Transformational Supplier Diversity Leader Opens Doors for Innovative Diversity Suppliers
Kraft Foods is expanding its diversity initiative this year, continuing a 25-year tradition of commitment to supplier diversity. However, this year’s revamping comes with a twist. To continue to move toward their ultimate goal of having a supplier base as diverse as the products they offer and the consumers they serve, Kraft Foods is going above and beyond with new programming to invite new ideas and innovations from diverse suppliers.
Vickie Hsi, the newly-appointed Corporate Supplier Diversity Lead for Kraft Foods, feels that this is a natural continuation of the company’s commitment to truly increase their spend with minority- and women-owned businesses (MWBEs). It also builds on the momentum created by the launch of a new procurement transformation two years ago and recent diversity awards that Kraft Foods has won, including the 2011 Supplier Diversity Transformational Leader Award of the Year, awarded by Chicago Minority Supplier Development Council (CMSDC).
At the moment, Kraft Foods’ program is focusing on three key areas for the growth and development of their minority suppliers. They are working to grow their existing Tier 1 partners, improve Tier 2 reporting, and find innovative new solutions from diverse suppliers.
The first key area is on the growth of existing diverse suppliers, the focus has been sharpened by a desire not to extend their supplier tail. This means doing more with existing supplier relationships. To achieve this, Kraft Foods identifies the top Tier 1 MWBEs for each category and seeks to grow the relationship and spend.
The second key area is focused on improving Tier 2 diverse suppliers reporting. Kraft Foods plans on strengthening its Tier 2 program by expanding its prime supplier pool. Suppliers who are identified as the prime suppliers will report their own diversity spending to Kraft Foods. This is a deliberate effort by the foodmaker to trickle down the commitment of doing more businesses with MWBEs.
The third key area of focus is innovation. This area is open to current and wish-to-be suppliers. In order to speed access and acceptance of great innovations from the diverse supplier community, Kraft Foods is launching “Innovation Challenges” to attract the best ideas for its key internal initiatives.
The Kraft Innovation Challenge
The Innovation Challenge is a brand new, and it isn’t unique, program in the national diversity space. It was built out of a recognition that it can be hard to get in the door at Kraft Foods, but if there’s a great product or service innovation out there, the company wants to know about it. With a truly great idea, Kraft Foods will strive to help open the door.
The challenge is open to certified minority businesses (per the National Minority Supplier Development Council or Women’s Business Enterprise National Council criteria). The terms of the challenge are aligned to Kraft Foods’ key corporate objectives, divided into innovation and productivity categories. Within those two categories are target areas.
For innovation, the target areas are health and wellness and reaching growing consumer markets. Health and Wellness seeks to find ways for Kraft Foods to reduce sodium by 10 percent in its products, trim calories and fat, and ‘create innovative packaging solutions to support portion control objectives. In reaching the growing consumer market’s challenge, the foodmaker focuses on deepening engagement with growing ethnic consumer groups, which in the United States means Hispanic, Asian, and African-American communities. Kraft Foods wants to know how to better reach those groups, establish more shared experiences with its products, and bring in new flavors or products that will be popular with those target groups.
In the productivity area, Kraft Foods’ focus is on sustainability and cost reduction. On the sustainability front, the company is looking for ways to increase sustainable sourcing of agricultural commodities and to reduce plant energy use, plant water consumption, plant energy-related CO2 emissions, packaging materials, overall plant waste levels, and distance from its transportation network. In the area of cost reduction, it’s an open field for any solution that will help drive down costs in any area of operations throughout the company.
Suppliers who enter the challenge have 6 – 8 weeks to develop and present their idea to Kraft Foods. Proposals will go through two rounds of evaluation with both the Supplier Diversity Champion Team and the appropriate stakeholders in the functions and various business units at Kraft Foods. In the first round, ten semifinalists will be selected, while the second round will establish five winners of the challenge who will be invited back to present their proposals to the senior management team.
The Drivers for the Innovation Challenge
The motivation behind the establishment of the Innovation Challenge program comes from the internal commitment to diversity and demand from the marketplace. “We are committed to doing our part to ensure that we have a diverse workforce and supplier base. We are also committed to being a good steward of the environment, improving our communities and delivering value to our shareholders and consumers,” says Julia Brown, Kraft Foods’ Senior Vice President and Chief Procurement Officer, adding that ‘on the customer side’, the company also has a duty to its partners – the Wal-Marts and Krogers of the world – in delivering supplier diversity.
Kraft Foods truly desires to maximize the potential in the diversity space. They are hungry for innovations from diversity partners, and willing to put the talents of their own sourcing team behind key new ideas from diverse suppliers to drive down costs and help bring them to market.
Challenges do exist. A key one at the moment for Kraft Foods is the need to have suppliers with the scale to serve multiple market areas. They encourage their diverse suppliers to seek strategic partnerships to create that scale as they seek the next level of innovative service delivery. Suppliers who successfully do this, such as Adhesive Systems, Inc (ASI), a Detroit-based firm with a strategic partner in Dusseldorf-based Henkel, can have a rich future with the company.
In the case of ASI, the company leadership wanted to expand their scale and reach. Kraft Foods was already in a relationship with both ASI and Henkel, but the partnership between the two companies allowed them to secure a contract to provide the bulk of the adhesives used by the foodmaker. With the Innovation Challenge and other programming, Kraft Foods hopes to encourage more strategic partnerships like these to create winning solutions.
Looking to the Future
As they wait to see the outcomes of this inaugural Innovation Challenge, Kraft Foods continues to look toward the future and accelerating their supplier diversity efforts. “We have great support from the top with passionate advocates and leaders who firmly believe that supplier diversity is not just a social responsibility but a business imperative to grow the top-line,” says Hsi.
The external recognition the company has been receiving of late is an encouragement, but honors and awards aren’t all that Kraft Foods wants. They want success stories from diversity partners that showcase the possibilities both to the internal business units and to other potential diverse suppliers in the market.
“We are working to be a better advocate, to help tell the success stories of hard-working, resilient, and innovative entrepreneurs who are valuable partners to corporations,” states Hsi. “It’s always good to be recognized for what you are doing, but when you are doing the right thing, the results will show.”
Being a game-changer and emerging leader in the area of supplier diversity with innovative initiatives such as the Innovation Challenge, Kraft Foods has the potential to show some very strong results indeed.
About DiversityPlus Magazine:DiversityPlus is much more than “just” a supplier diversity magazine.Thanks to its strong media platform, which includes the print edition, digital magazine, website, weekly newsletter, social media, blogs, and video, DiversityPlus is able to provide print readers in seven countries and more than 117,000 digital readers worldwide with access to leading-edge supplier diversity content, webinars, and events.
What you’ll read in the pages of DiversityPlus represents the most current and impactful thinking about diverse supplier relationships. Plus, with over 17 years in print, our trend research, interviews, and feature articles showcase a depth of industry relationships unmatched by any other supplier diversity publication.