When you hear that a company has a diversity program, that means there is a strategy to hire people from a variety of backgrounds, right?

Well, that's right, but it's not the complete answer for some metro Atlanta companies. For many firms, an important component of the plan is to increase the diversity of its suppliers to include women and minority-owned firms. And companies aren't just diversifying suppliers to generate good feelings. They're doing it because it's good business.

"That's because, if you look at who is buying products, it's a diverse group," said Ella Koscik, CEO and owner of MDI Group, a health care services and information technology company. "If it's just a do-gooder program, then it won't last."

Big companies tend to benefit from better product knowledge and through the support of a broader customer base, Koscik said.

"People like to support people who are like them," she said.

A big challenge for smaller companies that are owned by minorities and women and have supplies or services to sell is to get noticed by procurement managers at large companies.

The solution? Plenty of networking.

George Lottier, head of the Georgia Minority Supplier Development Council, said that during his seven years as president of the organization the number of industry-specific committees has expanded. While that may not sound very important, the chance for a deal greatly increases when business people interested only in transportation are grouped together, instead of being thrown in with information technology professionals and real estate agents, as what had happened in the past.

Lottier joined the council 20 years ago as a supplier of hard plastic souvenir cups. Over those two decades, he said, the organization has become more effective at forming alliances with corporations and has become more diverse.

The council focuses on matching minority business enterprises with private and public sector contract opportunities. Lottier said that there is a growing awareness that working with minority suppliers makes business sense.

"Some corporate buyers come in with experience with minority buyers and they're already comfortable," Lottier said. "But there is still a perception out there that if you're going to do business with minority suppliers it's going to cost you more."

For evidence to the contrary, Lottier and others point to a report by the Atlanta-based research firm The Hackett Group that concludes a company can expand its supplier diversity program without incurring higher costs or adding administrative burdens. The report also suggests that using minority-owned suppliers may result in more revenue in the future, as customers concerned with corporate social responsibility hear about a company's diversity program.

Getting in the door

Supplier diversity initiatives give smaller companies such as VantagePoint Staffing Solutions in Smyrna a better chance at winning contracts from big companies.

Dawn Gehring, one of two women principals at VantagePoint, said that shortly after the company was formed last year the owners obtained certification as a woman-owned business from the Women's Business Enterprise National Council and the city of Atlanta with the hope that recognition would translate into more opportunities.

"It's not a golden ticket, but it certainly allows us to network with suppliers," Gehring said. "It allows us to bid on business with larger companies with strong supplier diversity programs, but you still have to perform and you still have to provide a service."

At Atlanta-based United Parcel Service, a 15-year-old supplier diversity program has earned the company accolades as it gained momentum in recent years. James Mallard, the delivery company's vice president of procurement services, was named Executive of the Year at the Georgia Minority Supplier Development Council's 2007 awards presentation.

"What it's all about is to make sure we have fair representation in our supplier network," Mallard said. "The benefits are obvious. UPS is in the business of supply chain. As we participate with diverse organizations, they ship packages with us and they do storage with us."

Making connections

While Lottier and others on the supply side work to play matchmaker between contractors and those with contracts, UPS is working to make connections. Mallard says he and his colleagues regularly search the databases of Lottier's organization, as well as the Women's Business Enterprise National Council, for new potential suppliers of goods and services.

"A second source is through networking and going to functions where companies come together to sell and market their product," Mallard said. "And the last component is to network through the local chamber of commerce, where we monitor new companies coming in."

Mallard declined to say precisely how large a percentage of UPS suppliers are owned by minorities or women, but he did say that the average year-to-year increase is 15 percent since 2005. And, he predicted, in two more years minority and women-owned businesses will account for about 8 percent of the company's total procurement spending.

Koscik, the MDI Group owner, said through seminars and other forms of outreach she's letting potential suppliers know that there is some homework to be done in order to win over procurement officers at large companies.

"We've had to raise the bar and said, 'You've got to go in with a level of knowledge you're not used to,' " Koscik said.

And after the potential supplier has become familiar with a company's core business and is ready to make a pitch, the chances of success are greatly enhanced if the targeted procurement manager is working for a company that has clear direction from the top that diversifying suppliers is a priority.

"The programs that are doing well are the ones that report to the CEO," Koscik said. "The most successful companies today are the ones that take it very seriously. And now the mid-market companies are starting to care about this, because of push-down from the big companies."

UPS is one of several large Atlanta companies that take supplier diversity seriously enough to get top management involved. Mallard notes that top UPS officials, including the CEO and chief counsel, sit on a steering council to provide top-down support.

"It's not just a program, it's a process," Mallard said.