Intel expands supplier diversity program globally
By William Atkinson -- Purchasing, 1/17/2008 2:00:00 AM
Two of the bigger trends recently in strategic sourcing have been supplier diversity and global sourcing. While many companies see these as separate trends, high-tech giant Intel Corp. sees some overlap where one trend can feed the other.
As a global company operating in 48 nations, Santa Clara, Calif.-based Intel has enormous diversity in its employee base, and it has had an admirable track record seeking and working with a diverse supply base. Intel's supplier website notes: "As part of our commitment to supplying world-class products and services, we recognize the importance of working with a supply chain that represents and knows our many local markets." To this end, Intel's Supplier Development and Diversity team promotes opportunities for diverse suppliers around the world. How can global suppliers qualify as diverse suppliers? For starters, Intel's website points out that, "While global adoption of supplier diversity may be slower paced, we will align our initiative with each country's government guidelines."
"We have been aligned with diversity in our supply base as we have been with our employee base, because we find that we get a lot more creativity and thought when we widen the net this way," says Craig Brown, vice president of the Technology and Manufacturing Group and director of materials for Intel. "As many companies, including Intel, increased our global sourcing, we had to redefine diversity to include global suppliers. That led to the creation of a formal global supplier diversity program."
For companies wanting to work with diverse suppliers in the U.S., the first and easiest step is identifying such suppliers. And in the U.S. there are numerous national organizations providing lists of diverse suppliers for procurement organizations. In addition, the suppliers themselves are aware of their status and the potential benefit that status has, and thus make themselves known to potential buyers.
But this is not the case worldwide. For U.S. companies that want to work with diverse suppliers overseas, the first step is not creating relationships with these suppliers. The first step is locating them. "Defining country-specific diverse suppliers may prove to be the biggest hurdle we need to overcome," says Brown. One reason is that, due to privacy concerns, the burden tends to fall on the suppliers to make their classification known to potential buyers. Intel tries to help educate suppliers in global markets on the value of declaring their business ownership classification as being a diverse supplier.
Intel has launched a number of efforts to identify international diverse suppliers. "We have spent the better part of 2007 positioning ourselves to identify our international supply base," says Susan Martinez, Intel's corporate supplier and diversity manager. "We have been conducting a lot of background preparation to integrate our systems and capabilities in order to capture and track our spending, making sure that our data integrity is 100% aligned with our overall corporate goals." She expects the first set of data to be available by mid-2008.
Education in general is playing a very important role. Intel is working to educate diverse suppliers and governments in other countries on why it is important to make their availability known. Intel has revised all of its internal training to educate its global procurement organization on international diversity suppliers, so that they are fully versed and can converse well with the suppliers as the company moves forward with this initiative.
"We also want to build a bridge between our existing domestic diversity suppliers and the international diversity suppliers," continues Martinez. "This allows them to strengthen their network."
Intel has been working with several U.S. diversity supplier organizations for a number of years, including the National Minority Supplier Development Council, the U.S. Hispanic Chamber of Commerce, the National Gay and Lesbian Chamber of Commerce, and the Women's Business Enterprise Council. It is now working with some of these organizations to learn more about international diversity suppliers.
"For example, one of the national organizations with which we are affiliated visited China this year and found that there are more than 55 ethnic minorities in China," says Martinez. "This group is now working with a non-government organization in China to help classify suppliers."
 Brown: “We get a lot more creativity...with diversity.” |
In some countries, identifying and working with diverse suppliers involves working with local governments. In China, for example, the government is a much larger involved party than in a lot of other countries, says Brown. Intel is currently building a factory in China, and it is working with the local governments, so it can come to mutual understandings related to supplier quality requirements, as well as how it will identify and work with diversity suppliers.
Intel is also expanding its use of international diverse suppliers beyond its own direct purchases. It is working with its Tier One suppliers and encouraging them to utilize international diverse suppliers. Its supplier website notes, "We encourage your company to support our efforts to develop a healthy diversity initiative and report downstream spending data, relative to under-represented socio-economic groups."
"We want this initiative to go beyond just Intel," explains Brown. "We want it to be part of our entire supplier network." Intel hosts an annual supplier day which involves about 150 suppliers from around the world. Beginning last year, it began spending part of the time at the supplier day focused on encouraging participating suppliers to seek diverse suppliers in their regions. In addition to asking them to do so, Intel also provides networking opportunities for the suppliers, as well as some "educational takeaways" to help them get started, according to Martinez.
The next step, according to Brown, is to begin working with diverse suppliers once they are identified. "We explain that, once they begin to work with us, they can build their businesses to worldwide scale, since we operate in so many different countries," he says. "We then explain that, to succeed, they need to step up to the opportunity and really want to be world-class." This involves getting them beyond seeing themselves simply as small niche players. Intel is not interested in doing small amounts of business with thousands of small suppliers. "We prefer to have some of these diverse suppliers grow large," he states.
The efforts are paying off. Today, more than 90% of bids that Intel receives include at least one diverse supplier.
Intel's strategy for expanding its global supplier diversity program
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Educate the supply base and government agencies in oversesas markets about the benefits of identifying themselves as diverse suppliers
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Educate internal procurement contacts on how to identify potential diverse suppliers in overseas markets
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Work with existing suppliers to help identify diverse suppliers in new markets
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Consult U.S.-based supplier diversity agencies on expanding programs
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Once found, work with global diverse suppliers to expand their business
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