In 2020, the world watched as racial unrest unfolded across the U.S., hitting a crisis point midyear. This political and powerful movement incited action, inspiring not only individuals but also Fortune 500 companies to reflect and evolve. Though already in the middle of an 18-month journey to further develop its supplier diversity program, PepsiCo’s CEO Ramon Laguarta engaged his team, and years’ worth of data, to go bigger and do more. Motivated by recent events, he led the charge, releasing a personal, passionate statement — and promise — of how PepsiCo would do right by its customers, workforce and suppliers.
Its robust racial equality commitment made headlines nationwide: “PepsiCo announces a more than $570 million initiative over 5 years to increase manager representation within our workforce, support Black and Hispanic-owned businesses, and uplift Black and Hispanic communities.” This bold statement represents the company’s determination for evolution and progression.
PepsiCo’s supplier diversity program started in 1982, allotting $5 million in annual spend to women- and minority-owned businesses. Like most supplier diversity programs, it launched on the basis that it simply was the right thing to do.
“Almost four decades later, what we can tell you is that it’s not only the right thing to do but it also provides a competitive advantage,” says Paige Adams, senior manager of supplier diversity at PepsiCo. “We experience innovation, nimbleness and creativity when the diversity in our supply chain reflects the diversity in our workforce as well as our consumer base.”
The multibillion-dollar food and beverage company now partners with women-, minority- and veteran-owned businesses; people with disabilities and members of the LGBTQ community in everything from marketing to manufacturing. For years, PepsiCo has worked with Burns & McDonnell on various facility and packaging and processing line projects throughout the country. Sharing similar values, culture and commitments, both companies have seen firsthand the type of talent and results that a diverse supplier base offers. That steadfast support also extends to the communities they serve.
With a clear understanding of the importance of diversity, equity and inclusion in every aspect of business — and life — PepsiCo has taken strides to educate internally and evolve its supplier diversity program into what it is today.
After the CEO’s announcement in June 2020, PepsiCo created a companywide committee to drive key performance indicators for its three core pillars — people, business and community — as part of its racial equality journey. A supplier diversity e-module recently was completed, promoted within PepsiCo University, or PEP U, an online educational platform containing leadership development learning resources. The module became a requirement for global procurement and new hires in 2021. Launched in conjunction with a Global Learn Together webinar, this training module has been warmly welcomed, helping clarify terminology as well as the process for identifying diverse suppliers, engagement tactics and more.
Unconscious bias training, led by a diverse supplier, also was introduced in 2020 and has continued to gain momentum through 2021 as a requirement for director-level employees and above. Additional trainings were released for nondirector levels and front-line associates as well. These all-inclusive, thoughtful strategies have positively affected the hiring process, and current workforce numbers reflect that.
As a corporation, the leadership team continues to focus on the tangible value that a diverse mix of suppliers brings to each project, resulting in strong revenue streams and even stronger communities. From a procurement standpoint, sourcing with diverse-owned companies opens the door for unique perspectives, ongoing innovation, newfound relationships, increased productivity and quality, and cost-saving measures. As PepsiCo looks to double its annual run rate with Black-owned businesses and support steady growth with Hispanic-owned businesses, it is equally dedicated to finding a way to sustain diverse spend, including pursuing partnerships that can fill current gaps or offer the potential for a joint venture. The company also looks to engage with minority-owned investment firms that have the capacity and capital to expand into new areas where business opportunities exist.
“Day in and day out, I can point to diverse suppliers who — because of their nimbleness, connections to community and unique perspectives — have delivered on our bottom line and have made our products better,” Adams says. “If you know nothing else about PepsiCo, you know we have a commitment to diversity. We are loud about it, and we try to make that part of the consumer experience every time.
“What our external statement and increased commitment did is reenergize the journey. What is great about that, and what I love most, is that I think it’s going to positively impact our culture in the process. Eventually, everyone at PepsiCo will know what supplier diversity means and understand why being inclusive in your supply chain drives value. If we keep up this momentum, we can effect transformational change.”
This post is part of Together By Design, a quarterly business diversity newsletter published by Burns & McDonnell to advance a community of inclusion. This newsletter features stories of great opportunity, leaders who bring out the best in others, innovative approaches, and diverse perspectives that shape the business community and the world at large.