May/June 2008, eSide Supply Management Vol. 1, No. 3
Minority Supplier Development: Status and Strategies
Harriet R. Michel, president of the National Minority Supplier Development Council (NMSDC), believes supplier diversity has come a long way — and she would know. Michel is currently serving her 20th year with the nonprofit, earning her reputation as a noted administrator and public policy expert on minority issues.
But she also wants you to know this: There is still a long way to go. Full-scale efforts to source, use, integrate and grow minority suppliers are the goal she and the NMSDC most value.
This month, eSide interviews Michel to gauge the state of minority supplier development, both domestically and abroad. She also discusses how supply management professionals can inject supplier diversity efforts into their organizations' corporate DNA and pinpoints the most common obstacles they are likely to face.
"The good news is this: Supplier development activities have definitely increased."
This is the message Harriet R. Michel, president of the National Minority Supplier Development Council (NMSDC) in New York, sent loud and clear to attendees at ISM's fifth annual Black Executive Supply Management Summit held in Washington, D.C. For 20 years, Michel has been instrumental in helping the private, nonprofit NMSDC further its mission to act as a direct link between corporate America and minority-owned businesses.
Despite the mostly positive outlook she shared with attendees, Michel acknowledged that significant work remains in the area of minority supplier development.
"It has become increasingly difficult for me to fight cynicism regarding corporate commitment to minority supplier development," she shared. "As I see it, more of them are using these programs as public relations ploys or window dressings."
What would Michel really like to see? Full-scale efforts to source, use, integrate and grow minority suppliers.
In this spirit, the NMSDC compiled its 2007 Best Practices in Minority Supplier Development Guidelines, a resource full of building blocks, tasks, practices and processes which NMSDC's corporate members have identified as necessary for success in minority business development. In particular, the Guidelines set forth eight goals for supply management professionals to accomplish within their organizations:
eSide caught up with Michel to discuss the state of minority supplier development domestically and abroad; how to incorporate these efforts into the corporate DNA; common barriers, practical strategies, supplier diversity metrics; and more.
Harriet R. Michel,
eSide: One of the goals you put forth in the NMSDC's Guidelines is the establishment of corporate policy and top management support for minority supplier development. On the whole, how aggressively do you think U.S. executives are pursuing this goal?
Harriet R. Michel: The continued growth and increased membership in NMSDC demonstrates that American executives are increasingly more supportive of corporate minority supplier development programs. In 2006, our corporate members reported $100.3 billion in purchases from Asian, Black, Hispanic and Native American-owned businesses certified by NMSDC, which is a 5 percent increase over the previous year.
eSide: You recommend that minority supplier development be implemented as part of the "corporate DNA." Can you explain what that looks like?
HRM: When we talk about "corporate DNA," we're referring to companies where minority supplier development is embedded in the corporate culture and is an integral part of a company's strategic plan. Goals and results of the company's efforts are also included in the corporate scorecard.
eSide: What are some common obstacles within the organizations falling short of the eight proposed goals?
HRM: Some of the common challenges to having a best-in-class minority supplier development program are lack of support from the C-suite; lack of resources, particularly personnel and budgetary funding; and strategic sourcing. Changing economic conditions and internal restructuring are also common challenges.
eSide: What two critical, universal strategies would you offer to supply management professionals interested in ramping up their organizations' efforts to develop or improve existing minority supplier programs?
HRM: Supply management professionals should look for inclusion of MBEs throughout the supply chain, either as the tier 1 supplier or as a subcontractor. Minority supplier development program managers should look for corporate buy-in from all business units in both the traditional and nontraditional areas. They should also have goals and report results related to minority supplier development in all performance appraisals.
eSide: The NMSDC recommends that one individual be responsible for reporting minority supplier development results. What qualities or skills would the ideal candidate possess?
HRM: Aside from the typical skills needed to lead a major strategic initiative within a company, I believe the most important qualities for minority supplier development program managers are passion and creativity. Individuals must be passionate about minority supplier development and think outside the box for innovative solutions for inclusion.
eSide: You recommend that senior management — including the CEO and CFO — regularly review supplier diversity key metrics. How common do you think this practice is right now in American organizations? Outside the U.S.?
HRM: My experience is that corporations that are serious about implementing and maintaining strong minority supplier development programs regularly report on the progress of their programs, particularly to their internal stakeholders. Our corporate members report their minority supplier purchases to NMSDC each year. The majority of them may also be required to inform their customers, federal/state/local government agencies, and various advocacy groups of the results their minority supplier development programs on a regular basis.
Outside of America, we're seeing the development of minority supplier development programs using the NMSDC as a model as part of our international program. We're currently working with groups in Brazil, Canada, China, South Africa and the United Kingdom to establish minority supplier development programs abroad.
eSide: For supply management professionals interested in gauging how their own organizations' supplier diversity practices measure up, where would you advise them to begin?
HRM: Companies can do a baseline assessment of their minority supplier development programs using NMSDC's Best Practices in Minority Supplier Development Guidelines, and then benchmarking their achievements to development a gap analysis to develop plans for improvement.
eSide: How can ISM as an organization impact the concept of growing minority supplier development programs in other countries?
Harriet Michel: ISM can impact the growth of minority supplier development abroad by highlighting the success NMSDC is having with its international program. ISM should leverage its affiliate group and forum structure using the MWBDG as a model internationally. ISM should also include topics about minority supplier development in the curriculum at all its conferences, and include "inclusion language" in all its policy statements.
More information about the NMSDC and a downloadable copy of Best Practices in Minority Supplier Development Guidelines are available online.
RaeAnn Slaybaugh is a senior writer for the Institute for Supply Management™. She can be reached by e-mail.
For more articles on minority supplier development, visit the ISM articles database.
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