Managing Supplier Diversity

Expanding our supplier diversity base is essential to Masterfoods USA’s ability to compete effectively in the marketplace of the future.

A diverse supply base provides MFUSA access to:• new ideas• expanding markets• growing consumer base• consumer insight• cost-competitive inputs• diverse business solutions

In order to realize these benefits, it is imperative to create and maintain an environment that enables every associate to fully contribute to the achievement of our corporate diversity goals.

Through Supplier Diversity, we create value for our consumers, customers and stakeholders in communities where MFUSA conducts business.

Masterfoods USA Masterfoods USA Supplier Supplier DiversityDiversitySupplier Diversity Defined

A fundamental business strategy helping to build, expand, penetrate and service growing markets. It is fueled by a set of processes that strengthen business relationships with small business concerns and companies owned, operated and controlled by minorities and women.

Supplier Diversity Importance• Demographic shift - minorities/women are ever

increasing percentage of total population• Supplier participation reflective of diverse business

community• Encourages economic development in federal, public

and private sector marketplaces• Critical to sustained economic engagement, growth and

success in global economy

Supplier Diversity Drivers• Minorities fastest growing segment of population• Women-owned businesses employ 20% of US

workforce• Minority purchasing power increasing• Women (86%) maintain high product loyalty• Minorities voting with their dollars• Women (76%) make conscious purchase decisions

based upon corporate reputation

Limited Supplier Diversity - Business Risks • Missed market growth opportunity• Negative external perception• Potential customer contract impact/loss

Supplier Diversity Reporting

Federal regulations require that suppliers and contractors (those conducting business with the Federal Government) are to engage diverse business enterprises through subcontracts in all commodity, goods and services categories with subcontracting opportunities.

Public and private industry customers follow this same practice.

First Tier Suppliers

A first-tier supplier provides products/services to MFUSA (prime) and invoices MFUSA directly for the goods/services rendered.

Second Tier Suppliers

A second tier supplier provides the products/services to the First Tier Supplier and invoices the first-tier supplier directly for goods/services rendered.

Benefits of First & Second Tier Sourcing• Build positive brand and corporate image• Enhance customer and brand loyalty• Additional support for regulatory/legislative agendas• Quality, service, price and technology improvements• Access to growing market of diverse consumers

IdentifyCriteria& QualifySuppliers

AnalyzeSpending & MarketsChoose

Strategy

Plan theP.O.’s

eRFxEvaluateNegotiateContract

Fulfill &Settle

Orders

Monitor & ImproveSuppliers

Identify Needs& Specs

Supplier Diversity

Strategic Sourcing Process

Supplier Review Process

Step 1Review spend by individual sourcing group to maximize specific opportunities.

Step 2Analyze incumbent supplier classifications for growth opportunities and/or scalability.

Step 3Based on MFUSA priority, target a specific sourcing group.

Step 4 Collaborate with Supplier Diversity Group to profile sourcing group based on business requirements and diverse classification hierarchy.

Step 5 Utilize sourcing resources (websites & databases) to identify, quantity and evaluate potential new diverse suppliers.

Step 6Collaborate with Supplier Diversity Group to develop a plan supporting increased diverse supplier participation and integration. Identify specific steps, time-lines, and key stakeholders.

Terminology and Terminology and ResourcesResources

http://supplierdiversity.masterfoodsusa.comFederal Government Classifications and Goals

SDB - Small Disadvantaged Business (Minority-Owned) • At least 51% owned and controlled by socially and

economically disadvantaged individuals• Must be SBA certified• Government Goal: 5% of total spend• www.ccr.gov or www.sba.gov

HUBZone Small Business• Located in “Historically Underutilize Business Zone

(HUBZone)” • 35% of employees must reside in HUBZone area • Must be certified by SBA• Government Goal: 3% of total spend• www.ccr.gov or www.sba.gov/hubzone

VOSB - Veteran-Owned Small Business • Government Goal: 3% of total spend• www.ccr.gov or www.sba.gov/vets

SDVOSB - Service-Disabled Veteran-Owned Small Business

• Government Goal: 3% of total spend• www.ccr.gov or www.sba.gov/vets

WOSB - Women-Owned Small Business • Self-certification• 51% woman ownership and control • Government Goal: 5% of total spend• www.ccr.gov or www.sba.gov/hubzone

SB - Small Business• Must meet Federal Size Standards (consult SBA for

proper designation)• Government Goal: 23% of total spend• www.ccr.gov or www.sba.gov/size/indextableofsize.html

Commercial & Public Sector Classifications

MBE - Minority Business Enterprise

• 51% minority ownership and control• May be self-certified; prefer third party certification• National Minority Supplier Development Council

(NMSDC) certified• www.nmsdc.org

WBE - Women-Owned Business Enterprise• 51% woman ownership and control• Can be self-certified, but encourage third party

certification• Women Business Enterprise National Council

(WBENC) certified• www.wbenc.org

MFUSA Supplier Diversity Website

On-line enabler for buyers to locate potential diverse suppliers and/or retrieve designated information (e.g. company name, product or service description, SIC Code, NAICS Code, State or Business Type Code). Additionally, the site provides on-line supplier registration that is accessible to all suppliers for input of supplier profile data and related certification credentials.

To locate all information pertaining to MFUSA’s Supplier Diversity initiative, you may access the following site directly or through GBD:

http://supplierdiversity.masterfoodsusa.com