Supplier diversity is a proactive business process that seeks to provide historically disadvantaged suppliers equal access to purchasing opportunities. It promotes supplier participation reflective of a company’s diverse customer base and the diverse business community.
The business case for a company to have a quality supplier diversity program includes the following:
■ Any company that expects to do business in this millennium has to understand the demographics of its customer base.
■ The minority population is the fastest growing segment in the U.S. — projected to be 50 percent as early as 2020.
■ Minorities and female consumers are also the fastest growing segment in the U.S. marketplace and they are loyal customers.
■ Minority and Women Business Enterprises represent a significant and growing proportion of the economic pie.
■ Companies that embrace diversity and establish early successes in this area will have a competitive advantage in the future marketplace.
For the last 12 years, the Consortium of African American Organizations has been involved in many supplier diversity efforts. CAAO has seen what works well.
Building your program
Here are five things a company should have in place to build a successful supplier diversity program:
1. Corporate commitment — The only way any supplier diversity program is going to succeed for the long term is to have a written commitment from the CEO all the way to those in the purchasing department. A company diversity policy should be put into place that reflects the commitment to the corporation to work on having a qualified diverse supplier base.
2. Analyzing the current situation and setting goals for improvement — Before a company implements its supplier diversity plan, it should analyze where the company stands in doing business with MWBEs locally and nationally. A set of reachable goals should be established that allows the company visible and increased improvements in its MWBEs spend. The company should communicate its supplier diversity goals both internally and externally.
3. Involvement of community based organizations — Each community has organizations that work closely with MWBEs. This includes organizations that provide training, networking opportunities and financial education/assistance.
In Northeast Ohio, groups like CAAO, the Urban League of Greater Cleveland, the Minority Business Development Agency, the National Association of Women Business Owners, the NAACP and the Hispanic Business Association are examples of some of the organizations that help corporations connect with qualified MWBE vendors.
4. Creating mentor/mentee training programs — Many successful supplier diversity programs have developed mentor programs for both qualified MWBEs and those who are one or two steps away from qualifying. These programs can be designed to help the MWBE with coaching, guidance and training to better position the MWBEs for new business opportunities and overall growth.
5. Monitoring progress — This is an important part in any supplier diversity program that is trying to set goals. A designated individual should report on a regular basis the actual usage of on-site diverse workers on major projects, as well as the different departments (not just construction) reporting on a variety of contracts being sent to and won by diverse vendors. ●
William Holdipp Jr. is the assistant executive director of the Consortium of African American Organizations. For more information, visit www.caao.net.