Supplier Diversity For Dummies. Kathey K. PorterЧитать онлайн книгу.
“help landscaping and janitorial companies.” Supplier diversity has always done a good job of building positive relationships and converting them into advocates and allies. It has to continue to influence this decision making to earn its seat at the table and level up how people perceive supplier diversity.
An emphasis on conviction, compliance, and courage: I saw this three C’s idea for another industry but thought it was very applicable. Supplier diversity must lead with conviction to communicate why it’s doing what it is and why that’s important for the organization. It has to educate on compliance — the processes that are there to protect the organization and not expose it or the program to risk. Finally, supplier diversity has to have courage to continue to push for change so that it can add value and create impact that shapes the community.
Measurement of economic impact: Externally, supplier diversity has to be able to tell its story of the economic impact it adds to the small and diverse businesses, the organization, and the community at large.
Examining External Drivers Redefining Supplier Diversity
As I discuss in Chapter 2, the groundwork for supplier diversity as it exists today began in the 1960s. In its early days, corporations’ motives for taking on supplier diversity may have been a little self-serving, in that they were likely more concerned about preserving their standing in the eyes of the government and maintaining their own contracts than with helping small and diverse businesses succeed. It wasn’t until the 1990s (the Right Thing to Do Era) that organizations really began to dissect their efforts and view supplier diversity as a strategic component to their overall operations. In fact, using Google Ngram, Figure 1-1 illustrates how frequently the term supplier diversity has been used in book titles, which directly coincides with key periods in its existence.
FIGURE 1-1: Supplier diversity title frequency.
Supplier diversity is once again experiencing a resurgence in organizations. In the following sections, I take a look at some of the societal factors driving this resurgence.
Growth of minority entrepreneurship
The desire to achieve the American Dream allows entrepreneurship to experience explosive growth with minority populations. Supplier diversity as a strategy makes business-to-business (B2B) and business to government (B2G) contracting a viable and achievable path for many entrepreneurs. The federal government alone is required to set aside at least 23 percent of its total spending specifically for small and diverse businesses.
In 2017, the nation’s minority nonemployer firms (firms with no employees; using primarily 1099 contractors) generated over $279.3 billion in receipts.
The number of minority nonemployer firms grew by 16.7 percent to 8.169 million between 2014 and 2017, nearly four times the 4.2 percent growth in the number of non-minority nonemployer firms.
Of the 8.169 million minority nonemployer firms in 2017,3.635 million (44.5 percent) were Hispanic-owned (By official definition, the owner of a Hispanic-owned firm may be of any race.)2.951 million (36.1 percent) were Black or African American-owned1.960 million (24.0 percent) were Asian-owned84,500 (1.0 percent) were American Indian or Alaska Native-owned38,500 (0.5 percent) were Native Hawaiian and Other Pacific Islander-owned
Minority women-owned nonemployer firms totaled 3.779 million (46.3 percent of total minority nonemployer firms), with receipts totaling over $83.7 billion.
Minority veteran-owned nonemployer firms were 312,000 (3.8 percent of total minority nonemployer firms), with receipts totaling over $9.3 billion.
Demographic shifts: The changing face of the majority
According to census figures, by 2042, racial minorities (those that identify as part of a race other than non-Hispanic, single-race whites) are poised to become the new majority, making up more than half the U.S. population. By 2050, 54 percent of the population will be minorities. In a country whose history has been shaped by the boundaries among racial groups, this projected demographic shift is undoubtedly important. Additionally, U.S. society is increasingly represented by a cross-section of generations, including seniors and millennials (typically defined as those born between 1981 and 1997).
But what does it mean for the supply chain? As diverse populations increase, so does their spending power and influence. Gone are the days when companies told you what to think, do, and buy with no questions asked. Today’s buyers are very savvy. They’re looking for connections to the brands they buy from, whether that connection is in the organization’s principles and beliefs or its leadership. These buyers want to know that organizations stand for something that makes society better. And if that’s something that they value and believe in, that’s even better.
Forrester, a leading consumer research and consulting firm, refers to them as the values-based consumer. Customers are becoming more aware of — and sensitive to — social issues and using this to make purchasing decisions.
Social activism/economic inclusion
Activism has always played a part in the causes agencies and corporations take on. Though internal stakeholders can champion a cause, true activism starts from the outside, usually in an area that people feel the organization isn’t supporting or being responsive enough to.
Supplier diversity got its start based on calls for economic inclusion within the Black community. It has expanded over the years to include women-, LGBTQ, and veteran-owned businesses. Because of their positions in the community — often as large employers and major economic engines — organizations are realizing they have the power (and a responsibility) to address economic disparities through their supply chains and how they purchase the goods and services needed to run their organizations. In addition to being responsive to the needs of the community, they’re finding that it also makes business sense.
Accountability to secondary stakeholders
Stakeholders are individuals or groups that have an interest in the organization and, whether directly or indirectly, are impacted by its actions. Stakeholders can be broken into two different groups: primary and secondary. Organizations have a different responsibility to each group.
Primary stakeholders are employees, suppliers, boards of directors, owners, shareholders, and customers. Secondary stakeholders are external groups such as government and regulatory agencies, trade and labor unions, political and social groups, the media, and so on. They drive supplier diversity in the external environment. In this age of cancel culture, they can wield tremendous influence, both positively and negatively, on the actions that the organization takes. They indirectly affect the organization by taking actions that either support the organization’s efforts or make success difficult.
In some communities, supplier diversity can be an emotional and highly charged subject. When I was a practitioner, usually once or twice a year, I’d get a call from a reporter wanting to know for an article how much we were spending with small and diverse businesses. It usually came after a politician announced “increasing opportunities for small and diverse businesses” as part of their platform.
This usually created a frenzy about who would respond and what exactly should be shared (going