a solution when problems do occur. He characterizes the meetings as well worth the time that is invested.
Fostering a more sustainable supply chain
Because many of the products and services DTE purchases are unique to our industry, we are a charter member of The Electric Utility Industry Sustainable Supply Chain Alliance. Formed more than 10 years ago, the Alliance is a group of electric utilities focused on developing a more environmentally friendly supply chain. The group shares best practices and promotes and develops sustainable solutions for businesses.
The Sustainability Project (TSP) is one of our largest initiatives with the Alliance. TSP is an online survey tool to help suppliers identify, benchmark, plan and prioritize sustainable business practices. TSP’s mission is to make sustainable best practices easy to access, understand and adopt.
DTE encourages our suppliers to use this resource. Completion of the survey is part of the process in high risk sourcing decisions. In 2019, more than XX of our suppliers took the survey.
Supplier sustainability 2019 highlights:
- In March, we sponsored a webinar on sustainable business practices. The webinar was offered through the Michigan Minority Supplier Development Council. Participants learned about the benefits of sustainability and gained understanding on how to prepare for customer inquiries about sustainable business practices. The webinar was posted on the MMSDC’s web site afterwards so that additional members could access this learning.
- In August, we sent a letter our 200 largest suppliers explaining the benefits of our MIGreenPower voluntary renewable energy program. Open rates for the email were all above 30 percent.
- In November, Chief Procurement Officer Tony Tomczak was named 2020 chairman of the Alliance for the second time. He also served as chairman in 2017 and 2018. The group’s current chairman accepted a different professional role at their utility and no longer works in the sustainability arena. Tomczak was asked by the executive committee to take a leadership role once again next year.
Supplier Diversity
DTE has a long history of pursuing partnerships with minority women and veteran-owned businesses and encouraging diverse companies to explore supplier opportunities.
2019 results
In 2019, we spent more than $600 million – nearly 20 percent of our overall external spend — with certified minority and women-owned businesses and won 14 supplier diversity awards. Our spending with diverse suppliers has increased by 50 percent since 2013.
Last spring, we also committed to spend at least $500 million annually with businesses owned by women and minorities over the next five years.
Our program
Our award-winning supplier diversity program benefits our company, its suppliers and the communities we serve.
For diverse suppliers, DTE’s focus on outreach, mentoring, advocacy, and training means new opportunities to succeed and grow. For us, an inclusive supply base brings innovative ideas that add value, so we can provide exceptional service for our customers. For our communities, supplier diversity creates jobs, expands the economy and builds the capacity for revitalization.
This is why we use outreach, advocacy and training to seek out diverse entrepreneurs and help them grow. These are often small or mid-sized companies that connect with us, or our largest suppliers, through unique outreach opportunities or involvement in minority-business organizations.
An innovative approach
Outreach is facilitated by involvement in groups like the Michigan Minority Supplier Development Council and the Women’s Business Council and by supporting unique outreach opportunities, including:
Faith-based Supplier Immersion Day Summits – Since 2015, we have sponsored information and networking meetings at churches located in Grand Rapids and Detroit, Michigan. Small, minority entrepreneurs get the chance to learn about bid opportunities and network with our buyers and representatives from our largest suppliers and learn. These events have resulted in nearly $13 million in business awarded to diverse-owned enterprises and have opened the door for other contract opportunities. Faith-based leadership and advocacy groups lend support to the business owners prior to and during the events.
Michigan Diverse Supplier Showcases — Select small and medium diverse businesses are given the chance to compete for a contract opportunity with DTE. Entrepreneurs are invited to give a presentation to a panel of our buyers and business unit leaders. All presenters receive valuable and immediate feedback on their presentation and business plan. Sourcing decisions are made that day based on the presentations. These events have resulted in more than $1 million in contracts awarded to diverse businesses since 2016.
Awards
As a result of our leadership, DTE received a record-breaking 14 supplier diversity achievement awards in 2019 for our commitment to partnering with women and minority-owned businesses.
Among them was the selection of DTE Chief Procurement Officer Tony Tomczak as National Minority Supplier Development Council CPO of the Year. The honor recognizes an outstanding leader whose vision, passion and integrity have advanced the cause of supplier diversity throughout the corporate world. Tomczak was chosen out of a field of 300 CPOs from corporations nationwide.
Tier II measurement and focus
We multiply the value of our supplier diversity dollars by encouraging our Tier I suppliers to embrace this same commitment and by measuring their efforts. Tier 1 supplier spending amounts are reported and tracked and the percentage of diversity spend is based on business unit goals. Last year, our Tier 1 suppliers spent $106 million with Tier II diverse-owned businesses, an increase of 20 percent over 2018 Tier II spend.
One supplier’s story
Ten years ago, certified diverse supplier Carla Walker-Miller left a successful engineering career to launch Detroit-based Walker-Miller Energy Services. The company distributed medium and high voltage equipment and DTE was among her first customers. Initially, her company thrived and then in 2009, growth stagnated because of the recession.
Rather than quit, Walker-Miller adapted. She began working as an energy waste reduction subcontractor, and slowly acquired prime contracts. A decade later, that persistence and patience is paying off. Walker-Miller is an industry leader in energy waste reduction consultation, employing specialists that show DTE customers how to reduce their energy use.
Walker-Miller started with 11 employees. Today, the company employs 120 people in three states, and revenue is growing. DTE’s 2019 spend with Walker-Miller exceeds $11 million.
Additionally, the company strives to ensure 60 percent of its local team members are Detroit residents, and trains Detroiters without experience to become certified energy auditors.
After nearly two decades as a supplier, Walker-Miller says DTE is a “clear leader” in supplier diversity and credits our supplier diversity team with allowing her business to maximize its opportunities.
Local spending commitment
At least 65 cents of every dollar we spend goes to a Michigan company. This focus on local spending allows us to create jobs and expand the statewide economy.
2019 results
We spent $2.1 billion with Michigan businesses in 2019, creating and sustaining more than 9,800 jobs across our state and exceeding our yearly goal by $600 million.
Our focus on local spending began in 2011. DTE is a founding member of Pure Michigan Business Connect, a public-private initiative that encourages companies to buy from Michigan vendors.
Back then we spent $450 with in-state suppliers. We agreed to a goal of increasing our spending by $50 million a year. Today we spend more than $2 billion a year with Michigan-based companies – four times the amount we spent in 2011. Labor economists estimate that the increased spending has created 14,000 sustained jobs. In May of 2019, we committed to spending $10 billion more with Michigan suppliers over the next five years.
Some of our key strategies for increasing our Michigan spend include:
- Requiring at least two Michigan suppliers on all new contracts available for bid.
- Establishing internal Michigan spend targets to drive ownership
- Working with existing and net suppliers to encourage them to physically locate in Michigan.
This work helps local entrepreneurs like Vincent Floyd create jobs and grow their companies. Vincent is CEO of Utility Resources Group (URG) based in Troy, Michigan. When his company began working with DTE he had three employees. Today, more than 300 people work for him and URG is continuing to grow.
We’ve replicated this success over and over again to generate thousands of jobs and build vibrant communities across our state.