SUPPLIER DIVERSITY
question becomes: what communities are we reaching that have been histori- cally underrepresented and why is this spend considered supplier diversity? The simple answer is they get them-
selves certified as diverse businesses. There are only 20,000 businesses certi- fied by third party certification agen- cies and another 100,000+ certified by Federal, State and local governments. Of these, most have gone through the process because “someone told them they had too” but that number still rep- resents less then of 1% of the estimated 10 million traditionally-defined diverse owned businesses. And, frankly, any- one can now get certified somewhere, somehow in today’s world. Abuses are widespread.
Market Share
There is also little hard evidence that
today’s supplier diversity programs are achieving goal number one—increas- ing market share in specific multicul- tural communities. Ask for proof and you’re like to get specifics on market share, segmentation, size, and growth of the U.S. multicultural market but most companies have not done an in- depth analysis of the attitudes and be-
havior of multicultural consumers to determine if their diverse procurement spend has any effect on purchasing habits? While “multicultural markets” en-
compass segments ranging from eth- nicity and race to sexual orientation and geographic dispersion, the sec- tor getting the most play today is the rapidly swelling Hispanic-American market. Known as the majority minor- ity, this booming segment--expected to surpass $1 trillion in buying power in a few years--is spawning many multi- cultural marketing initiatives.
Spend Analysis
Our research for the “Top 500 Di-
verse Owned Companies” (report at- tached) shows aggregate revenue of nearly $53 billion. $104 billion has been reported by a third party agency of di- verse spend among Fortune 500 com- panies. The Top10 diverse owned com- panies received nearly $20 billion total spend. This means that approximately 10 diverse owned companies received nearly 20% of total spend reported by Fortune 500 companies. It also means that 50% of all spend went to only 500 diverse owned companies. But the
most important number is that 40% of spend with the Top 500 companies went to the Top 10 companies.
Supplier diversity managers need to ask themselves questions like:
How many diverse companies are participating in spend? Are companies with less $100 mil-
lion in diverse spend as effective in meeting the mission as companies spending over $1 billion? What has the greatest impact? A $50 million contact to one com- pany in one geographic area The simple truth is that “spend” is
not an adequate measurement of the success of supplier diversity programs and despite the fact that they are spend- ing more with fewer diverse suppliers, most large companies are not fulfilling the mission of creating generational wealth in historically disadvantaged groups or even doing a good job of increasing market share in diverse cus- tomer communities. It’s time to rethink the emphasis on spend and start bring- ing more diverse companies into the mix. Next time you think that a diverse company is too small to be a supplier, ask yourself if it is big enough to be a customer?
Additional notes and figures can be found at: http://www.
diversitybusiness.com/news/ supplierdiversity/
45200980.asp
About the writer
Kenton Clarke is the Founder, President and CEO
of Computer Consulting Associates International, Inc. (CCAii) and the founder of
DiversityBusiness.com. CCAii, of Southport, Connecticut , is one of the na- tion’s leading multicultural Information Technology and Diversity consulting firms. DiversityBusiness. com, CCAii’s flagship product, is the nation’s largest and most comprehensive online resource center for small businesses and large procurement organizations. Considered one of America ‘s authorities on diversity business issues, Mr. Clarke is frequently quoted in lo- cal and national publications on diversity business de- velopment and technology issues, including Fortune, Forbes, and Business Week. He has also appeared as an industry spokesperson on PBS, CNBC , CBS News Radio and Yahoo! Finance Vision.
Source:
Diveristybusiness.com
22 HISPANIC NETWORK MAGAZINE Celebrating 18 Years of Diversity
www.hnmagazine.com
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