american airlines supplier diversity program training procurement & supply chain department

American Airlines Supplier Diversity Program TrainingProcurement & Supply Chain Department

Minority/Women Owned Historical Spend Results ($ Millions)

2American Confidential & Proprietary -12/20/2013

Year over year growth with Minority/Women-owned business

Supplier Diversity Program

American Confidential & Proprietary -12/20/2013 3

• The program was established in 1989 to facilitate minority suppliers’ efforts in doing business with American Airlines

• American focuses on bringing the added value of diversity to its procurement process by proactively seeking out minority/women-owned (M/WBE), Lesbian, Gay, Bisexual & Transgender (LGBT), Veteran/Service Disabled Veteran-owned, diverse and small businesses through direct relationships with American and indirect relationships with our prime suppliers and contractors.

• Develops a supply base that reflects our customer base

• Certification is important to the supplier for the following reason:• Credibility• Networking opportunities• Mentoring opportunities with local councils

4

Supplier Diversity Recognition

American Confidential & Proprietary

“Corporation of the Year”

Recognized for “Best Practices”

in SupplierDiversity for Professional

Services

“Best of the Decade” for outstanding Leadership in Supplier Diversity

“Outstanding Leadership and Support of Women Business Owners”

“Corporation of the Year”

“Advocate of the Year”

American Confidential & Proprietary -12/20/2013

Supplier Diversity Program


• American takes a holistic approach to Supplier Diversity

Goal Setting

Supplier Diversity

Diversity Awareness

Memberships

Company Advocates

Networking and Communications

Volunteers to Organizations

Employee Diversity

Holistic Approach


• Goal Setting • Tracking progress to ensure achieving the goal • Sharing success stories and being recognized in the community for those efforts

• Memberships• Membership in 17 organizations (nationally and locally) • Board member of 5 advisory boards• Participate in several industry groups committees concerning “Best Practices” and

benchmarking

• Volunteers to organizations• Employees from different departments assist with many national, regional and local committees

and events

• Networking and Communications• American is expecting to participate in over 46 events during 2013

• Company Advocates• Departments that purchase products and services have a designated person to report and

support these efforts within their department

• Employee Diversity• American Diversity Leadership Committee brings strength and broader support to the

organization by sharing information and supporting each other efforts

• Diversity Awareness• Inclusion of diversified suppliers

Diversity Qualifications


• 51% owned, controlled and operated by one or more of the following:• African Americans• Asian Americans• Hispanic Americans• Native Americans• Women • LGBT• Veteran & Service Disabled Veterans

• Principal place of business in the U.S. or U.S. territories • American Samoa, Guam, Marianas Islands, Puerto Rico, U.S. Virgin Islands

• Company’s status must be validated by a third-party agency/council or be certified from a qualified agency, such as:

• Small Business Administration (SBA)• Affiliates of National Minority Supplier Development Council (NMSDC)• Affiliates of the Women’s Business Enterprise National Council (WBENC)• National Gay & Lesbian Chamber of Commerce (NGLCC)• Other city, state and national agencies

• SBA Self Certification form can be used if the supplier meets the criteria

Small Business Administration (SBA) Definitions


• As a contractor to the government, American is required to report to the Small Business Administration spend with a SBA supplier and include them in the bidding process for contracts over $150,000

• Certified 8(a) minority-owned (SBA8a)• A firm owned and operated by socially & economically disadvantaged individuals• Must be certified by the SBA as an 8(a) firm

• HUBZone Small Business (HUBZN)• Historically under utilized business zone – small business in distressed areas

• Veteran-owned Small Business (VOSB)• A small business concern that is at least 51% owned by one or more veterans. In

addition, one or more veterans must control daily management and business operations.

• Service Disabled Veteran-owned Small Business (SDVOSB)• A small business concern that is at least 51% owned by one or more service disable

veterans. In addition, one or more veterans must control daily management and business operations.

• Women-owned Business Enterprise (WBE)• Same as minority classification definition

Small Business Administration (SBA) Definitions


Industry Group Size Standard

Manufacturing 500 employees

Wholesale Trade 100 employees

Agriculture $750,000

Retail Trade $6.5 million

General & Heavy Construction (except Dredging) $31 million

Dredging $18.5 million

Special Trade Contractors $13 million

Travel Agencies $3.5 million (commissions & other income)

Business and Personal ServicesExcept:

$6.5 million

Architectural, Engineering, Surveying, and Mapping Services $4.5 million

Dry Cleaning and Carpet Cleaning Services $4.5 million

• SBA has several general size standards. A business in one of the following industry groups is small if it is not greater than the size standard indicated

• If the size of a business exceeds the size standard for its overall industry group, it may still be a small business for the specific NAICS industry in that group. Some industries have higher size standards than the general one for the industry group. SBA has a Table of Size Standards on its web site.

Certifications Examples:

10American Confidential & Proprietary -12/20/2013

SBA Self Certification Form 3rd Party Certification Certificate

American Supplier Diversity Data Base


• Suppliers register at:

www.aa.com/supplierdiversity email: [email protected]

• Once the supplier completes the registration and American receives their certification, they will receive an email with the name and contact information of the person within American that handles that particular product or service

• The designated American person receives an email stating that the supplier has registered in the database

• To access American database:

http://americanairlines.divtrak.com

Username: diversity

Password: diversity

•Reports can be run by Linda Misenhimer

Example of Advocate Email


Dear (Commodity Manager Name),

As our Printing & Graphic Design & Fulfillment Commodity Advocate, this notification is to inform you that the following supplier has completed their profile and has selected Printing & Graphic Design & Fulfillment as their primary commodity. Please take a moment to login and review this supplier's profile. They have been provided with your contact information and may be contacting you shortly to discuss their products or services along with potential bidding opportunities and the timing of those. Supplier Name: A&h LithoprintTax ID:362313420This supplier is classified as a diversity supplier http://americanairlines.divtrak.com/ If you have any questions, please contact me at [email protected] or 817-963-2620. Sincerely,Robin PulfordMgr. Supplier Diversity

Other Resources


• Linda Misenhimer can also pull reports from these systems using different types of information for potential certified suppliers:

• MBISYS database – National Minority Supplier Development Council

• WBENC database – Women Business Enterprise National Council • Standard Industrial Classification System (SIC) category• National American Industry Classification System (NIACS) codes• Products or Services

• NGLCC database - National Gay & Lesbian Chamber of Commerce• hhtp://nglcc.cvmsolutions.com

• Username: AmericanAirlinesTeam Password: aa100

• The National Center for American Indian Enterprise Development • Michael Barber – Director of Procurement • 480-319-4121 – [email protected]

• Central Contractor Registration (SAM/CCR) database for the U.S. Government

• www.ccr.gov

American Advocates


• Each department with purchasing power is supporting the Corporate commitment to Supplier Diversity

• Advocate within the department helps communicate information about the goals, tools and processes

• They are actively promoting inclusion of diverse suppliers within their department

• Participant in the events and expo’s

• Point person for their department in Divtrak• Assist with connecting suppliers to the appropriate buying party• Additional categories or contact information can be added

• Reporting M/WBE 1st tier & 2nd tier department spend

Reporting Diversity Classifications


• Minority Business Enterprise (MBE) – Male/Female• African American• Hispanic American• Asian American• Native American

• Women Business Enterprise (WBE) – Female non-MBE

• Track Other Classifications – Male/Female and/or M/WBE• LGBT • Veteran• Service Disabled Veteran• Dallas Together Forum (DTF) & Women’s Business Initiative (WBI)

• Only if business is located in a 75XXX or 76XXX zip code

First & Second Tier Spend Reporting

16

Definitions:•First Tier/Prime Spend

• American purchases directly from a certified diversified supplier for products and/or services

• Example:American purchases from a certified diversified drink cup manufacturing company and the company invoice American directly

• Second Tier Spend • American purchases from a first tier/prime supplier that in not a diversified supplier,

who then subcontracts or purchases products and/or services on American’s behalf• Example:

Prime Supplier (non-diversified supplier) subcontract bag delivery to our customers with certified diversified suppliers. Prime Supplier would provided American with the breakdown of the spend for those suppliers and their classifications (M/WBE)


Indirect Second Tier Spend Reporting


• Spending by the Prime supplier with MBE and WBE firms in support of supplier's general business operations that cannot be directly attributed to support of American Airlines

• Usually large corporations provide 2nd tier spend:• IBM, HP, Coca-Cola, Sodexho Magic, LSG Sky Chefs, PepsiCo, Phillips 66, Pratt &

Whitney, FedEx, ExxonMobil, Chevron, BP, Boeing, Airport Terminal Services, Aetna, RR Donnelley, Sage Parts Plus, Shell Oil, TXU Energy, Airports

• American provides a template to the Supplier

• Proration Formula• Supplier’s American Airlines US spend divided by supplier’s US Sales equals the

percent of supplier sales attributed to American Airlines – American’s indirect spend equals the supplier’s total MBE/WBE spend multiplied by the percent of supplier’s sales attributed to American Airlines

Example: $1,889,325 / $722,196,786 = 0.2616%Total supplier MBE/WBE $7,781,519 X 0.2616% = $20,356 American indirect spend is $20,356

Summary


• 2014 Focus• American will focus on finding opportunities for Veterans and Service Disabled

Veterans owned business• Grow Hub Markets M/WBE suppliers and identify advocates in the region• New Brand awareness

• Why is Supplier Diversity important to American Airlines• Utilization of certified Small Businesses is required for our U.S. Government

contracts• Continued focus on our Supplier Diversity efforts from our Senior Leadership team • Brand awareness• It’s the right thing to do

• Your support and enthusiasm is critical to our success

Questions?

american airlines supplier diversity program training procurement & supply chain department

Documents

communications american

added value of diversity

territories american

year advocate

year growth

minoritywomen owned

minority suppliers efforts

best practices