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...


Of course, having a functioning minority supplier initiative at all is the best place to start when considering how to mix diversity and e-procurement. "Corporations have to have an established minority business development program," asserts Layton of Johnson Controls. "You can't automate something that isn't there. If they don't have policies and procedures regarding minority suppliers, signed and supported by senior management, it won't work. If there is no minority coordinator, it won't work. If there is no way to track the dollars, it won't work. If there is no way to report the dollars to customers or the minority community, it won't work."

Carter, too, points to the importance of top management support for diversity, noting that he took on the responsibility of director of supplier diversity in January 2000, with a charge from company CEO Green to revitalize UtiliCorp's minority supplier development efforts. Carter, who reports directly to Green, further notes that Jim Miller, a senior vice president in the company, serves on the board of the Kansas City Minority Supplier Development Council. "Immediately, the status of supplier diversity goes a notch higher when you have that kind of senior management buy-in," Carter says.

With a diversity strategy in place, corporations must carry their awareness of diversity issues with them as they enter into new e-business relationships. Reginald Williams, from Procurement Resources, cites an example from the automotive industry, which he lauds as a leader in the diversity field. When the corporate founders of the industry-sponsored Covisint launched that exchange, they at first did not include supplier diversity as an element of that business, Williams says. After Williams and the Michigan Minority Business Development Council raised the issue with the exchange, the founding companies responded that Covisint would indeed include some aspect of supplier diversity. The problem, Williams says, was that the staff setting up the exchange was primarily from the IT departments of the companies involved and therefore simply was not aware of the diversity issue. Queried in this regard, Hill, the Covisint spokesperson, said that, while the exchange does not currently have any specialized technology that would pick out an MBE among other suppliers, Covisint has set up a 15-member customer council that includes a minority supplier.

Michel, of the NMSDC, cites a similar example involving a coalition of brick-and-mortar utility companies. All the member companies individually had supplier diversity policies in place, but, as they were putting the consortium together, diversity was not part of the conversation until some of the minority-supplier coordinators from the individual companies raised the issue. Subsequently, the consortium established a diversity coordinator position. "My overall thought," Michel concludes, "is that, in order for the system to accommodate the commitment to include minority suppliers, it has to be an up-front consideration."

Corporate diversity coordinators agree, adding that education is the key to ensuring that a diversity initiative remains vital in the e-business world. That includes educating internal constituencies as well as the MBEs themselves. Johnson Controls holds training sessions for buyers, contract agents, program managers, sales people and program specialists to raise awareness of the importance of diversity to the company's business. JCI also has training available for key suppliers. Delphi annually hosts more than 200 MBEs at Delphi's Automotive Matchmaker Conference, a minority supplier conference in Dayton, Ohio, to bring purchasing agents from major automotive manufacturers and suppliers together with minority business enterprises. And UtiliCorp has initiated e-business-related dialogs with community organizations representing MBEs to communicate the important role that e-commerce will play in the company's supplier-selection criteria. UtiliCorp also works closely with suppliers, including MBEs, that bid unsuccessfully on RFQs to educate them on why the suppliers lost the bid. For his part, Green has continued to set the tone for UtiliCorp's diversity efforts, even as the company has moved toward e-procurement by promoting the philosophy that the diversity aspects of the utility's e-procurement solution are as important as the solution itself. Other steps that corporations can take to ensure that diversity suppliers don't get left behind include:

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