Supplier Diversity and e-Procurement: Why Your Initiatives Are Not At Odds

While minority-owned businesses risk being left behind in the e-business bonanza, large corporations risk inadvertently alienating minority communities by not partnering with diversity suppliers. Achieving automation presents obstacles for both sides, but...


[From iSource Business, August 2001] Richard Green, Jr., sums up his philosophy on e-procurement and supplier diversity with the kind of economy of words and clarity of purpose that one might expect from the CEO of a $29 billion company. "Technology should enhance inclusion and promote the true innovation that comes from diversity," says Green, who heads UtiliCorp United, an international electric and gas company based in Kansas City, Mo.

It falls to Brett Carter to put Green's vision into practice at UtiliCorp. Supplier diversity and e-procurement have been the stuff of Carter's days since he began leading both initiatives at the utility earlier this year, having been director of supplier diversity at the company since January 2000. And Carter has had his work cut out for him: UtiliCorp does business with 450 minority-owned businesses (MBEs) and set a goal to double its spend with diversity suppliers by mid-2001. Meanwhile, the company has also begun pursuing an e-procurement initiative to reduce costs and streamline business processes.

Can the two initiatives get along within the same company? Carter believes they can, and more than that, he asserts that his company must combine diversity and electronic procurement to survive. "The smart companies have already figured diversity into their e-procurement plans," he warns. "UtiliCorp doesn't want to find itself in the Ice Age."

UtiliCorp's challenge in pursuing supplier diversity and e-procurement exemplifies the dilemma facing many corporations today. With profitability and market share at stake, supplier diversity in the e-business age clearly represents a dangerous opportunity for stakeholders on both sides of the supply chain equation.

The dangers are real for the MBEs, because they risk getting left behind as business goes "e"; and for corporations, because they risk inadvertently alienating minority communities. But the opportunities are equally real, since nimble MBEs can get a jump on their competition by becoming enabled; and corporations can use e-procurement to build closer ties with their minority suppliers, opening up new opportunities for MBEs and giving them an edge in winning loyal customers among minority communities.

To address this challenge, several minority-owned businesses have carved niches for themselves by helping corporations track their minority spend, enabling other MBEs and integrating minority suppliers with buying organizations. At the same time, corporations are taking steps to ensure their supply base remains diverse, even as they move toward greater adoption of e-procurement. Practitioners and solution providers are already offering best practices for both corporations and MBEs.

The Facts about Diversity

The corporate perspective on diversity versus procurement goes something like this: Your company spent the last 20 years squeezing costs out of manufacturing and suppliers, but Wall Street and your e-procurement team continue to breathe down your neck, causing you to turn to cost cutting's next frontier: a smaller supply base leveraged through e-procurement with larger, tech-savvy trading partners.

At the same time, the marketing department tells you the company needs to focus on the country's fastest-growing population segment: minorities. Fortunately, your company's supplier diversity initiative taught you that the best way to appeal to minority consumers is to partner with more minority-owned business enterprises. However, MBE suppliers are typically small and medium-sized enterprises, most of which are at the early stages of getting on the Internet — a situation at odds with your e-procurement initiatives.

If you read this magazine with any regularity, you probably know that e-business is reshaping the way companies leverage their supply bases, but you might not have the facts on supplier diversity initiatives. Here's a primer to get you up to speed.

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