On May 25, 2020, George Floyd was killed while in police custody in Minnesota. The ensuing protests were part of the fallout. For many companies, it marked a turning point in how they approached diversity, equity and inclusion (DEI) within their organizations and their supply chains.
Procurement diversity initiatives had been on the rise in prior years, but Floyd’s death kick-started more earnest efforts.
“We would publicly commit to spend $1 billion with diverse suppliers and commit to grow strategies with diverse suppliers,” said Gary Sutton, U.S. firm business diversity leader for Deloitte.
Sutton was speaking on a panel discussion, Unpacking Supplier Diversity Culture, at Amazon Business’ Reshape 2022 conference in Scottsdale, Arizona last month. Moderated by Chris Costello, Amazon Business general manager of strategic accounts, the panel also included Val Castaneda, senior director of supplier diversity and strategic financial services for the YMCA; Jim Czarnecki, senior vice president and chief procurement officer for MGM Resorts; Jay Goodman, senior manager of procurement programs and strategic sourcing for global corporate procurement for Amazon (NASDAQ: AMZN); and Stefanie Bensmiller, director of indirect procurement for ABM Industries.
“We’ve made a lot of changes at Amazon in helping customers reach diversity goals,” Costello said as she introduced the panel.
Amazon’s “2022 State of Business Procurement Report” found that 84% of business-to-business buyers say their organization plans to increase the purchasing budget for Black-owned or other diverse-owned businesses, and 63% said sustainability is a top purchasing goal. Of the latter group, 55% said it is difficult to source suppliers that follow sustainability practices and 81% said this is holding their own company back in meeting sustainability goals, while 89% said if it were easier to find sustainably certified products, they would be more likely to purchase those.
Shop local and support diverse businesses
Interestingly, businesses looking to diversify their supplier base may not need to look outside their local areas in some cases. A survey by Clutch, a B2B review platform, found that 67% of small businesses are run by underrepresented groups, defined as those owned by women, racial and/or ethnic minorities, veterans, people in the LGBTQ community or those with a disability.
To Costello, looking local for suppliers is an opportunity to increase diverse-supplier goals.
“Companies in some areas don’t want to pull away from local businesses,” Costello told Modern Shipper in an interview following the panel discussion.
Diverse efforts ongoing
Costello, too, said she has seen a difference in the approach businesses are taking to diversity and inclusion since the George Floyd killing.
“I think there is a very notable change since that time frame,” she said. “The message and tone have come from the top and this is much broader than supply chain goals and the [companies] that have been successful have the CEO that has been very forceful and [public about the goals.]”
Sutton said that in 2020, he was told that Deloitte was spending $700 million on diverse suppliers, but it was a number that he didn’t quite believe. When the Floyd killing happened, Deloitte took a public stance to commit to spending $1 billion by 2025. Sutton said the company reached that goal this year — three years early.
Each of the panelists had stories and journeys to share, but they all noted that efforts are ongoing. Goodman, who leads Amazon’s efforts, said the key is not to move too fast, noting that Amazon’s scale can be a “challenge to suppliers.”
“Our efforts early on were on supporting the growth and development of suppliers,” he said.
Task force-guided
At MGM Resorts, DEI programs go back more than two decades, but Czarnecki said there is still a ways to go. The company took several steps to get its program up and running, creating focus groups of suppliers, reviewing data on purchasing habits, and working to get buy-in from upper-level executives and the board of directors.
“With that support, we created a supplier-inclusive task force that looked at what the focus groups [came up with],” Czarnecki said.
A scorecard is now used for measuring business units against each other, which helps drive further investment in DEI. MGM also has a program designed to help suppliers. Between 25 and 30 suppliers yearly graduate from the program, with a goal to increase that to about 150 graduates annually by 2025.
While DEI can look good for businesses publicly, Bensmiller noted benefits outside the four walls.
“For us, it’s not just about growing the businesses we have. … We are growing the economic vitality of the areas [the suppliers come from].”
With about 50,000 suppliers, ABM has made a conscious effort to improve its DEI program. The company has hired a chief culture officer and created an equity council. Over the past five years, ABM has seen its diverse supplier base grow more than 150%.
Finding DEI success
Castaneda advised building a policy around DEI, explaining it to stakeholders, and tracking the spend using technology.
“We tracked our Tier 1 spend and at our first snapshot, we were at about 1% spend with diverse businesses,” he said. “We are at about 20% right now, will room still to grow.”
Goodman said companies often forget about the very businesses they are trying to lift. When building a DEI program, he said, consider the barriers that you may be creating for these small businesses.
“You might be introducing bias that would be disadvantageous to small suppliers,” he said.
Sutton added that companies should not be shy about setting aggressive goals. “Be bold,” he said.
Amazon Business has developed tools to help businesses interested in meeting DEI goals, sourcing locally or both.
“When I think about the tools and features that matter to our customers, there are features around budget management, approvals … and when all is said and done, guided buying is by far the No. 1-requested feature, and in my customer base, the most adopted feature to support Fortune 1000 [companies],” Costello said.
Panelists noted that Amazon Business’ guided buying is able to quickly identify suppliers that have a diverse-owned business certification. However, according to Clutch, just 43% of diverse-owned businesses have this certification, potentially costing them business.
“I think minority-owned business certifications aren’t as popular because many people simply are unaware. There is not as much information out there to assist minority business owners and share that this is even possible,” said Suzanne Bucknam, CEO of travel and hospitality service The Connecticut Explorer.
The panelists advised businesses to get certified, which if they are on the Amazon Business platform, would then surface their items to buyers looking to purchase from a diverse-owned business.
“The most critical value is the positive economic impact in the communities we live in and the communities we serve,” Czarnecki said.
Click for more articles by Brian Straight.
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