By Editorial Staff
Supplier diversity programs are more than socially responsible — they're also good for business. They help improve the way a company serves its markets, and they represent significant revenue opportunities for buyers and sellers alike. Supply & Demand Chain Executive recently sat down with Matthew A. Troka, vice president, product and partner management at CDW Corporation, to discuss his company's success with its supplier diversity program.
Supply & Demand Chain Executive: What did CDW see in the marketplace that caused it to explore the idea of implementing a supplier diversity program?
Matthew Troka: The U.S. Small Business Administration recently spotlighted the economic impact of small, diverse businesses, citing that women- and minority-owned businesses account for 10.6 million businesses worldwide. Minority-owned business is among the fastest growing segments of the U.S. economy. CDW realized this is a large pool of suppliers that can be tapped on to help us offer products with appeal to a diverse customer base, and in turn, boost our competitive advantage.
We determined that launching a supplier diversity programs with minority-, women- and veteran-owned, and small business partners would enable us to address customer needs and buying requirements. Our partnerships with qualified businesses will help us to provide a better customer experience, while contributing toward economic growth in diverse communities throughout the United States.
SDCE: Tell us a little bit about your company's supplier diversity program.
Troka: CDW provides technology solutions for business, government and education. Our company launched its supplier diversity program in May 2007 and it currently includes partnerships with 65 minority-owned businesses, 101 women-owned businesses and 39 veteran-owned businesses, as well as additional classifications such as small, disadvantaged and disabled. Our supplier diversity program partners work with us to fulfill our functional requirements, and with our customers to provide specific product or service offerings.
For example, one of CDW's largest customers has aggressive direct tier-two spend goals in its diversity objectives. "Direct tier-two spending" is the process by which a contracted majority vendor subcontracts to a qualified minority-owned business for goods or services that directly support the fulfillment of a contract.
With this goal in mind, the customer contacted its CDW account manager, who reviewed the customer's purchases over the previous 12 months to see if any of those products could be procured from qualifying diversity vendors. The account manager found that the customer was buying substantial amounts of memory and recommended Kingston Technology Company, Inc. [one of the world's leading manufacturers of memory products] which qualified as a minority-owned business under CDW's supplier diversity program. The customer made the switch almost immediately, enabling it to achieve its direct tier-two spending goal.
SDCE: What are some ways that manufacturers can become a supplier diversity partner?
Troka: Well, it really varies. Although the process can be time consuming, it allows companies to choose high-quality partners in each category that can contribute offerings to meet the needs of the customer base. A few tips to keep in mind when selecting partners are:
- Evaluate applicants based on pre-determined criteria, with input from multiple departments and reviewers.
- Consider the organization's business history, annual revenue and how many partners the company already has in the category for which it has applied.
- Carefully assess each applicant's diversity qualifications and ability to capture revenue opportunities.
SDCE: Do you have any other tips for companies looking to implement a supplier diversity program?
Troka: Supplier diversity programs should be ever-evolving to meet the needs of organizations, customers and manufactures alike. For example, CDW continues to improve the application process for prospective partners and give applicants a clearer understanding of qualifying criteria. We also participate as a national corporate member of the National Minority Supplier Development Council. And to make diverse purchasing easier for our customers, we are adding icons to products listed on our Web site that are provided by participants in the supplier diversity program. This way, customers can choose many products from qualifying vendors without having to consult their account managers.
At CDW, we believe the U.S. IT marketplace is stronger and more vibrant because it values the creation of opportunity for minority-, women- and veteran-owned businesses. However, the principle is easy to endorse but harder to live in practice. Organizations should set the goal of practicing diverse business for the sake of their business, their partners and their customers alike.