Nurturing Supplier Diversity in the Fastest Growing Sectors of Small Business



ISM's 93rd Annual International Supply Management Conference

St. Louis, MO
May 2008

Author(s):

Diane L. Denslow CBA, MA, MBA, Instructor in Entrepreneurship, University of North Florida

Larry C. Giunipero C.P.M., Ph.D., Professor of Supply Chain Management, Florida State University

What are some of the newest sectors to look at when developing a supplier diversity program? In this session led by Diane L. Denslow, CBA, MA, MBA from the University of North Florida and Larry C. Giunipero, Ph.D, C.P.M., of Florida State University, participants learned details about some of the new minority groups as well as tools they could use to evaluate and ensure long term success of small business suppliers.

According to the presentation, women-owned businesses made up 30 percent of all businesses in the United States, the number of Hispanic-owned businesses grew 31 percent (source: U.S. Census Report, March 2006), which was three times the national average for all businesses, and veteran-owned businesses (VOBs) were now making a significant jump following VOB legislation to help these businesses and service-disabled veteran-owned businesses (SDVOBs).

A show of hands demonstrated that most in attendance already include VOBs and SDVOBs in their diversity programs; yetonly 10 percent of Fortune 1000 companies had written VOBs into their diversity programs, although the number is growing, said Giunipero. Details about other sectors including Asian-American and Pacific Islanders, Hispanic-owned businesses, and the rising number of businesses owned by Black women.

The presenters emphasized how to go about analyzing the diversity of your supplier base, which includes looking at non-traditional spend categories such as event planning and company wellness facilities, for example, and expanding in traditional spend. Overall, says Giunipero, matching supplier diversity to customer diversity is "where we in supply management move from tactical to strategic. Do we ever talk to marketing to find out how this affects our customers? This is good business, after all ... a diversity program can help your organization make more money."

Finally, a list of 15 key question to develop supplier diversity were presented, and Giunipero and Denslow stressed the importance of evaluating the business plans of your suppliers, and let them know about resources they might not be aware of if they do not have, or are in the process of, developing a business plan. The key is to assess and monitor the financial situation. "Act like a venture capitalist," said Giunipero. "A venture capitalist would never fun a business without a business plan. And within that business plan, financials are probably the most important part."


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