CVS Health sees collaboration as key to future growth
By Melissa Lowery
As supplier diversity programs mature and the business landscape changes, corporations are at a crossroads. Do they continue down the familiar but well-worn path they’ve trod, or seek innovation through disruption or collaboration? Will we need systems thinking or design thinking for the future?
Forging a new path for the next 50 years of supplier diversity means there will be many new models to address emergent needs. CVS Health has chosen a practical and solution-focused approach to solving the problem of how to increase spend with diverse suppliers.
In March 2018, CVS Health hosted the Supplier Diversity 2020 Ideation Session, requesting the presence, experience and best practices of individuals within the CVS Health supplier diversity team and beyond to address a new goal of increasing spend with diverse suppliers from $1 billion to $1.5 billion by 2020.
“Corporate ideation sessions are a great way to inspire creativity, collaboration and innovative thinking,” said Eva Boratto, Executive Vice President, Controller and Chief Accounting Officer. “These hackathons establish a stream of valuable ideas and can have a significant cultural effect, potentially awakening an experimentation and innovation mindset.”
Welcoming multiple voices
Collaboration is a key tenet of how CVS Health approaches problem-solving. The ideation session served as an inclusive platform to encourage and embrace diverse perspectives from both internal and external voices.
The event brought together CVS Health leaders from different lines of business, strategic partners, existing and potential diverse suppliers, and representatives from national minority councils to share their perspectives.
“The CVS Health supplier diversity ideation session underscores the forward-thinking approach to increasing supplier utilization and development that earned CVS Health their 2018 Program of the Year honor from the NGLCC and its partners in the National Business Inclusion Consortium,” said Jonathan Lovitz, Senior Vice President, NGLCC. “It was a thrill to be at the table with fellow certifying body leaders, top diverse suppliers and the incredibly supportive CVS Health team, who have made supplier diversity an essential practice throughout their entire enterprise. NGLCC looks forward to seeing continued success for our certified LGBT Business Enterprises because of these kinds of innovative commitments to supplier diversity program excellence.”
Why does supplier diversity matter?
To understand why CVS Health is looking for the next breakthrough in supplier diversity, it is helpful to understand just how fundamental diverse suppliers are to this Fortune 7 company. Supplier diversity is “a critical competency” for CVS Health, impacting every part of the company.
“As part of our Strategic Diversity Management, our strategic approach to managing diversity touches every aspect of our business,” Raul Suarez-Rodriguez, Manager, Supplier Diversity/Strategic Procurement said. “In addition to support from our leadership, we are able to educate, equip and empower business units and their teams to proactively include and manage the purchase of products and services from diverse businesses and diverse-owned independent retail pharmacies while adding value in the delivery of expert care and innovative solutions in pharmacy and health care that are effective and easy for our customers and communities.”
The benefits go far beyond social responsibility. Partnering with diverse suppliers reflects the communities where CVS Health operates, promotes innovation, infuses competition into the supply base and provides economic growth and stability to underserved communities and demographics.
“While a supplier diversity program is essential for our company to compete in today’s global economy,” Boratto added, “it is also important that we use supplier diversity as a strategic asset that is aligned with the corporate vision, a contributor to global growth and a competitive advantage in a highly diverse economy.”
Adding more diverse suppliers to the supply base
To reach the goal of $1.5 billion in diverse spend by 2020, CVS Health is focusing on internal processes and external collaboration.
“Our job as supplier diversity professionals is to focus on increasing the number of diverse suppliers involved in all areas of our business,” Suarez-Rodriguez said. “We were able to generate nearly 400 general ideas, 33 great ideas and four outstanding ideas by collaborating at the ideation session.”
Now is the perfect time for diverse suppliers to begin pursuing opportunities with CVS Health and be part of this 2020 spend goal. Suarez-Rodriguez has several suggestions for how suppliers can prepare to do business with CVS Health or any company.
First, he said, fully understand the company’s mission, vision, objectives and, most importantly, its culture. Once you have that knowledge, prepare your value proposition, then make sure companies like CVS Health know how to find you.
“It is important to know that the sourcing process may differ from organization to organization,” he said. “However, understanding that process is critical to the success of diverse suppliers.”
The first step is to properly fill in a company profile via the company’s supplier registration portal. Having an updated and completed profile is key to a supplier being considered for all opportunities.
“There are times in which opportunities come outside the normal process,” Suarez-Rodriguez said, “and the registration portal is the first place the sourcing and supplier diversity teams go to look for diverse suppliers based on the requirements for the products and services being procured.”
Suarez-Rodriguez recognizes that suppliers look at the registration portal as a “black hole”. Remember that opportunities are not always available, that it takes time to be matched with the right opportunity, he said. Use that time wisely by investing in your company and yourself.
“I encourage each and every supplier to be patiently persistent while excelling his or her capabilities,” he said. “There are a lot of available resources from the different councils and associations that can really help diverse suppliers excel and build new capabilities.”
Another tool that few suppliers utilize is the power of following up. Suarez-Rodriguez estimates that only 15 percent of suppliers his team meets at trade shows, business conferences and events follow up with CVS Health.
“We understand that this is time-consuming, but investing time to build a relationship is crucial,” he said. “There is nothing wrong with staying in touch and updating your contacts with new information about your business.”
It’s time to collaborate
CVS Health values collaboration in all areas, including supply chain management. The goal of including other corporations and trade and advocacy groups in the ideation session was to establish strategic business partnerships that the company hopes will lead to collaborations that develop cost-effective access to technology transfers and intellectual capital, promote research and subcontracting opportunities, develop procurement and supplier diversity professionals and supply a skilled and diverse pool of suppliers.
“This is a momentum that needs to evolve rapidly as consumer and shareholder expectations increase,” Boratto said. “Industry groups, corporations, third-party certifying agencies and advocacy groups need to stop operating in silos. Together we can break barriers and drive bigger and better results while continuing to make an impact in the diverse supplier community.”