Benefits of supplier diversity go way beyond the bottom line

As food retailers and manufacturers ramped up their existing diversity and inclusion programs in the wake of last year’s racial unrest and awakening, a large part of those initiatives focused on supplier diversity. In a panel discussion at FMI Midwinter Executive Conference this week, several leaders discussed how they are using supplier diversity to drive a sustainable and meaningful impact to their supply chain, while building their customer base and brand loyalty.

Moderated by James E. Harris, director of diversity & inclusion and supplier diversity at H-E-B, the panel featured Kevin Holt, CEO, Ahold Delhaize USA; Laura Shapira Karet, CEO, Giant Eagle; Steve Spinner, chairman of the board and CEO, UNFI;  and Steve Cahillane, CEO, Kellogg Company. All are members of the FMI Supplier Diversity Committee.

Harris kicked off the session by noting that, according to a recent study, 74% of companies are leveraging supplier diversity today. “They have seen an improvement in their corporate image, as well as meeting growing customer demands,” he said. “And we can't grow a business without customers.” Here are excerpts from the panel:

Laura Shapira Karet, CEO, Giant Eagle

Giant Eagle is really committed to increasing the diversity amongst our supply chain. There’s several reasons for that. The first one, if COVID taught us nothing, it taught us that we collectively need to build a more resilient supply chain. We need to have access to more and different kinds of suppliers who are more agile, more nimble. And so we have more opportunities to pivot as needed. The second is we have a strong belief that our businesses are only as strong as our communities are strong. And you simply can't have a strong community unless there is equal access to economic opportunity amongst our participants. And again, as we've all learned so dramatically over the last six months, that is simply not true. And we must all have a deep responsibility to address that in every way. We have a very robust program that we call Standing Up Against Racism, of which supplier diversity is a part. I will tell you we're at the very beginning of our journey, but we're quite excited about the progress that we've already made and quite optimistic for the future.

Related:Schnuck Markets, Ahold Delhaize USA and Pepsi share diversity gains and challenges

As I think about the history of our program, and what the last six months since May 25th and the death of George Floyd have taught us is that the programs themselves are not enough. Giant Eagle’s had a D&I program for a gazillion years, as have all these other fine companies. And I prided myself as I'm sure all of the CEOs and everyone in FMI did on doing the right thing and being a values-driven company. I think we've made a lot of progress that we as individual companies should be proud of and that the industry should be proud of, but what George Floyd's death demonstrated so dramatically is that it's not enough. And I think thinking back as to what I would have, or should have done differently, or what I think we could have, or should have done differently, it's recognizing our own unconscious biases, recognizing that we actually were behaving in socially unjust ways without even knowing about it and figuring out how to unlock that.

Related:Schnuck Markets launches supplier diversity initiative

We have to take more seriously our own roles as leaders, and more seriously empower our own folks to do things differently, which is really hard. I wish that I had done a better job at listening to what was actually happening all around us so that I could know the real problems that go to try to fix.

Kevin Holt, CEO, Ahold Delhaize USA  

It has to start with our diversity inclusion holistically in our company and how we engage in that and how leaders lead in terms of enabling that type of an environment that really reflects the communities that we serve and allows people to bring their best to work and feel like they really are with an employer that has purpose.

We've been working to bring forward the consumer analytics and really starting with the consumer and demonstrating the economic value that we can really generate through having a diverse supplier organization. That's tightly connected in the communities that we serve and reflects the products and services that our community and consumers desire. And as we look at the analytics, it really demonstrates that that's very true today in terms of where we are, what people desire.

We've always been good at looking at local and as a byproduct of that, we have had a number of diverse suppliers that have been a part of local campaigns, that type of thing. But now it's a matter of how do we go further than that in terms of what we're doing and really integrating it now into all of our procurement plans, our sourcing. So when our category teams are working to actually do their category reviews, we're actually looking to work with those teams so that we have diverse suppliers who are part of the bid process, and also looking at how do we find more suppliers and build a context that we need, in order for those suppliers to be a part of the pavement.

We're actually developing a single point of contact that can help suppliers navigate the organization and then looking at how do we help develop suppliers when they come in, to help educate them on what it means to be successful. Many of us, I think, have experienced where we have one-and-done type experiences where products come in and school out. The idea here is to really work hard at making certain that we build long-term relationships that really are beneficial for the communities, are beneficial for the suppliers and beneficial for us. And we believe that if we do that, we'll be remarkably successful.

Steve Spinner, chairman of the board and CEO, UNFI

We think about supplier diversity as an integral part of our D&I system and a deep part of UNFI’s culture. As a wholesaler, one of the things that I think has really differentiated us is always being in front of the broadest availability of SKUs and being in a position to make them available throughout the United States and Canada in a really efficient way.

UNFI’s Better for All program outlines the company’s ESG (environmental, social and corporate governance) initiatives and its supplier diversity and D&I efforts. We have launched a website that specifically states those KPIs (key performance indicators) that UNFI has embraced around diversity, social issues, sustainability, and more.

The other thing that has been really important to our efforts is resourcing the programs. We’ve got a wonderful head of D&I in Guillaume Bagal, we've got a team that's focused on supplier diversity, and we think that within the next couple of years, we can get our diverse supplier procurement to over a billion dollars a year.

Consumers are increasingly seeking products from companies that align with their values. This is doing the right things and taking care of our environment and supporting the diverse communities that we all live and work in. We track the diversity in our supply chain across different classifications — minority, women, members of the LGBTQ community, veterans, disabled veterans and other disabilities. It’s part of how we see the future and we're really, really committed to it.We believe it's going to make us a better company.

Steven Cahillane, CEO, Kellogg Co.

We have over 20,000 suppliers around the world and our diversity efforts are at the heart and soul of everything that we really try and accomplish. For the past 40 years, we have increased our supplier diversity goals annually each and every year. And as we close the books on 2020, which we are literally days away from doing, we're on track to meet our 2020 annual goal of $400 million in diverse spend. It’s always an important effort to really try and raise the bar each and every year. And in 2020, in fact, we'll close the year again with 8% of our North American spend with certified diverse suppliers.

This is about not only seeking out diverse suppliers, but seeking out the very best suppliers that there are out there. And another thing is, don't underestimate the value of mentorship. We're all big companies and a lot of these suppliers are also big companies, but some of them are small companies. But each and every one can benefit from the value of what we bring to them in terms of mentorship and helping them.