The DiversityInc Top 10 Companies for Supplier Diversity
March 30, 2009
Also read: DiversityInc Top 50, DiversityInc Specialty Lists, philanthropic budgets
Why is supplier diversity so important? It's a critical way to build company reputation and support in a community while helping members of the community build wealth and stability.
All of the companies on this list demonstrate increased awareness of community involvement; they donate 22.4 percent of their philanthropic budgets to multicultural nonprofits, have formal mentoring or training for diverse suppliers, and all but one provide financial assistance for diverse suppliers, usually in the form of low-interest loans.
For more on supplier-diversity best practices, please visit our diversity-management web site, www.DiversityIncBestPractices.com.
Methodology: To determine this list, we relied on the answers supplied by the 401 participants to The 2009 DiversityInc Top 50 Companies for Diversity® survey. Specifically, we looked at their answers to the more than 30 questions on supplier diversity on the survey, including their metrics, use of supplier diversity in RFPs (requests for proposals), auditing of supplier-diversity numbers, third-party certification, communication of supplier-diversity initiatives externally and internally, tying executive compensation to procurement, and making supplier-diversity initiatives part of the procurement department.
While we ask for the total dollar amount spent with vendors that are minority-owned, women-owned, LGBT-owned, people-with-disabilities-owned and veterans-with-disabilities-owned, we only count percentages of procurement budgets, as that is a more equitable way to compare the largest corporations with smaller companies.
Here are the top 10 and a reason why each of them made this list:
No. 1: Xerox Corp., No. 35 in the DiversityInc Top 50
Xerox is clearly a long-time leader in supplier diversity that stays ahead of the pack. The company reports that of its Tier I (direct contractor) procurement, 13.2 percent goes to minority-owned business enterprises (MBEs), 19.3 percent goes to women-owned business enterprises (WBEs) and 0.1 percent goes to gay- and lesbian-owned business enterprises. Of its Tier II (subcontractor) procurement, 7.6 percent goes to MBEs, 6.8 percent goes to WBEs and 1 percent goes to gay- and lesbian-owned business enterprises.
No. 2: IBM Corp., No. 10 in the DiversityInc Top 50. Also No. 1 in The DiversityInc Top 10 Companies for People With Disabilities; No. 4 in The DiversityInc Top 10 Companies for Asian Americans; No. 4 in The DiversityInc Top 10 Companies for LGBT Employees; and No. 2 in The DiversityInc Top 10 Global Diversity Companies
IBM was one of the first companies to reach out to LGBT suppliers (who are certified by the National Gay and Lesbian Chamber and Commerce). Of its Tier II procurement, 12.4 percent goes to LGBT-owned businesses. The company has excellent metrics to assess supplier-diversity success and strong relationships with external certifying organizations.
No. 3: Ford Motor Co., No. 28 in the DiversityInc Top 50
With a long history of supplier-diversity excellence, especially with second- and third-tier suppliers, Ford continues to be innovative, with new emphasis on LGBT-owned businesses and firms owned by individuals and veterans with disabilities. Ford maintains a five-year business plan for MBE and WBE suppliers. Spend objectives are contained in the global purchasing scorecard and assessed in the CEO's biweekly business-plan review with his direct reports.
No. 4: Marriott International, No. 4 in the DiversityInc Top 50. Also No. 9 in The DiversityInc Top 10 Companies for African Americans and No. 10 in The DiversityInc Top 10 Companies for Executive Women
Marriott's commitment to building hotels in urban areas and creating jobs, especially for Black and Latino people in low-income communities, is unsurpassed. Marriott had pledged to spend $1 billion with minority-business enterprises by 2010 and already has nearly doubled that goal.
No. 5: Comerica Bank, No. 30 in the DiversityInc Top 50
The bank's supplier diversity is outstanding, with 14.2 percent of Tier I procurement going to minority-owned business enterprises and 11.1 percent going to women-owned business enterprises. Of Tier II, 7.3 percent goes to MBEs and 2.1 percent to WBEs.
No. 6: Health Care Service Corp., No. 22 in the DiversityInc Top 50. Also No. 10 in The DiversityInc Top 10 Companies for African Americans.
The company has accelerated its supplier-diversity efforts in recent years, with 5.6 percent of Tier I procurement now going to minority-owned business enterprises and 4.6 percent to women-owned business enterprises. Of Tier II, 39 percent goes to MBEs and 42.5 percent goes to WBEs.
No. 7: MGM MIRAGE, No. 19 in the DiversityInc Top 50
MGM MIRAGE has had an evolving supplier-diversity program. In 2008, MGM MIRAGE dedicated one employee to coach suppliers and obtain Tier II reporting. This included spend threshold and propensity to include diversity in the supply chain.
No. 8: PG&E, No. 3 in The DiversityInc Top Regional Utilities
PG&E spends 11.8 percent of its Tier I procurement budget with minority-owned business enterprises and 5.1 percent with women-owned business enterprises. The company audits its supplier-diversity numbers and integrates supplier diversity into its overall business strategy. In addition, PG&E has strong metrics to assess its supplier-diversity success, including: diversity as percentage of total spend; the number of diverse suppliers; revenue growth of diverse suppliers; recognitions received for supplier-diversity success from outside organizations; and savings as a result of contracting with WMBEs. The company also ties procurement-management compensation to supplier-diversity success.
No. 9: Bank of America, No. 14 in the DiversityInc Top 50. Also No. 2 in The DiversityInc Top 10 Companies for Recruitment & Retention; No. 6 in The DiversityInc Top 10 Companies for Latinos; and No. 4 in The DiversityInc Top 10 Companies for Executive Women
With 9 percent of Tier II procurement spent with minority- and women-owned suppliers, Bank of America has a clear connection to its multicultural communities. The bank has training/mentoring for MBEs and WBEs, provides financial assistance for them and includes supplier diversity in its RFPs.
No. 10: Henry Ford Health System, No. 26 in the DiversityInc Top 50Forty-one percent of its philanthropy budget goes to multicultural groups, most in the Detroit area. Henry Ford also spends 7.3 percent of its Tier I procurement with minority-owned suppliers.