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About this book

This book provides an in-depth view of supplier diversity programs and how they have contributed to the meteoric rise of minority businesses. Incorporating expert advice from supplier diversity practitioners as well as empirical data, it looks at the emergence of supplier diversity programs, how to make them effective, and their future.

Supplier diversity ensures an open and inclusive competition for contracts during the procurement process, and the use of vendors of different backgrounds fosters a better understanding of a diverse customer base. Over the last decade the number of minority-owned firms in the US has increased 38 per cent. As the number of minority entrepreneurs continues to rise, these business owners have recognized the need for B2B opportunities, and supplier diversity programs that create the fastest path to scale and grow a small business.

Porter highlights the history and impact of these programs as sources of business education as well as pipeline development for minority and women entrepreneurs. Finally, readers interested in levelling the playing field in business have a go-to source.

Table of Contents

Frontmatter

Creation, Evolution, and Emergence of Supplier Diversity Programs

Frontmatter

1. Supplier Diversity Programs in the Public Sector

Abstract
When supplier diversity programs began, the nation was ripe for economic change and inclusion. The federal government is the largest, longest-running, and most comprehensive program for diverse businesses. However, many other industries that are part of the public sector have formalized their processes and efforts to become viable and lucrative business partners for small and diverse businesses to consider. According to Brian Tippens, noted supplier diversity expert and Director, Global Procurement Sustainability and Innovation for the Hewlett-Packard Company, “many companies’ supplier diversity programs in the United States are built around a compliance core. These programs are designed to help ensure that the company meets compliance requirements mandated by its public sector customers. The US federal government requires that any company that provides goods and services to it, above a certain mandated minimum level, meets aggressive goals of subcontracting spend with a list of enumerated categories of underrepresented small businesses. These categories include ethnic-minority-owned, women-owned, and veteran-owned businesses.
Kathey K. Porter

2. Supplier Diversity Programs in the Private Sector: Corporations

Abstract
Corporations are beginning to use supply chain management as a strategy for increasing profitability, growth, cost containment, and customer value. Supply chain management and supplier diversity share benefits such as enriched reputation, competitive advantage, morale boosting, and innovation; stakeholder relations also accrue from both supplier diversity initiatives have demonstrated a direct impact on consumer purchasing decisions, whereas historically they were presumed to have an indirect impact. This means that such initiatives also have return-on-investment potential. Firms need both resource capital and institutional capital for a long-run competitive advantage, and future research should study the combined effects of both as a source of competitive advantage for firms.
When looking beyond finances to social responsibility, supplier diversity is often seen as a testament to a company’s commitment to producing a socially responsible impact in local communities. Supplier diversity programs also meet customer mandates, leverage governmental initiatives, and comply with federal supplier requirements.
Kathey K. Porter

Driving Entrepreneurship

Frontmatter

3. Impact of Supplier Diversity on Startup Activity and Small Business Growth

Abstract
According to the Chartered Institute of Procurement & Supply (CIPS), “Supplier development is the process of working with certain suppliers on a one-to-one basis to improve their performance (and capabilities) for the benefit of the buying organization and can take the form of a one-off project or an on-going activity that may take some years to come to fruition.” Forward-thinking companies are leading the way in multicultural marketplaces by infusing supplier diversity into their main business processes in unique and creative ways. Many of those who have developed strong relationships with minority business owners are reaping the benefits.
When supplier diversity began, it was a new frontier for everyone. Organizations and entrepreneurs alike learned as they went. The focus was very transactional, and companies used basic metrics to quantify their success.
Kathey K. Porter

4. The State of Diverse Suppliers

Abstract
For many, entrepreneurship is the American Dream. Everyone loves a good “bootstrapping” story and nothing demonstrates that more effectively than taking an idea and turning it into a growing, thriving enterprise and creating wealth for the entrepreneur and employees. For millions of Americans, starting and owning a business has been the route to success, security, and providing for one’s community. This is particularly true for people of color, who face disparate unemployment rates and obstacles breaking through the “good old boys network” to secure good, stable jobs.
An economic downturn or recession might not seem like the most opportune time to start a business, but depending on the type of business, a recession can actually be the ideal time to take the plunge and launch a new company.
Kathey K. Porter

Designing an Effective Supplier Diversity Program

Frontmatter

5. Foundations for a Supplier Diversity Program

Abstract
Since its inception during the 1970s, the supplier diversity initiative has faced tremendous obstacles in replacing existing practices in the ways companies work with suppliers. Legal challengers have described the changes as “reverse discrimination” or as a violation of the Equal Protection Clause of the Fourteenth Amendment of the US Constitution. Meanwhile, diverse business owners have raced to acquire the elusive “experience” that is often used as an excuse to overlook them. Further, the perceptions of increased risks and decreased quality by using diverse businesses, hidden prejudices, and conscious and unconscious biases have made work for both, supplier diversity practitioners and diverse businesses, an uphill battle. Over time, however, companies have come to realize that supplier diversity and working with suppliers that may resemble their customers offer a more direct return on investment and tangible benefits to the organization through increased market penetration, increased spend with small and diverse vendors, and increased access to diverse markets.
Kathey K. Porter

6. Best Practices for a Successful Supplier Diversity Program

Abstract
If you were to ask a group of supplier diversity professionals what makes their program successful, you would likely get very different and possibly conflicting answers, depending on the era they entered the field, their programs’ stage of maturity, their industry, their experience, or the culture of their organization. These factors make identifying definitive elements of a successful program arduous, but they also make the search fascinating, as there is no single recipe for success. While some process and policy consistency is required, supplier diversity programs must be adapted to reflect the cultural norms of the organization; the availability and capacity of viable businesses; and the expectations of their customers, leadership, and stakeholders within the community in which the organizations operate.
According to Brian Tippens, the chief diversity officer for Hewlett-Packard and a noted subject-matter expert on global diversity and sustainability, “There is no global supplier diversity “cookie cutter-method” for implementation.
Kathey K. Porter

7. Common Mistakes in Design and Implementation

Abstract
A study by the research firm The Hackett Group, a global leader in business advisory, business benchmarking, and business transformation consulting services, indicates that many companies make several common errors in managing their supplier diversity initiatives. To start, too few companies focus on developing programs that further their corporate goals. Instead, they focus on hitting certain numbers or gaining recognition from their customers or from other companies within their industries. These are certainly not bad aspirational goals, but they may not provide all the value that a more comprehensive approach might deliver. And even when programs align with corporate objectives, management often fails to ensure alignment at the operational level.
Hackett’s study also found that most programs rely on overly simplistic measures to evaluate their programs. For instance, about 90% of organizations track their percentage of spending with diverse suppliers. However, fewer than half of the study participants track the percentage of diverse suppliers in the total pool of suppliers.
Kathey K. Porter

Helping Entrepreneurs Use Supplier Diversity Programs to Scale

Frontmatter

8. Certifications and Other Tactics to Help Small Firms Leverage, Differentiate, and Win!

Abstract
Small businesses, especially minority-owned small businesses, are well placed to lead the United States in economic growth in the coming years. The combination of a growing minority population and the number of government-sponsored small business assistance programs makes this a great time to be a minority-owned small business. In fact, companies can do quite well for themselves if they are poised to take advantage of the increased spending power of minority communities and the prevalence of supplier diversity programs.
As of 2007, there were around six million minority-owned firms in the United States. The truth is that the minority population is large, both in terms of size and business influence. Supplier diversity programs and the accompanying government programs designed to assist disadvantaged businesses represent a strategic business opportunity for minority-owned businesses. Getting certified in one or more of these programs is the first step, but following through by delivering great value is what keeps your business in the game in the long term.
Kathey K. Porter

9. Community Engagement: Partnerships and M.O.D.E. (Mentorship, Outreach, Development, and Education)

Abstract
The Chartered Institute of Procurement & Supply defines supplier development as “the process of working with certain suppliers on a one-to-one basis to improve their performance and expand capabilities for the benefit of the buying organization.” Supplier development can come in many different forms, from informal initiatives to a formally structured program. There are numerous examples, use cases, and best practices that demonstrate a broad spectrum of supplier development initiatives to fit any size organization or supplier diversity program.
According to CVM Solutions, corporate supplier diversity programs must go above and beyond spend metrics, but in an era of continuous improvement, supplier diversity programs—like most business units within an organization—must figure out how to evolve to remain a resource for the businesses they are servicing. Most do this by driving an even more robust program to promote economic growth through supplier development.
Kathey K. Porter

10. Benchmarking, Quantifying, and Reporting: Measuring Success

Abstract
From a corporate perspective, the success of a supplier diversity program goes far beyond an organization’s diversity footprint. It has been well documented that a well-managed program does indeed deliver results and has a real and tangible economic impact. We all understand that the objective of a supplier diversity program is to ensure equity of procurement funds dispersed by an organization, but it is also important to understand the economic effects on the communities in which the programs operate. The human element of these programs should be at the forefront of everyone’s mind in the supplier diversity community.
To measure, track, and report on the economic outcomes and effectiveness of a supplier diversity program, it is crucial that the data collected is valid and comes from a solid and trusted source. A good data plan allows a program to be assessed objectively.
Kathey K. Porter

The Future of Supplier Diversity Programs

Frontmatter

11. The “New” Business Case

Abstract
The US Census Bureau has repeatedly confirmed that consumers are becoming more diverse, and companies are taking notice. Ford Motor Company, for example, has been a leader in supplier diversity spending in the automotive industry for years. Ford also benefits from the diverse thinking and fresh ideas born from these relationships. Ford’s diverse suppliers have provided substantial contributions to its growth in the form of new product and technology development, from sustainable products to fuel-efficient vehicle technologies. Ford recognizes how vital small and minority-owned businesses are to the US economy and to the identity of the Ford Motor Company. Ford understands and promotes within its company the direct and positive economic impact that minority business procurement has on the communities where it does business. For them, investing in these minority-owned businesses helps build brand loyalty from the companies and communities that directly benefit from the jobs and the wealth created by their investment in supplier diversity.
Kathey K. Porter

12. From Social Issue to Business and Economic Imperative: The Impact of Changing Demographics

Abstract
According to the US Census Bureau, more than half of all Americans will belong to a minority group by the year 2044. This major demographic shift will have a significant impact on every aspect of the country. Improving minority access to business opportunities will be more than a social issue; it will be an economic imperative. Because entrepreneurship and small business ownership are the greatest drivers of wealth and job creation in the United States, access to employment and entrepreneurship among minorities in the future will be exponentially more important to the health and sustainability of the US economy.
In today’s fiercely competitive global business environment, organizations are faced with a harsh new reality: The antiquated supply chains of yesteryear are no longer sufficient for addressing the relentlessly shifting demographics within the marketplace or for capturing a qualified cohort of uniquely talented, diverse professionals
Kathey K. Porter

13. The State of Supplier Diversity Programs

Abstract
According to CVM Solutions, the supplier diversity industry has come to a fork in the road. One path leads to a place where the supplier diversity concept is firmly entrenched in the public and private landscape, where most companies and government agencies strive to increase their diverse spend year over year. The other path leads to a place where companies do not take advantage of the growing potential of supplier diversity initiatives. Such companies will find themselves at a competitive disadvantage in the coming years.
CVM Solutions set out to discover what supplier diversity professionals are experiencing with their organizations’ programs—the challenges they are facing, the ways that they manage and measure their programs, their thoughts about where supplier diversity is headed. CVM Solutions submitted a survey to supplier diversity professionals. These professionals have ringside seats to the trends that shape the industry and have a say in the policies and programs that will usher the industry into the future.
Kathey K. Porter

14. Supplier Diversity Program Resources: For Practitioners and Entrepreneurs

Abstract
As the supplier diversity industry has grown, so too have the availability and the depth of resources designed to help supplier diversity programs and entrepreneurs interested in interacting with them. The list below, though not exhaustive, is a great place to start:
Kathey K. Porter

15. Conclusion: The “Next” Supplier Diversity Disruption: Supplier Inclusion

Abstract
Supplier diversity has passed through several phases since its inception. It has moved from the “compliance” phase to the “right thing to do” phase to the “business case” phase. As business evolves and as demographics change, it is likely that there will be another seismic shift in the arguments for supplier diversity. It may be the case that the next disruption will take the arguments full circle, so that supporters of supplier diversity again tout the transformation of communities as the prime justification for supplier diversity. Communities are strengthened and renewed when successful, diverse entrepreneurs support employment, contribute to the tax base, and improve the economic health of communities by increasing income and consumption. Increasingly, corporate leaders want to know that their economic support is partly responsible for these transformations.
Economists talk of the circular flow of an economic system. One person’s spend is another person’s income, and the interactions between buyers and sellers have long-term, measurable effects.
Kathey K. Porter

Backmatter

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