Reengineering The Minority Business Development Program

Author(s):

Ralph G. Moore, CPA
Ralph G. Moore, CPA, President, RGMA, Inc., Chicago, IL 60606, 312/419-1911
Sharon Castillo, CPA
Sharon Castillo, CPA, Senior Consultant, RGMA, Inc., Chicago, IL 60606, 312/419-1911

81st Annual International Conference Proceedings - 1996 - Chicago, IL

The Issue. Historically, minority business development (MBD) programs were developed and have been viewed as economic development initiatives which were socially driven. However, if MBD programs are to continue in today's competitive business arena, they must:

• embrace the corporation's overall goals and objectives
• demonstrate a positive impact on the corporation's performance
• be measured using the same quantitative and qualitative criteria as other corporate initiatives

The Opportunity. Although some will disagree about its effectiveness, business process reengineering has forever changed the way hundreds of corporations do business. As more corporations join the reengineering ranks, the challenge is integrating minority supplier development into the reengineering process. This workshop will provide a brief discussion on the rationale and strategies for meeting that challenge.

Reengineering is a concept that challenges the principles of American businesses, most of which were developed during the first half of the 20th century for a world that no longer exists. Not only have the business principles become outdated, but so have the underlying perceptions which support these principles -- including the perceptions surrounding minority consumers and minority owned businesses. Today, corporations are crafting a new set of business principles through reengineering and it is imperative that minority supplier development is integrated within this new approach.

The Concept of Business Process Reengineering. In the introduction to their book Reengineering the Corporation, authors Michael Hammer and James Champy state:
"To reinvent their companies, American managers must throw out their old notions about how businesses should be organized and run. They must abandon the organizational and operational principles and procedures they are now using and create entirely new ones."

They go on to define reengineering as "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed."

Fundamental: What must we do and how should we do it not how can we improve on what we are currently doing. Focus in on what should be.

Radical: Disregarding all existing structure. Reinventing, not improving, not modifying or enhancing.

Dramatic: Only needed when a dramatic change is required. Two basic questions:

1. Is the process strategically important? and
2. Does the process currently fail to deliver competitive performance?

Processes: Do not focus on tasks or departments, but on processes. A process is customer driven and is defined in terms of customer needs, not existing structure.

Continuous Improvement. Involves daily, weekly, or monthly small scale improvements -- change occurs in many small, incremental improvements, none of which may look or feel revolutionary, however, over time these small improvements powerfully advance the organization's performance.

Process Reengineering. Is a one time approach that focuses on major magnitude performance improvement; typically, such large scale change efforts create initial discomfort because people are asked to work in new ways.

Business Process Reengineering. Also known as extended strategic change (ESC) is a relatively recent and radical performance improvement approach, which combines both continuous improvement and process reengineering.

• Reengineering is extended because it can take years to fully implement.
• It is strategic because it reinvents the way an organization conducts its business.
• Reengineering starts with a clean slate and the underlying assumption "there are not sacred cows".
• Reengineering is risky because it involves change and change is uncomfortable for many who enjoy the status quo. Process reengineering is comparable to embracing process redesign, job redefinition, new technology applications, employee skill enhancement, revision of managerial systems, etc. Fear, anxiety, and resistance are not uncommon early reactions.
• Key elements include:
  • clean slate starting point
  • senior management involvement
  • broad, cross functional scope

Reengineering Minority Business and Supplier Development Programs. Supplier diversity and minority business development will become an integral part of corporate strategy only if its contribution to brand building and shareholder value can be documented and measured. The reengineering process can facilitate this objective. The business case to elicit senior management support should tie directly to the corporate objectives within the annual report.

This process will accomplish the following:

• Articulates the differences in minority supplier development and minority business development.
• Confirms strategic value of supplier development processes.
• Integrates MBE program measurement with corporate results based measurement system.
• Enables MBE Program Manager to share supplier development process throughout procurement department.
• Elevates MBE to key part of strategic sourcing strategy.
• Positions MBE Program Manager as an integral part of the reengineering process.

The following issues will be discussed in the workshop and should be considered in reengineering the minority business development program.

1. Objectively evaluate your program-- both performance and perception.
   • What value does the program bring to the company?
   • Can this value be measured?
   • Does this value have any bearing on the company's customers or profitability?
2. If your program already adds value, positively contributes to customer satisfaction, contributes to cost reductions, enhances the corporation's brands, and has a results based measurement system, you have a great program! Don't fix it.
3. Your reengineering team will look a lot like your MBE steering committee. Add some outsiders for balance and your ready.
4. You must exploit information technology fully to experience maximum impact.

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