Supplier diversity has long been a priority for more socially conscious companies. But, according to Ricardo Barrientos, senior director of supplier diversity and global procurement for PepsiCo, being socially conscious is not the only reason businesses should strive to include more diversity in their vendors.
“Since the early stages, executives at PepsiCo have recognized the value that having a diverse supplier base brings to the company,” Barrientos says. “We believe diversity and inclusion provide a competitive advantage that drives business results.”
When an initiative benefits a company, its business objectives, and the communities in which it operates, it becomes a no-brainer. “That’s why we are committed to developing a supplier base that is diverse and that represents the diversity of our employees, our customers, and our consumers,” Barrientos says.
Six years ago, Barrientos was asked to run the supplier-diversity program for PepsiCo. At the time, the company was looking to further evolve the program, and it needed someone who understood how to successfully navigate a large, diverse organization like PepsiCo internally and engage with diverse communities externally.
“I started with the company in Mexico, then I was transferred to the US,” Barrientos says. “I then worked for the Latin American region and later on managed categories with a global scope. So, I knew PepsiCo in Mexico and the Latin American region, and I understood the global implications of having a diverse supplier base.”
Having spent his entire career in supply chain and procurement, Barrientos is well acquainted with the benefits of working with diverse vendors. “There are a lot of misconceptions or assumptions that small companies cannot deliver value or that they are too small to do business with large corporations,” Barrientos says. “But, after the time, energy, and capabilities these men and women put into their businesses, despite the challenges they face, they are able to reap their success thanks to their hard work. I think that is what makes me passionate to help and mentor these companies and bring the ones with scale to deliver value to PepsiCo.”
Managing supplier diversity requires working with a lot of different stakeholders within the company. For example, when Barrientos was working on value engineering projects, he had to involve multiple functional leaders such as marketing, operations, research and development (R&D), and even the CEO to approve proposed changes.
“We believe diversity and inclusion provide a competitive advantage that drives business results.”
It was that kind of experience PepsiCo was looking for, for the management of its supplier-diversity program. The company needed someone who could build and maintain relationships with suppliers, with different departments within the company, and with external organizations.
That skill comes in handy, because one of Barrientos’s biggest opportunities in his position has been showing stakeholders that working with suppliers who they might not be as familiar with or who are still growing and establishing their footprint will deliver the same, if not more, value to the company.
“It’s incredibly fulfilling,” Barrientos says, “when an internal stakeholder, who is looking for innovation, experiences how a new or different supplier can bring value, very good resources, and technology in terms of developing new products or providing services.”
Barrientos has seen firsthand how effective these companies can be. “Discovering new companies that help develop products that are now being sold in major retail chains—those are companies that can also help PepsiCo develop and manufacture its products,” he says.
Barrientos also enjoys working with internal stakeholders to help them find the right supplier while also helping that supplier work with PepsiCo. And, recently, he has been working with global procurement to help introduce even more diverse suppliers to R&D. It’s a win-win for everyone.
Another way Barrientos has been helping increase supplier diversity at PepsiCo is by implementing a new Supplier Diversity Portal, where diverse suppliers can register their companies and present their capabilities. The info becomes part of a searchable database that category managers can use to find prospective diverse suppliers. Through a Stage-Gate process, category managers and the supplier-diversity team add comments to advance suppliers through the qualification process and ultimately to participation in an RFI/RFP. The database can also include the reasons why a supplier can’t move forward and what developments it needs to be reconsidered.
This helps streamline the entire diverse-suppliers qualification process, because new category managers can just go in and see the entire history of a supplier. In the past, they would have needed to be updated via e-mails and face-to-face conversations.
“You have the vetting process and the engagement with diverse suppliers, so that’s one of our key strategies that is going to help us be more successful in the future with getting diverse suppliers in the door,” Barrientos says.
But PepsiCo doesn’t just want to increase its own supplier diversity; it also hopes to set an example for other companies. According to Barrientos, there are three things companies need to do to have successful supplier-diversity programs: set goals, track diverse spending, and maintain a tiered program.
“Just like how we plan our productivity for the year and the years to come, we plan our supplier diversity the same way,” Barrientos says. “We base our targets on the information we have, and we build up our targets with input from everyone in global procurement, in all the categories of spending.”
PepsiCo’s tiered program has also been very successful, and it’s another way to get other companies to start thinking more seriously about their own supplier-diversity programs. It allows nondiverse companies that share PepsiCo’s goals and beliefs on supplier diversity to do business with diverse suppliers doing business with PepsiCo and report to PepsiCo their spending with those suppliers.
PepsiCo tracks the amount of business it is doing with diverse suppliers, and it assembles that information into a report every quarter that gets presented to the chief procurement officer. The company plans engagements with different organizations, including the Women’s Business Enterprise National Council and the National Minority Supplier Development Council, and the plan for those engagements is presented to the CPO, who plans the attendance of global procurement executives.
As much as Barrientos likes giving diverse companies a lift, it’s ultimately up to them to do the work and provide the value, and when they do, there’s nothing more satisfying. “Seeing them succeed and being able to deliver value,” Barrientos says, “that’s one of my favorite things.”
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