HispanicBusiness

While the U.S. unemployment rate has hovered at a disappointing 10 percent, the figure for Hispanics in December was nearly 13 percent, and African Americans 16.2 percent, according to the U.S. Department of Labor.

"The best way to build strong minority communities is to have strong minority businesses," Harriet Michel, longtime president of the National Minority Supplier Development Council, told HispanicBusiness Magazine.
"The minority population is still growing in size and economic impact," she added. "The economy can't recover if large segments of the population are left out."

Over the past couple years, John Murray Jr., the CEO of the Southern California Minority Business Development Council, said "more than a few" corporate supplier diversity directors have lost their jobs.

"When corporations are looking for places to cut, they take a look around for areas not generating revenue, and one of those places is sometimes supplier diversity," he told HispanicBusiness Magazine.

Still, in the aggregate, supplier diversity is alive and well in America. Nationwide, corporate spending on minority-owned firms has grown steadily for decades, swelling from $12.5 billion 1988 to $41 billion in 1998 to $100.5 billion in 2008, according to the NMSDC. Ms. Michel says U.S. corporations again spent a little more than $100 billion in contracts with minority- and women-owned businesses in 2009.

And yet, there's a long way to go. While minorities make up about a third of the U.S. population, the $100 billion figure represents just 5-to-6 percent of total annual procurements in this country, Ms. Michel said.

The Limitations of Ranking

Determining the company with the "best" supplier diversity record is admittedly tricky, because success can be based on many variables. HispanicBusiness uses percentage metrics , but other measurements could include overall volume and improvement over time.

Further complicating the ranking process is how some companies are more forthcoming than others about their spending budgets.

On sheer volume, Ford's $3.3 billion is tough to beat. Then again, Ford is ranked No. 7 on the Fortune 500 list. With its supplier-diversity goal set at 10 percent, Ford came in at No. 11 this year on the HispanicBusiness index, up two notches from 2009.

"Ford has had a long history, from the very beginning, of being a socially responsible company," said Armando Ojeda, the company's director of supplier diversity development. "In the early part of last century, Ford Motor Company was the first to provide equal pay for African Americans."

Another noteworthy company is PepsiCo. Inc., which spent an estimated $1 billion last year on minority- and women-owned contractors. In fact, 2009 was a banner year for the company, which in October was named the NMSDC's Corporation of the Year.

And yet, Pepsi, too, faced major challenges in '09. The company, which ranks 19 on this year's HispanicBusiness list, had grown its supplier diversity budget by 10 percent every year for six consecutive years -- until 2009. That year the size of its supplier-diversity program stayed flat, which was a feat in itself, said Chris Knox, the company's director of supplier diversity and global procurement.

"We were able to maintain the gain," he told HispanicBusiness Magazine. "More importantly, we are proud of the fact that we have not lost any key diversity partners throughout the course of the year."

Another company with a laser-like focus for improving its record on supplier diversity is hotel giant Marriott International.

Bill Hartwig, Marriott's VP of supplier relations and global procurement, readily admits the company's supplier diversity program used to be weak.

"Different vendors or suppliers would call (the department) and beg for business, but that group had no decision-making authority at all," he told HispanicBusiness Magazine. Two years ago, the company jettisoned this "silo" approach to supplier diversity in favor of a more holistic corporate model, in which high-ranking decision-makers from various departments -- such as legal, IT, contracting and others -- were brought into the fold. Leaders in these departments receive bonuses for meeting diversity goals.

It appears to be working. In 2005, Marriott set a goal to boost its diversity-supplier spend from about 10 percent to 15 percent of its entire $2.5 billion purchasing budget by 2010. The company--ranked 208 on the Fortune 500-- is on track: Last year, it hit 14.8 percent, with a total dollar amount of $372 million.

Hartwig said in general, if a minority supplier and a majority supplier vying for a contract are equally impressive, the tie goes to the minority-owned business. It's a practice he refers to as "positive discrimination."

To be sure, though: "if they don't perform, they will be out tomorrow," he said.