HispanicBusiness

The top 25 companies for supplier diversity span the economic spectrum, from heavy industry to food processing. The companies in the top 10, however, were clustered in the telecommunications, banking and finance, retail, and utility sectors.

At PG&E's Supplier Awards Conference last year, six out of the nine award winners were diversity suppliers, according to the Winter 2011 issue of the company's "Powered by Diversity" newsletter. PG&E's supplier of the year, OneSource Distributors, is Hispanic owned.

Supplier diversity "helps improve the affordability of our products for our customers," Ken Goulet, executive vice president of health insurer WellPoint's commercial business unit, said in a prepared statement announcing a strategic partnership with the RLJ Companies in January.

However, cautioned Robert L. Johnson, founder and chairman of RLJ, "without exceptional products, competitive pricing and outstanding customer service, diversity alone doesn't deliver compelling value."

The prime concern for AT&T is to find diversity suppliers in emerging technologies, according to Ms. Strobel.

"We have a need for innovative businesses in the areas of cloud applications and API," or application programming interfaces, she said. "There are many new micro and startup companies that maybe have the latest mobility devices or mobile applications that could be used over the AT&T network, (but) they are not seeking certification as a diverse business."

Although Verizon sees some recovery in the economy, Mr. Legaz said, the current climate presents particular problems to "small and medium-sized businesses, which is what most of our diverse suppliers are."

Many companies are consolidating their supply base, according to Ms. LeFevre. "There are many diversity suppliers quite capable of benefiting from these consolidations if they are positioned properly," she said.

That means having a strong relationship with more than one decision-maker at a company, she said. When it comes to landing government contracts, on the other hand, the prime issues are "accountability and oversight," according to Mr. Espinosa.

"At the federal level, minorities and disadvantaged businesses have continued to be abused by regulations and by barriers," he said. Legal venues for protecting their rights, such as protests, "don't deliver justice," he said.

He saw good news and bad news out of Washington. "The president has made contracting with small and disadvantaged businesses a priority," he said, but "laws that protect our rights are not being enforced and the barriers that exist are not being eliminated."

Meanwhile, the diversity supply chain saw much the same sort of changes as the general supply chain during the past year, Ms. LeFevre said. "There were a lot of companies that didn't make it, (but) the ones that did are stronger than ever."

Companies throughout the supply chain need "to be more disciplined in the way they spend capital," Mr. Legaz said. That doesn't necessarily mean spending less, but deploying resources that give a return on investment. Verizon has invested more than $66 billion since 2008 on infrastructure, he said, and "we've increased our spend with diverse suppliers."

Mostly Unscathed
The diversity supply chain has emerged mostly unscathed from the fizzled recovery of 2011, according to our respondents. Demand continues to grow for manufacturing suppliers, especially in the automotive sector; information technology; and staffing.

"Outsourcing is still a hot topic these days to keep down overhead costs," Ms. LeFevre said.

Mr. Espinosa said that companies in the manufacturing, infrastructure and technology sectors all "stand to benefit by diversity efforts."

Verizon looks for diverse suppliers that are innovative and agile, Mr. Legaz said.

PG&E is particularly interested in diversity enterprises in the field of green energy, and held eight green-business strategy workshops with the California Hispanic Chambers of Commerce and other diversity advocates last year. It also held a matchmaking event in November 2011 to help its prime contractors improve results from their diversity subcontractors and to answer diversity suppliers' questions about opportunities with PG&E.

"Most of our strategic diversity partners are still doing well and finding ways to grow their business," Ms. LeFevre said. She also sees encouraging signs among suppliers in the service sectors that have "been capitalizing on their customer's supply-base consolidation plans."

Verizon continues to do more business with diversity suppliers, "and we don't think we're alone in this trend," Mr. Legaz said. "We're a member of the Billion Dollar Roundtable, a group of corporations that spend more than $1 billion with diverse suppliers, and its membership continues to grow."

Verizon is "constantly looking for contracting and subcontracting procurement opportunities with Hispanic entrepreneurs," he added.

"During the recession, many large companies relaxed their dedication to supplier diversity and small-business development," Ms. LeFevre said. Some even eliminated entire staffs to stay solvent.

But now they're "coming back to the table with a renewed energy around increasing diversity spend and revitalizing tier 2 reporting programs," she said. "This is already having a great impact on the recovery of many diversity suppliers and driving economic improvements."