August/September 2008

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Supplier diversity

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Supplier Diversity

Microsoft’s focus on diversity includes mega-MBE WWT

“You can build a very valuable business case for supporting multicultural suppliers. It’s a win-win-win,” says Microsoft’s supplier diversity director

Fernando Hernandez: “a business case linked to revenue enablement.”Fernando Hernandez, director of supplier diversity at Microsoft (Redmond, WA), explains that the company started with supplier diversity some six years ago, and began to focus on it extensively four years ago.

“I’m the second supplier diversity director,” Hernandez says. “When I took the program over two years ago our spend was about $640 million, and this year we expect to close our books in excess of $900 million.

“It’s been an interesting ride,” he adds with a smile.

Going global
Hernandez thinks the growth “really started to happen when we became goal-aligned with the needs of the business. As our supplier diversity goals started to become more strategic, I could go to management and show a business case linked to revenue enablement.

“If we as a company are looking to grow into a business like entertainment, for example, we have to realize that a lot of our consumers will be much younger than most of our execs, and they’ll be looking for very different products than we’ve been used to!”

Putting this all together, “You can build a very valuable business case for supporting multicultural suppliers like small businesses, women-owned businesses and minority-owned businesses. From a business perspective they help you drive your program forward, and it also supports the social good. It’s kind of a win-win-win!” Hernandez concludes.

Mentor/protégé at work
Within the supplier diversity function, Hernandez considers Microsoft’s mentor/protégé program to be “pretty exciting.

“We’ve partnered with our sales team to mentor and grow and teach and extend opportunities to Microsoft-certified M/WBEs to move them specifically to the next level.”

One part of the program is ongoing, run in conjunction with the state of Maryland. “We identified a group of M/WBE technology companies and offered them extensive training focused on business opportunities that we saw in that geography within the next year or two.”

For example, in the Middle Atlantic area Microsoft might foresee a need for security technology on the part of local government or some Fortune 500 companies. “We tell the MBEs that if they want to engage with us in this critical area we will provide the training free. We will help them build the core competency to help us fulfill the needs of our clients in these areas.”

It’s working very well. In fact, Hernandez discloses, New York State is interested in replicating the Maryland program. “We’re very happy about that and hopefully it will spread.”

Off to Tuck
Earlier this year, Hernandez’ group sent execs from some ten MBEs to the Tuck Business School for executive training. “That was great. They all got a lot out of it on how to map their businesses to move to the next level.”

The programs are, of course, focused on technology. “It supports our interests, supports their interests and supports our clients,” Hernandez notes.

Centers of excellence
Another program originated with the New York Council of the NMSDC, where Hernandez is still a board member from his previous job. “They created the ‘centers of excellence,’ a pilot program intended to spread through many local councils, and Microsoft was engaged as one of the first.”

Each partner corporation selects about ten M/WBEs and focuses on building up these enterprises. “You come into the program over eighteen months and it works pretty decently,” Hernandez reports.

Partnering with WWT
Microsoft has been partnering with World Wide Technology (WWT, St. Louis, MO) since 2003, Hernandez notes. “I’m proud to say they’re our largest diverse-owned company in the mix. They’re our single source for Dell peripherals, with full integration of WWT/Microsoft electronic procurement systems, integration, staging and logistics.

“We’re definitely looking at ways to expand the relationship even further,” he adds.

How the relationship started

Dave Steward: “fully integrated ordering with automated procurement.” Dave Steward, CEO and owner of WWT, describes how the relationship got started. “Microsoft was looking for a way to simplify their process for ordering peripherals while reducing procurement costs and simplifying their supply chain,” he recalls. “We at WWT created a fully integrated ordering process that combines Microsoft’s
MS Market and other products with our own highly automated procurement system.”

It all started in late 2002, when Microsoft requested bids for a streamlined product-fulfillment process covering the entire U.S. The company was looking for a vendor to provide a single source for peripherals, non-standard hardware and the like.

The winner was WWT, one of the largest African American owned businesses in the country. “WWT and Dell teamed up to provide a single integrated solution that enables us to fulfill more than 400 orders per day,” Steward reports with pride.

Fully integrated
Today WWT is fully integrated with MS Market, an online procurement tool developed and used by Microsoft. When WWT receives an electronic purchase order from Microsoft via eBIS, the order is routed through previously set distribution channels for drop shipment to the appropriate Microsoft location.

The benefits are many, Steward says. First, the new ordering process is highly streamlined and efficient. Second, Microsoft can choose from thousands of products from hundreds of manufacturers via the single WWT source. Third, Microsoft receives faster shipments: nearly 90 percent of all orders are shipped the same day.

And in addition, WWT supports Microsoft with personal attention. A dedicated staff, both on-site and off-site, offers sales and support services.

Award-winning service
Microsoft’s purchases through WWT add up to $40 to $60 million of product procured annually. As a result of the ongoing success of the relationship, WWT was honored with Microsoft’s premier vendor award for exceptional performance in quality, service and cost, Steward notes with pride. WWT’s initial three-year contract with Microsoft has been extended to a total of five years, and the two companies are working to establish other technology solution initiatives.

“We consider Microsoft a key account and an extremely important customer,” Steward adds. “Microsoft has also kindly served as a reference for us, enabling us to engage in new customer relationships.”

Inside WWT
Over the past three years WWT’s own supplier diversity program has grown about 13 percent, Steward reports. “We are committed to providing diverse suppliers with equal access to our purchasing opportunities, and we’re ready to report any and all minority spending levels and program data to our clients.

“We are constantly seeking partnerships with small, diverse businesses in order to leverage our position in today’s increasingly diverse marketplace,” Steward declares.

As the nation’s largest African American-owned business, WWT is certified by NMSDC. The firm has reached Corporate Plus status, and is also active with local organizations like the St. Louis Minority Business Council and St. Louis Civic Progress.


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