October 1, 2004

Is Strategic Sourcing the Answer?   

          Many today will argue that shifting demographic trends are in fact an indicator of the future of world business, while others can and do say that incorporating minority-owned businesses into supply chains is simply ‘the right thing to do.’ Still, it is often suggested that the decision as to which suppliers a corporation should do business should simply be a question of dollars and cents and have nothing to do with the race or gender of the business owner.

          DeHaven disagrees, adding that for Accenture diversity is simply about providing more options to its customers.

          “Enterprise organizations such as Accenture use MWSBE’S to deliver innovation to their clients,” he said. “Accenture's broadening network of suppliers allows for new ideas and new business opportunities.” 

          Peters said that Exelon spent about $173 million with MWSBE’s last year – about 7 percent of corporate spending – and that in many cases annual management incentives are tied to meeting diversity goals. He added that several minority-based companies serve as first tier suppliers and that companies “should be doing business with the people who make up your community.”

          “They’re using our services, so they should be receiving some of the opportunities that we provide,” he said.

          Officials at Accenture add that clients often require a commitment to supplier diversity before agreeing to do business, a trend Smith said the CMBDC is hoping to indirectly foster through making consumers more aware of the business practices of the companies from which they purchase. An educated consumer, Smith noted, is one that is more likely to base buying decisions on a company’s track record of investing in minority communities and on being inclusive in its’ hiring of suppliers for goods and services.

According to a report released in August by the Selig Center for Economic Growth, by 2008 the combined buying power of African Americans, Asians and Native Americans will exceed $1.5 trillion, more than triple 1990 spending level. Additionally, the report states that the 2008 value of Hispanic buying power alone will outpace 1990 spending by 357 percent.

Smith says the benefits of doing business with minority firms go beyond simply trying to attract new customers today. Those benefits, she said, extend into helping to create a stronger, more stable economy, one that will have a larger percentage of disposable income for years to come.

“Minority firms hire 75 percent more minority employees,” she said. “So if minority companies are the largest employers of minorities, it stands to reason that if you want to create an expansive base of your economy you have to include those firms in you business.

“There’s no economy in the world that can survive long term with large parts of its population disengaged.”