Microsoft’s $2.1B Supplier Diversity Program Goes Beyond the Traditional

Being named National Corporation of the Year at last month’s Northwest Mountain MSDC Awards Dinner was just another feather in Microsoft’s cap.

Microsoft's Glenda Dengah and Fernando Hernandez with their award for National Corporation of the Year at last month's Council Awards Dinner.

Microsoft's Glenda Dengah and Fernando Hernandez with their award for National Corporation of the Year at last month's Council Awards Dinner.

The longtime Council Corporate Member and supporter has won several awards for supplier diversity through the years, from organizations such as the Council and Astra Women’s Business Alliance. The National MSDC also honored Fernando Hernandez, Microsoft’s director of supplier diversity, with a Robert M. Stuart Leadership Award last May.

Hernandez oversees the company’s supplier diversity program, which currently spends $2.1 billion on 1,450 vendors owned by minorities, women, the disabled, and veterans. Since taking the position in 2006, Hernandez has nearly quadrupled Microsoft’s spend on diverse suppliers and led Microsoft’s journey to the Billion Dollar Roundtable in 2008.

“Supplier diversity is good for Microsoft because it aligns with where Microsoft wants to go,” Hernandez said. And where Microsoft wants to go is to the emerging markets globally and the ethnic markets domestically, which tend to be trendsetters.

“If done well, supplier diversity helps you engage those markets,” he added. “You can bring in people who have the cultural sensitivity to help you in the research, manufacturing, marketing, and so forth. And those markets feel more comfortable if they know that the people on the other side understand them and can engage them.

Under Hernandez’s leadership, the program has gone international, with a presence in countries including South Africa, China, Australia, Canada, and the United Kingdom; established partnerships with treasury services, community banks, and legal providers to support suppliers; and holds annual hackathons for university students and for female programmers.

Hernandez next aims to take the program “to the next level” in spend, venture into more nontraditional initiatives, plan a “Shark Tank”-like business competition, and focus on other diverse populations such as gay- and lesbian-owned suppliers. “This is a good time to make the issue of supplier diversity resonate in corporate America,” he said.

The Northwest Mountain MSDC has long been “a strategic partner and feeder pool to bring in qualified MBEs for us,” he said. “What’s been transformative for me is to work with the ‘other Fernando’ [Council President & CEO Fernando Martinez]. It’s a really good partnership because his approach, having worked in corporate America for a long time, is a very strategic and thoughtful way of going to market. He’s garnered the respect of us and other corporations.”

The Council has also provided Microsoft with opportunities to truly engage with MBEs. Hernandez is a frequent speaker at Council workshops and, with Martinez and Board Chair Diane Lin, moderated the most recent CPO Summit.

“Microsoft is a national leader in supplier diversity. The two reasons for this position are the support for this program by Microsoft executives and Fernando Hernandez’s experience, strategic alignment, collaboration, planning, inclusion, execution, and, most importantly, creativity,” Martinez said.

With his experience in procurement and supplier diversity, Hernandez is qualified to give his fellow Corporate Members and MBEs some advice. Corporations, he said, should “approach this space like you would any other business. What is the business balance? What is the strategy? Why are you doing this? Is it just compliance or are you enlightened and you understand the customers of the future?”

Corporations need an executive champion to put together a program, procedures, policies, and goals that have the support of the CPO. Then, they need to “be triangulated with the people on the business side, to own the goals,” he said. Externally, they “have to have a person who is passionate about serving people in the community.”

MBEs, on the other hand, need to “really identify how they should differentiate their firm,” Hernandez said. MBEs should identify goals and targets that are realistic to their capacity. “You have to understand who you’re going after and why—understand your product and services and what the differentiator is. Understand the corporate strategies. The closer you have your alignment, the better it is.” And, he added realize that corporate supply chain executives tend to be risk averse. “If you’re smart, you go in and you allay risk,” he said.

“If we—the corporations—really choose to embrace these suppliers as strategic partners, they will give us the best that they have to offer,” Hernandez said.