Our Supplier Diversity Program is designed to ensure all types of businesses are given the opportunity to build long-term relationships with CVS Health. The program consists of two tiers: Tier I focuses on monitoring our purchases to ensure we have diverse suppliers providing quality goods and services. Tier II monitors the diversity of the suppliers employed by our large-valued Tier 1 suppliers. Our program also supports small business enterprises. Our total spend with diverse suppliers and small businesses on both Tier I and Tier II for 2015 was approximately $2 billion. When we started 2015, our intent was to move closer to our goal of a $1 billion spend on diverse Tier I suppliers by 2017, or 10% of our total sourceable procurement spend. We got closer to both goals in 2015. Our spend for Tier 1 suppliers was more than $913 million, which represents 91% of our 2017 target and just over 8% of our total sourceable procurement spend.
The strength of our program starts with a strong commitment at the top of our company and cascades down through the organization. We integrate supplier diversity initiatives into our overall corporate business plan, including goals specific to supplier diversity. Our supplier diversity team reports to the vice president of procurement, who reports to the CVS Health senior leadership team on a quarterly basis. In addition, the compensation of senior leaders, including the vice president of procurement, is directly tied to successful supplier diversity results. We also require a commitment to supplier diversity from our vendors and potential vendors.
Supplier diversity at CVS Health is aligned with our broader corporate diversity program. Our multi-pronged approach includes encouraging the integration of supplier diversity into our overall procurement practices, partnering with national organizations to identify potential and develop new diverse supplier relationships, and helping to build the capacity of these suppliers. Diversity is also an important component of the pharmacy partners we work with on behalf of our PBM business.
Encouraging Supplier Diversity within Our Organization
In 2015, we broadened the internal reach, visibility and transparency of our supplier diversity program. Our aim was to capture the diverse suppliers we were already doing business with and look for opportunities to attract new diverse suppliers through our procurement process. We did targeted outreach to our merchandising team and appointed supplier diversity champions within our logistics, treasury, legal and print business units. As a result, we identified 33 suppliers who were diverse but not certified. Our Supplier Diversity office has been supporting these diverse businesses through the certification process. Our Supplier Diversity team also hosted its first enterprise-wide, business-building event in New England with the aim of increasing jobs and positively impacting the local community. The day-long event was attended by 164 diverse suppliers, 31 CVS Health colleagues and 19 advocacy group representatives, and offered workshops and an opportunity for one-on-one supplier meetings with CVS Health decision-makers. Of the suppliers we met with, 76% scored medium to high on the probability of doing business with CVS Health.
Partnering with Outside Organizations
We are continually expanding our diverse supplier networks through participation in an array of national diversity organizations and by hosting and attending local and national events.
In 2015, we participated in a number of Supplier Diversity Development Council-sponsored events, including:
- Women's Business Enterprises National Council, in Austin, TX
- National Minority Supplier Development Council, in San Diego, CA
- National Gay Lesbian Chamber of Commerce, in Fort Lauderdale, FL
- US Pan Asian American Chamber of Commerce, in Baltimore, MD
- Greater New England Minority Supplier Development Council and Center for Women & Enterprise, in New England
We also held two construction business building events in Baltimore, MD, in support of new store builds and remodels, and in Florida, in support of the expansion of CVS Pharmacy y más and our Navarro retail stores.
Building Capacity of Diverse Suppliers
In 2015, CVS Health launched its Executive Learning Series for Diverse Suppliers, designed to build the leadership skills diverse suppliers need to secure contracts with large businesses. Sponsored by CVS Health and created in partnership with Rhode Island’s Roger Williams University, the professional development program offered 160 hours of training over an 18-week period to leaders of 10 diverse businesses from across the country who applied and were selected to participate. The program helped participants broaden their skills in a variety of areas, including management, technology, finance and human resources. It was developed following the successful 2014 collaboration between CVS Health, Roger Williams University and National Grid.
Diverse Retail Pharmacy Program
Diversity is also an important component of the pharmacy partners we work with on behalf of our PBM business. Our Diverse Retail Pharmacy Program encourages diverse-owned retail pharmacies, many of which are independently owned, to become certified with CVS Health. The certification allows them to expand and establish potential business opportunities with our company, as well as become qualified for targeted government programs. In order to encourage growth and participation, CVS Health provides guidance and assistance to potential partners about the certification process.
At the end of 2015, we had more than 100 retail pharmacy partners in the program and had spent more than $300 million with them during this year.
Achieving Recognition for Supplier Diversity
In 2015, CVS Health, again, was honored to be named again as one of America’s Top Corporations for Women Business Enterprises from the Women’s Business Enterprise National Council (WBENC). We were also named Corporation of the Year by the Florida Minority Supplier Diversity Council and by the Center for Women and Enterprise in New England. We were also recognized as Top Supplier Diversity Program by Black EOE Journal, one of America’s Most Admired Corporations for Supplier Diversity by Minority Network USA Magazine, among the “Best of the Best” by Professional Woman's Magazine and in the Top 100 Corporations “Best of the Decade” by Women's Enterprise USA magazine.