SUPPLIER DIVERSITY
Fortune 500 Diversity Procurement
S
ince the early 1950s, companies that supply the Federal government
with goods and services have been required by law to have a supplier di- versity program or initiative and to ap- point a supplier diversity professional to manage the program. While these ef- forts typically began as token initiatives to meet the regulatory requirements, many large American companies have now developed world-class programs that provide substantial opportunity to historically under-represented groups and businesses. Unfortunately, there has been a dis-
tressing tendency in recent years for big corporations to measure the suc- cess of their supplier diversity pro- grams by the “spend”—the amount of money they have directed toward diverse businesses during a particular
year. While “spend” is important, it is not the only (or, perhaps, even most important) metric by which success should be measured. In fact, if you ask the 48,000 mem-
bers of
DiversityBusiness.com and the more than 500,000 businesses that use our services, they will tell you flat out that large companies pay far too much attention to total spend, and not nearly enough to how and where it is being spent.
The Mission of Supplier Diversity
We know there are three basic rea-
sons that supplier diversity programs exist: To increase the sponsoring compa- ny’s market share within the nation’s
expanding multicultural/diverse com- munities. To include companies in the supply
chain owned by historically under- represented groups thereby creating wealth for these groups and growing the customer base. The traditional government contract
spend requirements. Because year-to-year “spend” com- mitments are growing and large com- panies have been concentrating their purchases with fewer suppliers, you would assume that those three goals were being met and some very large and successful diverse-owned compa- nies were being created. But, you would be wrong. If you
take a close look at the percentage of ownership, the number of diverse em- ployees, the location of the companies involved and where their employ- ees reside, you will find that only the original government-mandated con- tract spend requirement is being met. Supplier diversity programs are not increasing market share significantly or creating generational wealth for di- verse businesses because once most of these companies pass the $100 million dollars in annual revenue threshold and established themselves as high quality, profitable and sustainable, they are taken over by non-diverse companies. While that may enrich a few owners, it does not achieve goal number 2, above, of creating wealth for diverse commu- nities which leads to more customers.
Hiding behind Certification?
To make matters worse, I estimate
that nearly 30% of reported diverse spend is going to companies owned by individuals who have been in the United States less than 12 years. The employees of these companies--while being a high percentage diverse--are also highly educated and most have ad- vanced degrees. On average, they have been in the U.S. less then 7 years. So the
20 HISPANIC NETWORK MAGAZINE Celebrating 18 Years of Diversity
www.hnmagazine.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84