Anyone wondering about the business case for supplier diversity programs should talk to Joan Kerr. The executive director of supplier diversity at AT&T says that in 2006 the company documented that supplier diversity was a factor in generating $11 billion in revenue.

"We were able to show clearly that supplier diversity is helping us in sales enablement and revenue generation," says Kerr, who is also co-chair of DiversityNXT, an executive conference on diversity sponsored by the Telecommunications Industry Association.

Beyond generating revenue, Kerr adds that diverse suppliers can act as powerful advocates for the company sourcing from them, especially since some diverse suppliers are politically active in their communities. "They're more willing to step forward and say good things about us as a corporate citizen and support us in our efforts to offer product and services throughout the country."

And with more corroborating data on the subject, a recent study by the Women's Business Enterprise National Council (WBENC) and management consulting firm SB Services reveals that 80% of female consumers polled who were between the ages of 35 and 55 would be "compelled to try a company's product or service" if the parent company sourced from a woman-owned business. The same percentage said sourcing from women-owned businesses would increase their brand loyalty.

Some buyers see the concept of supplier diversity as PC lip service, but best-in-class companies such as AT&T, Motorola and others know better. For years, many top-tier companies have rolled out their supplier diversity programs at every part of their buying process and have been quietly reaping the financial benefits.

Many companies point to globalization as a strong reason to get more diverse suppliers on board. A supply base should reflect the consumer base, they argue. It means your suppliers are similar to the customers buying the end product. "When you think about who has the buying power and who's growing in buying power, a lot of it is in fact the business case for diversity," says Motorola CPO Rita Lane. "It's not just about us trying to set aside a certain percentage of our spend and doing it because it's the right thing to do, it's also about the long term, because if you look at the demographics of the U.S. and the world—consumers buy from people they feel comfortable with."

When it comes to the bottom-line benefit of supplier diversity, Lane should know—Motorola just won the 2007 NEXTGen Corporation Award, given by the tradeshow NXTcomm to a telecommunications company with a best-in-class supplier diversity program. The company was lauded for sourcing project management of a cutting-edge communications technology to a minority-owned supplier, Glow Networks.

Lane says that while Schaumberg, Ill.-based Motorola actively seeks out diverse suppliers to source from, Glow got Motorola's business not only because it filled a specific business need, but also because it went beyond Motorola's expectations with value-adds and quick response times. Glow first won Motorola's business in 2004 by providing "interoperability testing," which allows different telecommunications networks to communicate with each other. Through this project, Glow demonstrated their ability to fulfill Motorola's requirements in a small but very specialized field, and from there the partnership grew.

"One area where we believe there's an opportunity for bringing diverse suppliers into our supply chain is where diverse suppliers are local, agile and innovative enough to provide a quick response reaction in a niche," says Lane. "Glow originally started out as what was going to be a fairly small role for us back in 2005, and they then demonstrated good technology skills and an ability to react quickly and be flexible, grow and evolve to meet our changing technical requirements."

What this meant for Motorola was a fast deployment of a brand-new communication network that used both WiMAX and IP Multimedia Systems technologies—functioning together smoothly thanks to Glow's interoperability testing. What it meant for Glow was added business and growth potential.

Jay Srinivasan, president and CEO of Dallas-based Glow Networks, says his company's approach to project management was a major value-add for Motorola. Because of the very nature of interoperability testing, a lot of different OEMs need to be consulted and managed for the technology to work. Normally, says Srinivasan, the responsibility of managing the different OEMs as well as their added costs would fall on Motorola; however, Glow took the burden instead. Glow also set a fixed price and stuck to it, even if the project required extra hours.

"It's a win for Motorola since they knew upfront what they're paying, and it's a win for Glow as we're taking responsibility for what we do. We can put good people on the project and we can also learn from it," says Srinivasan.

The very first deployment of WiMAX and IMS was first lab-tested in Fort Worth, just outside of Glow's Dallas headquarters. Eventually, the project expanded to India and Pakistan, where the Glow staff, with its Asian roots, was familiar with the local culture and infrastructure.

"That's where bringing in diversity adds a lot of value for customers, because you get people with multiple skill sets, as people have seen things work differently in different places," says Srinivasan. "In a global market, companies have got to bring in a supplier that provides diversity—it's not just different types of people on projects, it's different skill sets and knowledge bases that you're bringing to the table."

Sharon Castillo, the principal of SB Services, says that while the metrics for tracking supplier diversity spend in business-to-business and business-to-government transactions have been available for some time, measuring the impact of supplier diversity on consumers hasn't always been clear.

"We've been promoting the link to the business case for supplier diversity for the last eight to 10 years, and corporations have started to walk the talk, make the connection," Castillo says. "Many corporations are still coming along because of internal challenges in going cross-functionally and getting sales information on the supply side of the house. If that information can be accessed it's usually not that difficult to track, especially for second-tier suppliers."