Supplier Diversity

Having a diverse supply chain is critical for continued success. Rapidly changing demographics and societal expectations contribute to an ever-evolving business landscape. RAI’s subsidiaries actively recruit and retain diverse suppliers to drive innovation, reduce our supply chain impacts and enhance the communities in which they operate. We’re committed, across the enterprise, to enhance our participation with diverse suppliers.

In order to accomplish this goal, we will:

• Cultivate relationships with diverse suppliers;
• Broaden the pool of diverse suppliers for consideration via the RFP process;
• Reach beyond conventional procurement into the areas of our business that traditionally do not process their spending decisions through the procurement function;
• Invest money to attend national Supplier Diversity symposiums and subscribe to databases where Diverse Suppliers are listed; and
• Engage and educate employees to encourage them to broaden supplier networks.

Supplier diversity promotes an innovative business environment not only throughout the RAI operating companies, but also for their diverse business partners. A diverse supplier base has the following benefits:

Our operating companies commit to ensuring equal-access business opportunities to qualified, high- potential, diverse suppliers. Procurement works with each of the operating companies to determine and execute supplier diversity goals. We track the following diverse supplier categories:

Diverse Supplier Spend (Percent)

Although these more stringent requirements resulted in lower diversity spend than previous years; had we included those who self-report, but are not yet certified, our spend would have been 12.3 percent. We have reaffirmed our goal to reach an 8 to 10 percent spend rate with certified diverse suppliers by 2020. We will continue to systematically engage non-certified minority suppliers to encourage them to obtain their third-party certification, as well as look to broaden the number of minority suppliers with whom we do business.

As we expand our supplier diversity program in 2017, we will update our tracking and reporting metrics to include the following:

• Small business spend by supplier and in total;
• Diversity inclusion in Strategic Sourcing Initiatives; and
• Percent of diverse suppliers in total supply base.

To advance our supplier diversity program, the procurement department maintains relationships with the Women’s Business Enterprise National Council (WBENC), National Minority Supplier Development Council (NMSDC) and Carolinas-Virginia Minority Supplier Development Council (CVMSDC). In 2016, we expanded our partnership with the WBENC and participated in several conferences to seek out Women and Minority Business Enterprises (WMBE).

In 2017, the Supplier Diversity Team plans to advance supplier diversity programs through several initiatives, including:

• Developing relationships with the National Veteran Owned Business Association and the United States Hispanic Chamber of Commerce;
• Growing and developing the number of certified diverse suppliers;
• Engaging and promoting internal communications with business functions to obtain commitment and support of supplier diversity objectives;
• Continuing the development of robust externally facing communication;
• Driving supplier diversity to further inclusion as part of the RAI culture; and
• Promoting and improving certification efforts to drive integrity and compliance.

In 2017, we also anticipate collaborating further with diversity councils, suppliers and other partners to drive supplier diversity throughout our companies’ supply chains.

Read an example of how R.J. Reynolds is engaging a diverse supplier.