Taking Supplier Diversity to the Next Level

MWBE (Minority/Women-owned Business Enterprise) procurement has a direct and positive economic impact on the communities where corporations do business, as diverse suppliers tend to hire more Black, Latino and other underrepresented employees than their white, male counterparts.

"We want to make sure our supply base is as diverse as our internal talent," says PepsiCo's Supplier Diversity Director Chris Knox. "And when supplier diversity is integrated into the strategic-sourcing process, it makes it much more sustainable." In 2009, PepsiCo's annual supplier-diversity spend was $1.3 billion (Tier I and Tier II), up 4 percent from the previous year.

"We've had some diverse suppliers that, unfortunately, didn't make it through the financial crisis," admits North American Procurement Leader Roger Larsh. "So one of the things we've had to do is put more rigor around … putting stronger plans in place to successfully … support our suppliers and help them grow with us." Over the past year and a half, the agribusiness has worked closely with a new WBE to develop a strategic plan that's helped it expand to the point where it's now doing $2 million a month in business with Cargill and employing between 30 and 40 people.

Cargill, which spent close to $300 million with North American MWBEs this past year (or 15 percent of total spend), regularly hosts the local supplier-diversity council events at its facilities while sharing information about its sourcing initiatives. "This is much more productive than saying 'Go look at our website,'" says Larsh.

So what have we got? "Diversity is good, so we should seek out Minority/Women-owned Business Enterprise suppliers and give them training and loan them money because Diversity is good."

Huh?

ROI? Bottom line? Minority vendors give us this, vendors of "the other" only give us that? Is this about color of skin or content of character? As I've told these Diversistas before, any company that hires and contracts by sex and skin color deserves exactly what it gets.

Guys,

Supplier Diversity is about economic growth, about “GREEN” ($$) as someone mentioned above. It is not affirmative action, although it can be easily confused as such because of the name.

Consider:
- Minorities are a growing segment of the population. Therefore, they represent a growing potential market for companies that recognize it - the ones that recognize it early will have an opportunity to capitalize the most.
- For a company to better address customer needs, it should be able to better understand the customer. Companies that incorporate diversity in their employee and supplier base, to mirror the diverse make up of their customer base, will be better able to understand and respond to customer needs.
- Supplier Diversity is about: Minority-owned, Woman-owned (including white), Veteran-owned (including white), Historically-underutilized businesses (HUB - businesses in economically depressed areas - including white), Small businesses (with fewer than a few dozen employees - including white), and even Gay-Lesbian-Bisexual-Trans-gender owned businesses (including white). It is not about race. It should perhaps be referred to as Supplier “Difference” to avoid the understandable race connotation.
- A great portion of innovations come from small businesses (regardless of race). Companies that recognize this will have more opportunities to capture new ideas, and come up with innovative products and services.
- Companies don’t have to trade quality and cost in the name of diversity. There are diverse suppliers that can compete in quality and cost. The strategic long-term benefits should also be considered, as aligned to specific company goals and vision.
- In the end, spending in diverse businesses drives economic development for everyone: as these businesses grow, jobs are created, poor communities improve and have access to better education and health, and companies can target a growing market segment with increasing purchasing power.

It’s all about business, about the economy. It makes companies more competitive. Companies that chose to ignore its economic and strategic value will inevitably lag behind.

Supplier Diversity has already been recognized by major corporations, as well as federal and local governments, as a strategy for growth. Many of these companies and governments have already tasted the benefits. It’s an unstoppable trend at this point. How long you will wait to move past the obsolete “Affirmative Action” stigma, and realize the benefits of Supplier “Difference,” is up to you.

"...For a company to better address customer needs, it should be able to better understand the customer...."

So, I cannot sell my product to nonwhites because I am a white person? I cannot understand their "needs" due to my hue?

That's racist.

If you want to give your clients great service, then that should simply fall under the guise of "excellent customer service", not racial pandering.

Actually, your entire post is a treatise political correctness. Sure, I want businesses to thrive,I want innovation, I want everyone to be gainfully employed. BUT I DO NOT WANT THE GOVERNMENT TO FORCE THAT UPON ME. This is a fundamental theme of conservatrism.

There are many classic marketing examples to illustrate this point, and again it is not about the color of your skin:

- Take the launch of the Chevy Nova. It did well in the US back in the day, but when it was exported to LatinAmerica sales were dissapointing. It turned out Nova, when read in Spanish, means “it does not go.” While some people got past this issue, others simply preferred to drive something else with a better name and not be the subject of ridicule.

- Another example, Coke and Pepsi launch in India in the 70s. They had a really tough time making it through, and who would have thought? - most people like Coke or Pepsi, or both. It turned out Indians are more oriented (or were at least) toward fruit based drinks.

But we don’t have to go that far. Send a white New Yorker to do business in rural Texas with a white rich Texan. There are differences that the New Yorker may not be aware of. Or imagine the opposite scenario. There are no differences in the color of the skin, but there are many other differences!

If the New York firm had employees representative of their Texan customer base, they would have an advantage over competing firms.

How could you provide Excellent Customer Service if you didn’t know that people from some areas or cultures prefer to be treated more warmly, while others may really just care about quality and speed of the product/service and nothing else?

You can sell whatever you want to whoever you want, but if you could understand where they were coming from and what they had in mind, you would have much better chances at closing the deal. That’s all.

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