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...


e-Business can also be beneficial for corporations pursuing diversity initiatives. The opportunities to increase market share by doing business with minority suppliers and to benefit from the innovations that MBEs can offer have been discussed above. But a company can also use e-business technologies to achieve cost savings by bringing diversity suppliers into its "extended enterprise."

For example, Reginald Layton, minority business development director at Johnson Controls Inc. (JCI), cites several circumstances in which JCI could potentially leverage MBEs to achieve cost savings and efficiencies. The company, which reported 2000 sales of $17.2 billion, might find it more efficient to outsource the manufacture of certain components to a diversity supplier, rather than build a new facility of its own. Or JCI might choose to replace an incumbent supplier that won't participate in cost reductions with an MBE with a lower cost structure. In each case, JCI's challenge of making its own internal operations more efficient provides an opportunity to a diversity supplier, Layton says, and e-procurement provides the tools for JCI, as well as other corporations, to connect cost-effectively with these more efficient suppliers.

New Tools for Diversity

Those tools include new solutions for automating the back-office side of managing a corporate diversity initiative, for identifying and connecting with MBEs, and for e-enabling diversity suppliers.

Johnson Controls, for example, is implementing software called DivTRAK to automate its diversity program. JCI, which supplies automobile interiors, facility management and building control systems, works with more than 900 diversity suppliers across most of its 60-plus commodity categories, generating $465 million in purchases from MBEs. The company internally created a minority business development Web site two years ago that provided an overview of the JCI program and allowed suppliers to register with the company. The site also allowed internal users with Johnson Controls to declare what they planned to buy so they could be matched with diversity suppliers in a particular commodity category. And it has let JCI electronically receive information from its prime contractors and key suppliers regarding their diversity spends.


Using the functionality available through DivTRAK, JCI is now looking to achieve a greater degree of automation in its diversity initiative. The software, from Somerset, N.J.-based Applied Information Services (itself a minority-owned company), is intended to allow corporations to "manage, measure and market their supplier diversity programs," according to John Lau, AIS president. DivTRAK expands the functionality of the JCI diversity Web site by adding additional automation and by providing a single platform for managing JCI's diversity-related information. For instance, it ties into Johnson Controls' accounts-payable financial system, identifies diversity suppliers in the system automatically and reports the amount spent with those suppliers across Johnson Control's divisions. This allows Layton to collect and relate information on the company's diversity spend more quickly and precisely, as well as to break out the spend by types of MBEs, track the spend over time and monitor the spend of JCI's own suppliers.

Other DivTRAK clients have included Pfizer, AVIS, Novation, Prudential Insurance, Lever Brothers and the New York Metropolitan Transit Authority. In a similar effort, CCAII created software called Supplier Diversity Application (SDA) to manage the diversity process for such clients as Pitney-Bowes and Deloitte & Touche. Like DivTRAK, the software includes an online supplier registration feature. When Clarke saw that all the SDA client companies were collecting the same information from suppliers, he realized that a single, comprehensive database would meet the needs of buying organizations and prevent MBEs from having to register with multiple corporations.

That realization prompted Clarke to establish Div2000.com, a nonprofit Website CCAII developed. It now features a database with some 1,500 corporate contacts and 10,000 diversity suppliers that Clarke describes as a central portal for diversity-owned businesses to make corporate contacts. MBEs can register once on Div2000.com and send their profiles to multiple corporate diversity contacts with the click of a mouse, while corporations can identify diversity suppliers that fit their requirements. Clarke says CCAII will continue to operate Div2000.com on a nonprofit basis because the site displays his company's competencies in Web development, one of CCAII's core offerings.

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