The Critical Link: Corporations Are Growing Their Diverse Supply Chain Network. the Companies on Our List Value Supplier Diversity and Demonstrate Their Commitment by Expanding Contracting Opportunities and Development Programs with Minority Vendors
Hocker, Cliff, Black Enterprise
MICHAEL L. THOMPSON, CEO OF FAIR OAKS FARMS L.L.C., AND HIS RELATIONSHIP with McDonald's USA demonstrate how the nation's largest fast-food company makes supplier diversity work. Fair Oaks Farms (No. 15 on the BE INDUSTRIAL/SERVICE COMPANIES list with $288.7 million in revenues) supplies McDonald's with breakfast sausage for approximately 35% and strip bacon for about 75% of the U.S., in addition to some of McDonald's international markets.
Thompson has expanded Fair Oaks through retail and food service growth opportunities, including additional business with McDonald's. "We have a strategy to grow with all our key customers," he says. "Our business has more than tripled since becoming a majority owner of Fair Oaks Farms in 2003. We've been extremely blessed to have McDonald's as our largest customer."
Before becoming a supplier to the $27 billion giant, Thompson worked as a vice president for McDonald's in both operations and supply chain, so he knew the culture and process well. "Knowing both the operations and supply sides of the business helped me to understand their needs at a higher level," he says. Thompson's Pleasant Prairie, Wisconsin-based business also supplies food products to Walmart, Sam's Club, Papa John's, Denny's, and Olive Garden. One of the most important lessons he's learned as a supplier is to leverage whatever is unique about his business. "Yes, customers want low prices," says Thompson, "but they want other things, too. In my world, it's food safety and quality."
Thompson is part of McDonald's expanding diverse supply chain network. In 2011, McDonald's purchased nearly $817 million in goods and services from companies owned by African Americans. In the past five years, the fast food giant's overall purchases from African American suppliers have increased 24.3%. The McDonald's U.S. system annually purchases more than 50% of its total food, distribution, and paper from minority- and women-owned suppliers. "One of the things I'm most proud of is how our team continues to make diversity a priority," says Pat Harris, the company's global chief diversity officer. "They demonstrate every day that at McDonald's, D and I [diversity and inclusion] is everyone's business."
McDonald's exemplifies what it means for a corporation to truly value supplier diversity and demonstrates that commitment by expanding contracting opportunities and development programs with minority vendors. Such efforts are critical at a time when corporations are restructuring and consolidating their supplier base. As may be expected, those corporations with the largest minority procurement spend can be found on our list of the 40 Best Companies for Diversity. Other criteria for being on our list are expansion of senior management, composition of corporate directors, and employee recruitment and retention. In each area, some companies performed better than others. (See "How We Compiled the 40 Best Companies for Diversity.")
Although several companies are expanding their diversity initiatives, B.E. Research found hundreds that aren't. Scores failed to complete surveys or return calls from our researchers.
This year BE focused on supplier diversity, because winning contracts to provide products and services is the lifeblood of most businesses. Corporations spend hundreds of billions of dollars a year purchasing an array of goods and services from suppliers. Although diversity among suppliers has come a long way, it still has a long way to go.
In 2011, the more than 460 corporate members of the National Minority Supplier Development Council spent more than $100 billion with NMSDC-certified Minority Business Enterprises, or MBEs, up from about $63 billion spent in 2001 and nearly a six-fold increase from the $17.9 billion spent in 1991. Moreover, from 2009 to 2010, companies designated as Billion Dollar Roundtable members increased overall corporate spending with minority- and women-owned suppliers. …