SUPPLIER DIVERSITY
current diverse spend with Hispanics The Big Shift spend is also blurred because of the
shown in Figure 1.1. inclusion of 2nd tier reporting spend
So what companies becomes your Looking at the chart on page 17, it’s by some companies.
fan club? What has the most impact? interesting to note the Asian Pacific In the final analysis, we see that
A $1 million contact award to a 50 and Black American gross sales fig- a tremendous amount of effort and
companies each with 10 diverse em- ures. In 2008, both groups had about resources are being used to service
ployees or a $50 million contract to $11 billion dollars in annual gross rev- an insignificant number of diverse
one company with 10 diverse employ- enue. (10) Years ago more then 60% of owned companies but it appears to
ees? the Asian Pacific spend would have the public that there are efforts for a
been in the Black American category. much greater
Spend Analysis
The shift in these dollars (mostly in inclusion.
IT spend) represents a huge set-
Our research for the “Top 500 Di- back to both mature African
verse Owned Companies” (report American business
attached) shows aggregate revenue owners and new
Who Knows
of nearly $53 billion. $104 billion startup en- Wo r l d - c l a s s
has been reported by a third party trepre- procurement orga-
agency of diverse spend among For- nizations spend 30%
tune 500 companies. The Top10 di- less on procurement
verse owned companies received operations than their
nearly $20 billion total peers and operate with
spend. This means that nearly half the staff. The sup-
approximately 10 di- plier diversity function within
verse owned companies procurement should make more
received nearly 20% of to- efforts to work with internal orga-
tal spend reported by Fortune nizations. They also should become
500 companies. It also means more involved with external organi-
that 50% of all spend went to only zations that are focused on multicul-
500 diverse owned companies. But tural market and diversity advertis-
the most important number is that ing as opposed to the traditional path
40% of spend with the Top 500 com- of belonging to business development
panies went to the Top 10 companies. groups only.
If the end-game for SD initiatives
Spread
is to achieve the goals of the mission
then it seems
• How many diverse companies neurs. By all measures, this group has Areas of supplier diversity pro-
are participating in spend? been under represented and contin- grams need to look at include:
• The Top 500 diverse owned com- ues to be economically deprived (lim-
panies have over $53 billion in annual ited) of participation in the American • How are Chief Diversity Officer,
revenue that represent over 50% of all dream. Marketing, Advertising, Sales, Com-
reported diverse spend munications and Human Resources
Are companies with less $100 mil-
Spend Bleed
departments involved with your sup-
lion in diverse spend as effective in plier diversity efforts?
meeting the mission as companies Imbedded in the total corporate • How many internal/external
spending over $1 billion? spend is also an unknown number people know of your spend? Is it in
What has the greatest impact? derived from data scrubbing. A pro- the millions or just in the diverse busi-
1. A $50 million contact to one cess used quite heavily for the last 5 ness network of a few thousand?
company years, with the purpose in finding di- • Has your spend motivated the
2. 50 $1 million contract to compa- verse spend within accounts payable diverse marketplace to:
nies in one geographic area records that weren’t tracked through • Choose your company as a pre-
Can we continue to hide behind supplier diversity. The use of this ferred product/service provider
… It’s too hard to manage too many spend in reported dollars is question- • Become employer of choice
suppliers? able as it accounts for “No Effort” in
They are too small to be suppliers sourcing and takes credits for appar-
but large enough to be customers ent supplier diversity efforts.
Is it true? Spend doesn’t matter! The total $104 billion corporate Source: DiversityBusiness.com
18 HISPANIC NETWORK MAGAZINE Celebrating 18 Years of Diversity www.hnmagazine.com
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