Supplier Diversity For Dummies. Kathey K. PorterЧитать онлайн книгу.

FIGURE 2-1: Evolution of supplier diversity.

      MAYOR MAYNARD JACKSON AND SUPPLIER DIVERSITY IN ATLANTA, GEORGIA

      A legendary example that resulted in the creation of some of the most substantial Black businesses that still exist today is the one created in Atlanta by the Honorable Mayor Maynard Jackson. This demonstrated the potential of supplier diversity.

      Maynard Jackson, Atlanta’s first Black mayor, is one of the most revered mayors in Atlanta’s history; many regard him as the father of modern-day supplier diversity. He won the election partly on his promise of economic prosperity for all Atlantans. His approach made him a legend and made Atlanta a model for economic inclusion.

      At the time of Jackson’s election in 1974, Atlanta was embarking on one of its most ambitious projects ever — expanding the Hartsfield Airport (now commonly known as the Hartsfield-Jackson International Airport) into an international hub. Upon assuming office, Mayor Jackson met with business leaders and told them he would move forward with the expansion of Hartsfield Airport on one condition: 25 percent of all contracts were to be set aside for minority firms. Jackson reportedly told those in opposition that the city wouldn’t build the airport if they didn’t agree to this stipulation, and he held fast to his offer of 75 percent of the project or 100 percent of nothing. As expected, the business elite recoiled, and Jackson’s administration prepared for a long fight.

      Over the next two years, Mayor Jackson fought some of the most powerful men in the South who were using their clout to call in political chips to get the governor and state legislature to take control of the airport expansion project. For Mayor Jackson, the stakes were high. This was not only a campaign promise but also an opportunity to provide Black business owners something previously denied them: access to a share of contracts on a major public works project initially valued at $450 million. The mayor used the delay to sell corporations on creative ways to work with Black firms. One novel concept at the time was creating a joint venture with minority firms. This model is now widely used across the world and is often a requirement on public construction-related projects.

      By 1976, the parties finally came to an agreement. All parties would eventually agree to Jackson’s modified version of his plan: a goal (not a mandate) of 20 to 25 percent participation of minority-owned firms.

      Five years later, Jackson increased the percentage of contracts awarded to minorities from less than 1 percent in 1973 to roughly 39 percent. This surge strengthened the Black middle class and created an affluent business community that still exists today.

      Compliance with federal law (1969–1990)

      Supplier diversity got its start with the federal government, but by 1968, several leading companies, such as General Motors and IBM (who were also federal contractors), were compelled to launch their own supplier diversity programs. Large corporations and the government have always had a close relationship. In the early days of the United States, it was nothing for the government to borrow money from private bankers when it ran a little short.

      To this day, many corporations are vendors that provide the government with a variety of goods and services. With the establishment of the executive orders I cover earlier in the chapter, these vendors were under regulatory pressure to provide contracts to minority-owned businesses. Although some were inspired to create their own programs, many were motivated to simply remain compliant in order to continue to win contracts. This period came to a close because of legal challenges and backlash against laws designed to promote minority business development.

      The right thing to do (1990s–early 2000s)

      Up until this time, the government or the public sector was the main force creating opportunities for minority businesses. But as legal challenges abounded, businesses began to shift their focus to look at opportunities in the private sector with corporations. The leading organization that certified minority firms and advocated for minority businesses interested in doing business with corporations was (and still is) the National Minority Supplier Development Council, or NMSDC.

      During this time, NMSDC strategically shifted its focus from a publicly funded organization to an organization funded by and focused on corporations. Corporations began to publicize their efforts in their communications, often touting supplier diversity as the right thing to do, and to formalize their programs by hiring personnel, developing processes, and investing in systems that allowed them to track utilization, which then can be reported.

      This era was the first time a true business ecosystem was created, and minority businesses benefitted greatly. It also created a model for advocacy and certifying organizations that represent other socioeconomically disadvantaged groups such as women, the LGBTQ community, and veterans.

      Making the business case (2000s–present)

The 2000s were marked by several shifts in the marketplace — the tech industry, changes in demographics, the growing influence of consumers, and the increased globalization of business — that had a tremendous impact on corporations, the likes of which they hadn’t experienced before. Each of these factors presented new challenges and raised the stakes for supplier diversity to not simply comply with government regulations or push its feel-good message as the right thing to do. Supplier diversity needed to help the organization maintain a competitive advantage by making the business case to support its reason for being.

      As I describe in Chapter 7, a strong business case for supplier diversity focuses on the tangible impact or metrics you can monitor through measured performance results. It’s sustainable in ways that the phases in the two preceding sections weren’t. Compliance allows programs to be challenged or risk being shut down based on court rulings. Programs based on an emotional appeal like “the right thing to do” can shift depending on leadership’s priorities or be difficult to justify when decisions are based solely on numbers.

Pondering the Future of Supplier Diversity

      Earlier in the chapter, I discuss the different phases of supplier diversity and how the industry has grown and evolved to become a strategic pillar within organizations and in communities. Just like the civil unrest of the 1960s led to the start of these programs, the civil unrest of 2020 has created a reawakening and refocus on supplier diversity as a driver of entrepreneurship and economic inclusion.

      As markets continue to get more complex and competitive and external factors influence business like never before, organizations have to look at every nook and cranny to gain or maintain a competitive advantage. For instance, market factors such as the supply chain shortages of the 2021 holiday season impacted everything from food to clothing to toys to electronics. This promoted organizations to take a closer look at supplier diversity and diverse businesses as a potential solution. It’s clear we’ve moved to a hybrid phase that combines all the previous eras and also includes social equity.

      As the industry continues to advance, you have to wonder what will drive the next phase of supplier diversity. Will it be a subtle shift or a major disruption? Whatever it is, you should be aware of the issues that are poised to have an impact on supplier diversity in the future.