Beyond basic supplier diversity
Procter and Gamble sets aggressive goals to get diverse spend in all categories
By Maria Varmazis -- Purchasing, 9/11/2008 12:05:00 PM
At Procter and Gamble, corporate supplier diversity leader Icy Williams doesn't want company buyers to think of diversity initiatives as something tacked on to the supply chain. It's her job to make sure getting diverse suppliers into the supply chain is just a natural part of supplier selection, with diversity criteria woven into the process. "It's not any different for our diversity suppliers than it is for our majority suppliers," she says. "Part of what I do with purchasing is making it clear to buyers that we don't have a different matrix, we expect all suppliers to bring us innovation, competitive pricing, meet process measures around quality, customer service and of course cost."
Though P&G's supplier diversity program began in the early 1970s, in the early 2000s the company thought it was time to completely re-tool the program and re-evaluate how it worked with procurement, says Williams. Changes in the business world and customer demographics helped push that initiative from executive leadership down the corporate ladder to all parts of the company. Instead of having supplier diversity being a soft goal with undefined targets and do-as-you-like hiring practices, Williams and four other employees, all of whom report directly to Vice President of Global Purchases Rick Hughes, were brought on board to set clear standards and solid targets. Ensuring diversity in the supply base became a core purchasing skill.
“The company likes to think of supplier diversity of being systemic," she says.
The plan is to not artificially force purchasers to go out of their way to find a token diversity supplier and bring them aboard. William's goal is to encourage the diversity suppliers to come forward and be able to present their qualifications. But it's also about getting people to answer the right questions, she says: "Where does supplier diversity show up in [a buyer's] work plan? As you're doing quarterly reviews, how does supplier diversity show up and get talked about in those reviews? ...How are we going to find suppliers that make us competitive, and how are purchasing managers talking to business leaders about their sourcing strategies?"
The business case for supplier diversity goes beyond basic ROI. The P&G supplier-diversity program also has a supplier-development component to ensure supplier stability and growth. "Let's look beyond the contract and have discussions with them about their business model, financing, and how they're able to do current contract and their capability to do even more," says Williams.
Right now the company is working towards a goal of $2.5 billion in diverse supplier spend in 2010, with a more short-term goal of $2 billion by the end of the 2008 fiscal year. Williams says the company is on track to hit this target.
Williams works across spend categories--each major area has to hit the target percentage of diversity spend. "Part of my work is that I talk with spend pools, understanding their action plans," she says. "Quarterly I work with individuals to understand what projects they have on the table to move towards the corporate goal, and if we have gaps, what work needs to be done to fill those gaps."
While there is room to maneuver, this means P&G avoids a practice where some areas have no diversity spend while other areas are forced to compensate for other departments just to hit quota. "Part of our learning is making it clear to everyone that supplier diversity is important and that no spend is sacred.”
Secrets of success
08/13/2003Agenda
06/11/2009Purchasing execs on the move...
09/06/2006
Now Playing: 