“When supplier diversity first started, there were a number of stereotypes that we had to deal with regarding minority owned businesses, Smith said. “During that time, the low hanging fruits (for buyers) were in areas such as corporate gifts and janitorial services.

          “That is no longer the case; the face of minority business has changed.”

Debunking Myths, Overcoming Challenges

            Few would argue against the fact that even in 2004 there are still stereotypes and myths which cloud the issue of supplier diversity, both in terms of what it means and why it is an important factor in stabilizing a company’s bottom line. Also, a number of companies have begun to cut back on the total number of suppliers with which they do business, a move that only increases the level of uncertainty in an already ultra-competitive minority business marketplace.

            According to Peters, Exelon once did business with about 16,000 suppliers. Today that number has been cut to about 3,000. That being said, Peters noted that Exelon’s requirements for doing business with suppliers are stringent and that there are basic levels of preparedness — including training and credentialing — that are a must.

“Our thing is to make sure that everyone is getting an opportunity (but) it is important to know that companies are certified,” Peters said. “When you go through the certifying agencies, you have been scrutinized and we know that you’re legitimate.

             “If you don’t, we don’t know who you are.”

Both Peters and Smith said that the obstacles related to improving supplier diversity aren’t just a question of supply and demand and don’t always come from the companies soliciting minority business. They say that suppliers themselves sometimes come with problems which can take them out of the running for potential work with major corporations across the country.

            Smith said that a recent business opportunity fair actually had more buyers than minority suppliers. To some degree she attributed this to outdated supplier ideas about what being “minority owned” really means.

             “Many minority firms are buying into an outdated myth that says, ‘I don’t want to be known as a minority supplier’ as if being minority owned and offering a quality service are mutually exclusive, which they are not,” she said. “Those involved in supplier diversity don’t feel that way; they expect you to come to the table prepared.

             “‘Why should we have a problem saying ‘Hey, I have a great product or service, I can help your company and oh, by the way, I am a minority-owned firm?”

            According to DeHaven, Accenture continues to battle the myths that companies are somehow compromising value and quality when using minority, women and small business enterprises (MWSBE’s) for procurement needs. That, he said, and the belief that doing business with MWSBE’s will be more expensive represent two of the biggest challenges in Accenture’s continued efforts to implement a more diverse chain of suppliers.

“Accenture currently uses MWSBE’S for supporting both internal needs and client engagements. We have found no reductions in value, quality or cycle time when using MWSBE’S.

“The businesses are as cost competitive (if not more so) than majority owned firms,” he said. “This has been confirmed in several key categories of spend including contractors, corporate housing and design agencies where women, minority owned and small businesses are included in Accenture’s list of preferred suppliers.”

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.”

© Copyright 2004 - 2007 Escendent, L.L.C. All rights reserved.