In this quarter's Q&A, Comcast NBCUniversal's Peter Kiriacoulacos, who was named 2017 Chief Procurement Officer (CPO) of the Year by the National Minority Supplier Development Council (NMSDC), joins Rick Hughes, BDR Chairman and former CPO of Procter & Gamble (P&G), to discuss why Supplier Diversity Programs are critical to the success of our businesses, and our economy.
What is the business case for expanding opportunities for diverse suppliers?
- Rick Hughes: The answer to this question becomes clearer and clearer each year, and for most corporations it's pretty simple. Companies, particularly consumer product brands, want a supplier base that reflects their customer base. You want a diverse set of partners who understand the needs and behaviors of your customers, so you can meet those needs faster and better than your competitors. Regardless of your business strategy, diversity makes companies smarter and more competitive.
- Peter Kiriacoulacos: I couldn't agree more. I will also add that our supplier diversity commitment has allowed us to expand our portfolio of suppliers broader and deeper than ever before. Our Supplier Diversity Program has exposed Comcast and NBCUniversal to an entire vendor marketplace that we might never have identified before. These exceptionally talented partners have unique and niche skills that have helped us develop new products, marketing campaigns, business strategies, and more. Over the past six years, we have spent more than $11 billion with diverse suppliers, and these partners have truly made our business better.
What is the biggest challenge that diverse owned-businesses face, and what can companies like Comcast NBCUniversal do to help them navigate them?
- Kiriacoulacos: Diverse businesses are often also small businesses, and they sometimes do not have the scale or resources to even bid for the opportunity to work with large corporations like ours. Limitations in scale also mean they may not have the proper certifications, or have the ability to provide the projections we need. So we've launched a couple programs internally to help support vendors who have the capabilities, but not the scale, to work with companies of our size. For example, we started incubator programs at Comcast and NBCUniversal, set up to educate a selection of growing diverse suppliers on how to become certified as diverse-owned, and how best to work with Fortune 500 companies.
- Hughes: We recently surveyed our BDR members on their approach to supplier development, and it's clear they're all doing some form of what Peter described. I think that creates an opportunity for the BDR to bring our members together to build something even more powerful to support diverse entrepreneurs. So we are looking at ways to develop a centralized technology platform that can connect corporations and diverse suppliers, and facilitate resource sharing to help suppliers meet the needs of these larger corporations.
Many companies also have Tier II supplier diversity commitments – meaning spending with diverse subcontractors. Why is Tier II spend an important part of Supplier Diversity Programs?
- Kiriacoulacos: Our Tier II Program is just as important as our Tier I [direct] supplier commitment. It's creating wealth, it's creating inclusion, and it's creating innovation. Tier II programs allow those smaller companies we talked about to do business with large companies like ours, when they may not have the scale to support us on their own. At Comcast NBCUniversal, we launched a formal Tier II program in 2012, where we encourage our larger, non-diverse suppliers to bring diverse subcontractors in on their projects with us. We actually measure, manage, and rate them on their subcontracting diversity spend. The program has been highly successful – we've seen more than $1.3 billion in diverse Tier II spend since 2012.
- Hughes: I agree, Tier II is absolutely critical, and one of the initiatives that the BDR is aiming to build into our strategy. Right now, our billion dollar requirement is focused on Tier I, but we are exploring how we take into account Tier II dollars as we look at the future membership. In the end, a dollar is a dollar when it comes to supporting diverse businesses.
We often hear that Supplier Diversity Programs help boost economic development in our communities. Can you talk about this?
- Kiriacoulacos: More often than not, expanding opportunities with diverse suppliers means bringing new business to small, local companies. Many of our top diverse suppliers have grown as our relationships with them grew, and that created more jobs and more opportunities outside of our company. It's no secret that Comcast NBCUniversal has a number of construction activities going on, from the new Telemundo Headquarters in Miami, to the Comcast Technology Center being built in Center City Philadelphia. These projects are all made possible by local labor, and partnerships with local companies. So we request that a certain percentage of the building cost, depending on the labor size, is localized through diverse companies, and that has a direct economic impact on employment.
- Hughes: There really is an economic impact to the communities when these diverse companies thrive. When I was at P&G, we worked with a small, minority-owned chemical supplier. He was fortunate enough to receive funding, so he centered his plant in the South Side of Detroit, bringing new jobs to a neighborhood that had struggled economically for many years. Soon the neighborhood was growing, and new companies were opening. He had employees with 20-year tenures whose children were going to the local Detroit City College. It is companies like his that can make depressed neighborhoods active and vibrant again.
What are some trends you're seeing in the Supplier Diversity space?
- Hughes: We're seeing many BDR members create Supplier Diversity Advisory Councils, made up of diverse suppliers and company leaders, which allow their vendors to provide input on the direction of the diversity programs. This not only helps Supplier Diversity Programs remain on track to accomplish their goals, it also grants diverse suppliers direct access to C-suite executives, so they can see the impact the program is having on the larger business strategy, and on the communities the company serves. I wouldn't call this a trend, but we also recently expanded our criteria in evaluating a corporation's diverse spend to include certified LGBT-, disability-, and veteran-owned businesses, in addition to minority- and women-owned suppliers. The definition of diversity spans far wider than race and gender, and we want to ensure that our membership reflects that.
Read more stories regarding diversity in the workplace in "On Diversity" Comcast NBCUniversal's D&I newsletter.