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...


William Harper, global contracts manager at Delphi, recommends that minority businesses look for a customer that can assist them in making the transition to e-business. At Harper's company, for instance, each of the purchasing teams working in a particular commodity line has the responsibility of mentoring a minority supplier. Part of the mentoring process includes making sure the suppliers have the necessary training to become enabled to the extent necessary to continue to do business with Delphi, which currently mentors 19 diversity suppliers (including InfoServices), from a total of 360 MBEs in the company's supply base.

Diversity suppliers should also make sure they understand the technologies involved, choose their solution providers carefully and make the best use of e-commerce sales channels, advises James Davis, a sales manager at the Kansas City, Mo., office of Chicago-based diversity supplier Sayers Group, a $300 million computer reseller. Davis, whose office sold about $7 million of computer equipment, software and services to UtiliCorp last year, further recommends that MBEs check that their own supply chains have the capacity to handle whatever volume of business comes in through an e-business sales channel.

But Davis also warns that while e-commerce technologies allow suppliers to automate certain processes once handled by customer service reps, the technology cannot take the place of old-fashioned, person-to-person contact between suppliers and clients. UtiliCorp's Carter echoes that sentiment, saying his company shifted business to Sayers from a much larger, non-MBE supplier at the beginning of 2000, because of the high level of service the computer reseller provided, as well as Sayers' ability to beat the incumbent supplier on price by as much as 5 percent.


For his part, Carter notes that his company has seen a trend toward partnering among MBEs looking to achieve the greater size that will allow them to compete in an e-business environment. "The push is going to be for the [minority suppliers] to get larger to create some scale for themselves in order to be able to serve a company like UtiliCorp," Carter says. The utility company sponsors a specialized course in its hometown, Kansas City, to explain and promote the partnering concept to minority suppliers.

MBEs should also look to ally themselves with larger organizations to leverage the geographic reach, expertise or resources of a better-heeled partner, advises John Walker, president of another UtiliCorp diversity supplier, Kansas City-based Perfect Output, a document management and print services provider. "In this day and age, Corporate America is looking for people who can supply solutions to them on a global basis," Walker says. In 1997, Perfect Output became the first minority-owned business to establish a strategic partnership with Xerox. Under the alliance, Perfect Output can represent any of the products or services that Xerox offers, but it also can work through the document giant to offer services throughout most of the United States and in Canada. This extended reach has proved a key competitive advantage: since Perfect Output began providing services to UtiliCorp in January 2000, the supplier has expanded into multiple locations for the utility company across the country and in Calgary, Alberta. Carter attributes more than half-a-million in hard-dollar savings to his company's use of Perfect Output.

Corporate Strategies

Pondering the question of how a corporation can ensure that its supplier diversity initiative and e-procurement activities complement each other, Carter offers: "The simple answer is to make sure both [initiatives] have strategies that tie back to the corporate strategy. All of the business unit strategies within UtiliCorp have to complement the overall strategic direction of the company." This has been a key issue for UtiliCorp, which has undergone tremendous growth in the past 15 years, expanding from $243 million in revenues in 1985 to the $29 billion in 2000. This growth, largely through acquisitions nationally and around the world, has not been conducive to centralized procurement, prompting the company to begin examining e-procurement as a way to both reduce costs and streamline purchasing processes. Carter is heading the company's e-procurement initiative as well as its supplier diversity program, so he is in a unique position to ensure that the two strategies proceed along complementary tracks.

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