Growing together is a priority
Supplier Diversity
AT&T
By Luana Ferreira
A deep dive into supplier diversity with Rachel Kutz, Vice President of Consumer Supply Chain & Global Logistics at AT&T
The definition of diverse suppliers is simple: they are businesses that are at least 51% owned and operated by underrepresented groups. Yet, creating a long-term relationship with them demands complex planning and commitment from corporations.
AT&T is one of the pioneers in doing business with diverse suppliers, and they created a program over five decades ago. Since then, the corporation has invested $214 billion in companies run by minorities: Latinos, women, service-disabled veterans, LGBTQ+, and people with disabilities. In 2018 they saw disparities and committed to increase Black spend to $3B by 2020. In 2020, they had exceeded the $3 billion goal with Black-owned suppliers.
The company's goal for diversity performance is 21.5% of total procurement expenditures with minorities. A successful supplier diversity program also demands that companies see it as a business. Rachel Kutz, Vice President of Consumer Supply Chain & Global Logistics at AT&T, stepped into the position in 2020 and ensured their program would be surgical for everyone involved.
She firmly believes companies must use top business practices when running a supplier diversity company. Therefore, having a staff that understands the business processes on all levels is crucial.
Being in a position where she can make decisions helps Rachel to be an advocate for supplier diversity. "I am a better advocate for diverse suppliers because I run a business; I'm not just talking -I am challenged with running a business as big as AT&T."
For Rachel, the program's success doesn't rely only on how much AT&T spends on diverse suppliers every year. "You've got to be able to get into your data and be able to say, 'Wait a minute, how many suppliers are we using and how do you break them down into the segments' so that you can go start targeting.'"
The VP believes there are challenges for both sides while doing business. As a buyer, Rachels states that it's essential to understand the supplier's capability to work with a Fortune 500 company. "The best day of their life is when they get an award from AT&T. It's also the worst day of their life because you got the business, but do they actually have the capacity to perform to it?"
Another challenge is finding suppliers for all the different areas within the company that need services. "The Hispanic suppliers tend to be in many different areas, which I love, but it is difficult to identify diverse suppliers of scale that understand our industry and business. Another issue: Can they scale? Do we understand their capabilities? Will this be a good relationship?"
Suppliers also have to deal with challenges. Rachel believes the first of them is "getting in the door, really understanding what their capabilities are so that they can sell themselves well to a corporation."
Rachel also affirms that to overcome issues that corporations and diverse suppliers face, we can't expect to have different results by trying the same things. Radical change is needed.
That was one of the reasons that motivated Rachel to become a member of the Board of Directors at the Hispanic Chamber of Commerce. "It's getting access to the data and making sure that it truly gives us visibility to who these suppliers are. We've been talking about getting those tools in the supplier diversity community. Many of these suppliers enter the offered education and business programs."
AT&T aims to increase its investment in diverse suppliers yearly and make it even more strategic. It doesn't mean replacing their suppliers but growing with them. "I look at the existing suppliers and know we're growing by looking at revenue growth metrics for the suppliers we're using. It's not just about getting new suppliers; it's growing our existing diverse supplier base and continuing to focus on jobs."
In the future, Rachel hopes the discussion is not focused only on how much they spend but on the community's impact. "That's the business reason for supplier diversity: you inject more dollars into the customer base, and those customers now will buy more from you. I want to get to the point where the discussion is not just about spending. The discussion is about community impact."