CVS Health is a member of the Billion Dollar Roundtable. It is not surprising when learning about its Supplier diversity program and proactive, dedicated professionals driving innovative best practices.
By Betty Armstrong

The supplier diversity program at CVS Health is a remarkable effort, reflecting the dedication of the team's professionals to building the best-in-class program. For the committed CVS professionals on the supplier diversity team, utilizing diverse suppliers is good for internal business units, good for suppliers, and good for the local economies where stores are located.

Upon learning about the supplier diversity program, it readily becomes apparent that this is a program based on a plethora of best practices, a variety of activities including proactive outreach, and internal and external partnerships.

Landscape of Opportunities
Monette Knapik is the director of strategic procurement for CVS Health, and she makes it clear the supplier diversity program is about continuous improvement, and discovering and creating opportunities. "We hosted an Ideation Session in March 2018 to generate creative new ideas and opportunities to grow our program. Three-hundred new ideas emerged which were collectively whittled down to a dozen." Attending the Ideation Session were business leaders, members of diversity advocacy groups and councils, and key suppliers.

One example of the ideas being implemented is mentoring diverse vendors in the merchandising space. Peter Doiron, Senior Manager Supplier Diversity, Strategic Management, adds, "Another example of an idea emerging from the Ideation Session, and in the process of implementation, came from sourcing and category managers. The plan is to train the diversity team on the Ariba platform, the same tools the sourcing team uses. This will allow the diversity team to use a much more proactive approach to forming RFIs and creating an ongoing pipeline with the advocacy councils."

Once familiar with the platform, the team will be able to work directly with internal business units to outline critical category specific questions, perform RFIs for qualified vendors, reduce the process flow for the Sourcing Team, and identify gaps in any category and region that can be closed with diverse suppliers.

As highlighted above, in 2019, Monette's team is piloting a new concept aligned with CVS Health Merchandising teams that will bring together Merchandising Stakeholders and subject matter experts, merchandising brokers, manufacturer's representatives, and diverse suppliers. One or more suppliers could be rewarded with CVS Health partnership and/or receive free entry into the CVS Health / Roger Williams University, Executive Learning Series. Peter states “we’re really excited about partnering with the Merchandising Category teams as they’ve shown a sincere appreciation on the benefits of partnering with diverse vendors who can make an impact at the local level”.

Next Big Thing
CVS Health merged with Aetna in 2018, creating new challenges but exciting opportunities to disrupt the healthcare industry and create a vibrant unified supplier diversity Program. New and existing suppliers can leverage this disruption as opportunities for coming to the table with new ideas and new ways of bringing the two Diversity Supplier Programs together. Diverse suppliers will play a big role in helping the company reduce costs and improve patient health.

The supplier diversity team is working on leveraging the two programs to connect prime suppliers and their Tier 2 subcontractors with buyers, with the goal of creating a unique program. Key to keeping the combining process moving forward is creating one policy applicable enterprise-wide, setting up accountability measures, and auditing the metrics. New databases will emerge, and they will be used to enhance localization.

Over One Billion Dollars
CVS proudly co-hosted the 2018 Billion Dollar Roundtable (BDR) Summit, during which a goal was set to increase spend with diverse suppliers from $1 billion to $1.5 billion by the year 2020. This is typical of the CVS Health Supplier Diversity team. They set high standards and stretch goals for themselves. says Peter….Though we do set high goals, one of the challenges we face is a natural attrition of suppliers that grow to the point where they are bought by larger companies. We are always looking for innovative new ways to replace those vendors and increase our diverse spend."

One of the strategies implemented is working with internal business units to get commitments. The construction team has already committed to a percentage of Tier 2 spend, and the Supplier Diversity team is working with logistics and merchandising to get their commitments too. To get commitments, the team knows that developing high quality reporting capabilities is crucial, and it is a top priority as CVS and Aetna continue their work towards developing a unified Supplier Diversity Program.

Diverse suppliers who can meet internal needs are proactively sought, a crucial effort in helping business units meet their commitments. One approach is analyzing the current vendor list to extrapolate potential vendors that have been overlooked. Another approach is identifying minority-owned vendors that have not gone through the certification process and assist them with achieving certification.

Data, Data, and More Data
This is not a program where CVS team members sit and wait for supplier registrations through a portal. They regularly review and analyze supplier registrations. The purpose is to search for new suppliers; evaluate existing suppliers to discover new opportunities; use data to refine and better target supplier training and development efforts; and identify hidden innovations. This is just one example of the CVS approach that led to their membership in the Billion Dollar Roundtable.

The supplier diversity team believes that collecting and analyzing data is a crucial step in developing a unified supplier diversity program. The goal, according to Peter, is to develop a comprehensive process to manage the combined data from CVS Health and Aetna.

The Supplier Diversity team has implemented a sophisticated process for measuring success. There are three different tools, one each used to measure Tier 1, Tier 2, and registration performances. The company supplier.io is used for Tier I; Northbound for Tier II; and ConnXus for new registrations. Peter explains, "Success will be measured by increasing our number of qualified registered vendors in ConnXus to support sourcing RFP events; maximizing the capability of our tools for detailed reporting that helps drive decisions by internal business units; and finding new opportunities to increase overall diverse spend." Eventually, the ConnXus registration platform will be able to match prime vendors and subcontractor vendors without CVS team involvement.

Helping Suppliers Grow
One of the many notable characteristics of the CVS Health supplier diversity program is that the team is focused on helping diverse suppliers grow, both to become prime vendors and/or to increase their opportunities in the industry. CVS has several partners that have realized steady growth through our partnership and have become substantial contributors to Tier 2 revenues. The supplier diversity team is reaching out to internal Business owners with hopes of converting these vendors to Tier 1 status.

To begin the process of helping smaller diverse suppliers grow, the CVS team puts many subcontractors in contact with its prime vendors when the supplier is not ready to become a prime. Monette explains, "Subcontractors may not be ready for prime status for many reasons: distribution, size, scale, unable to handle contract requirements like payment terms, and so on. So we provide them a partnership opportunity when we see real potential."

CVS has a program in partnership with Roger Williams University that provides 15 suppliers the opportunity to learn and grow their businesses. Suppliers learn about social media, financial matters, preparing a presentation for corporate decision-makers, responding to the CVS RFP, and other critical success areas.

What is particularly interesting about this program is that suppliers are not chosen with the sole intention they will necessarily end up doing business with CVS after program completion. It is offered in the spirit of providing growth opportunities, even if the journey takes the supplier to another Fortune 500 company. But companies like Planned Packaging of Illinois, Corp. and Universal Printing Co. do grow through their partnerships with CVS. They praise the CVS team for being instrumental in helping them grow the scale of their business and grow their business knowledge.

"CVS is intentional with helping us grow and be successful, making sure we are equipped to handle the scale of business. Each CVS business unit and corporate member buys into the idea of our overall success," said Jason Robertson, President/CEO of Planned Packaging.

Margaret McGrath, CEO of Universal Printing Company, offers similar praise, "CVS has made us a better company by consistently holding us to the highest standards in the industry. Through our work with both the PBM and retail divisions, Universal has been able to expand, purchase more of the most advanced equipment available, and hire additional employees. From QA processes to IT security, CVS has partnered with us every step of the way–and all of our other clients have benefitted from this relationship."

Culture of Innovation Begins at the Top
The CVS Health culture is one that creates an environment of innovation, and diverse suppliers are an important element. The CVS supplier diversity team has created multiple channels of contact for diverse suppliers. They include the supplier diversity program, a website, meet and greets, training and development programs, mailbox, and a variety of events that include booths at trade fairs. The website provides information on the needs of various categories.

The success of the CVS Health supplier diversity program began at the top. Peter explains, "It is critical that our program has executive level buy-in by leaders like the Vice-President of Procurement and the vice-president of Diversity & Inclusion. Any successful programs need top level buy-in."

With senior level buy-in, the Supplier Diversity team is able to proactively pursue multiple projects, helping diverse suppliers build capacity. Planned Packaging of Illinois started at one facility and now supports multiple facilities. The CVS team works with them all along the way to help them grow.

Never Satisfied
At CVS, the word "satisfied" is seldom used in the diversity space. The supplier diversity team is always looking for ways to increase utilization of diverse suppliers enterprise-wide. The professionals not only use best practices – they create them as industry leaders.

Once familiar with their energetic and thorough approach, it is not surprising to learn they already belong to the Billion Dollar Roundtable.