Supplier Diversity Business Case

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                 Billion Dollar Roundtable 2007 Policy Paper

                                              ESTABLISHING THE

                                                           Prepared by M.V. Greene

      SUMMARY                                        demanded by today’s knowledge-based             with diverse firms and empower domes-
      This paper is a report of the initial find-    economy that recognizes education and           tic and global communities. As minority
      ings of the Billion Dollar Roundtable on       skill as the measure of future success and      customer bases proliferate worldwide and
      the subject of global supplier diversity.      economic viability.                             demand new products and services,
      The paper represents a beginning and a              “The Business Case for Global              diverse firms increasingly will be posi-
      jumping off point in developing the busi-      Supplier Diversity” expects to provoke          tioned to engage these new customers
      ness case for global supplier diversity. The   ideas and discussion, provide direction         and markets. The BDR will continue to
      paper will assist the BDR in charting a        and stimulate best practices. Drivers that      examine the business case as it evolves.
      course for further thought and project         will move global supplier diversity activ-
      design. The development of the business        ities will include executive commitment,
      case for global supplier diversity is in its   the integration of supplier diversity into      ABOUT THE BILLION DOLLAR
      early stages as the global economy contin-     the supply chain, economic conditions,          ROUNDTABLE
      ues to expand and gain definition and as       technology, political and regulatory fac-       The 14-member Billion Dollar
      organizations adapt and transform them-        tors, social and lifestyle factors, global      Roundtable brings together major U.S.-
      selves. Given changing global demograph-       conditions and sourcing strategy. The           based corporations that make meaningful
      ic and population trends and market            benefits for global supplier diversity will     and measurable contributions to the eco-
      forces, along with corporate procurement       be clear — enhanced operations, bottom          nomic growth of diverse companies.
      requirements to reduce costs and to            line results, competitive advantage, cor-       Founded in 2001, the BDR draws from
      enhance productivity, the emerging busi-       porate image, business excellence and an        the experiences and forward thinking of
      ness case for global supplier diversity is     integrated supply chain. In a knowledge-        its members to accomplish the organiza-
      vibrant and relevant. The BDR believes         based, global economy, diversity is rec-        tion’s mission – “to promote supply
      the business case needs to be clearly artic-   ognized as a strategic asset. Enlightened       chain diversity excellence through
      ulated and closely linked to corporate         corporations will understand that global        research, education and best practices.”
      strategic imperatives. Corporations will       supplier diversity is part of business strat-   Don McKneely, president and chief exec-
      need to think differently about the roles      egy and corporate culture. These compa-         utive officer of Minority Business News
      key diverse suppliers can play in reaching     nies will support and collaborate with          USA, and Sharon Patterson, a former sup-
      a variety of constituencies. Economic and      diverse firms on global initiatives and         plier diversity executive with Kraft
      social factors will prompt corporations to     opportunities. They will foster interna-        Foods, serve as BDR chairman and CEO,
      embrace global supplier diversity as           tional market development in conjunction        respectively.
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            Each BDR corporate member spends           BDR is co-sponsoring an international          to robust supplier diversity initiatives
       $1 billion or more annually for a broad         summit in London, England.                     presents competitive advantages, delivers
       range of goods and services on a first-tier           Annually, out of the summit deliber-     critical, sustaining business and creates
       basis with diverse companies, whose             ative process, the BDR produces a policy       new business opportunities.
       majority owners are minorities and              paper to convey the information, insights           Samuel J. Palmisano, chairman,
       women. Members’ spend is audited annu-          and ideas for future action that were the      president and chief executive officer of
       ally by an independent third party. The         conclusion of its efforts. This year’s poli-   BDR member IBM, advocates that the
       BDR encourages corporations to grow             cy paper, the fifth produced by the BDR,       global corporation of the future is driving
       their supplier diversity programs by fos-       is titled “The Business Case for Global        new approaches on a number of fronts,
       tering the expansion of increased com-          Supplier Diversity.” Minority Business         including regulation, education, trade and
       mitment and spending levels each year.          News USA publishes the policy paper            commerce. Supplier diversity also fits
       Members justly are role models to other         each fall and it is distributed to policy      that paradigm. Palmisano commented the
       corporations seeking to achieve the $1          makers, governmental officials and other       May/June 2006 issue of Foreign Affairs,
       billion level of diversity spending. In         interested parties. In 2006, the BDR           which is published by the Council on
       September, the BDR’s efforts in the sup-        examined the longstanding challenge of         Foreign Relations Inc., about recognition
       plier diversity arena were recognized           how to include diverse businesses in the       of the globally integrated enterprise.
       during a program for the 25th MED               enormous area of corporate advertising         “The globally integrated enterprise offers
       Week anniversary, the annual celebration        spend. “Opening Opportunities for              a promise of delivering huge economic
       of minority business hosted in                  Diverse Suppliers in Advertising” is the       benefits to both developed and develop-
       Washington by the U.S. Minority                 title of the 2006 paper.                       ing nations where leaders in business,
       Business Development Agency.                                                                   government, education and all segments
            Serving as a “think tank” for best         The current BDR members are:                   of civil society must learn about its
       supplier diversity practices, the BDR               Altria Group, Inc.                         emerging dynamics,” Palmisano wrote.
       each year selects for further study and             AT&T Corporation                                Central to the globally integrated
       development a supplier diversity issue of           The Boeing Company                         enterprise is the full participation of
       common concern and importance to its                Chrysler Corporation                       diverse suppliers. Getting diverse com-
       members. The BDR’s process is to study              Ford Motor Company                         panies prepared to compete on a global
       and to debate, utilizing members’ long              General Motors Corporation                 stage is a key to success of the global
       history of supplier diversity engagement            IBM Corporation                            economy, Palmisano said. The globally
       and relative successes to grapple with an           Johnson Controls, Inc.                     integrated corporation of the future
       area of spend or a particular supplier -            The Kroger Co.                             requires a broadening perspective about
       diversity issue that calls for better solu-         Lockheed Martin Corporation                diversity, according to Palmisano.
       tions. The BDR’s goal is to develop ideas           Procter and Gamble Company                                       Continued on page 68...
       and approaches that will result in                  Toyota Motor North America Inc.
       increased opportunities and greater suc-            Verizon Communications, Inc.
       cess for diverse suppliers, along with bet-         Wal-Mart Stores, Inc.
       ter, more innovative and sustainable busi-
       ness solutions for the BDR member cor-
       porations.                                      OVERVIEW
            In promoting and sharing best prac-        Scope
       tices in supply-chain diversity excellence,     The advent and proliferation of global-
       the BDR sponsors various activities,            ization is dramatically changing the way
       including an annual summit held each            corporations do business. Corporations
       May in New York City. The 2007 summit           today are moving beyond their own
       attracted more than 100 participants who        domestic shores to serve an increasingly
       included corporate procurement execu-           diverse base of consumers on an increas-
       tives, supplier diversity executives, aca-      ingly competitive global landscape. In
       demics, owners of minority and woman            global companies, management is being
       businesses, consultants and others in a         challenged to think differently about the
       daylong examination of the business case        roles key diverse suppliers can play in
       for global supplier diversity. In February      reaching a variety of constituencies.
       2008, to examine further the business           Enlightened managers of global business
       case for global supplier diversity, the         understand that linking global ambitions       Samuel J. Palmisano

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           “These companies are the main-             ital and information, diversity is an asset   faculty director of programs for minority-
      stream of the global economy – both in          from which the private sector could ben-      and women-owned business enterprises.
      their racial, ethnic and gender make-up,        efit more by strategically incorporating      But the flip side of globalization means
      and because they are among the rising           diversity principles into employment,         that opportunities as well are being pre-
      tide of smaller and more entrepreneurial        marketing and purchasing policies.”           sented to business people from low-cost
      businesses driving global growth. Such                Linking global supplier diversity to    countries to do business in the United
      companies bring a new dynamism and              corporate strategic imperatives is fraught    States, often denying corporate business
      spirit, and offer new ideas and points of       with demands and challenges, which this       to diverse U.S. firms, Greenhalgh said, a
      view – providing innovative alternatives        paper examines through deliberations and      presenter at the 2007 BDR New York
      and aggressively filling niches being           subsequent recommendations of partici-        Summit.
      abandoned by larger suppliers. This is          pants at the 2007 BDR Summit at the                 The U.S. entrepreneurial economy
      why we have globalized our supplier             Marriott Marquis Hotel in New York            will suffer going forward if American
      diversity efforts to ensure we identify         City, and through other sources. For all      minority- and woman-owned companies
      and do business with dynamic, diverse           corporate suppliers, including diverse        fail to benefit and thrive from the prom-
      suppliers around the globe,” Palmisano          suppliers, globalization is having a pro-     ise of globalization, Greenhalgh said.
      said.                                                                                         Entrepreneurial companies, including
           Alexis Herman, former secretary of                                                       diverse firms, historically have fueled
      labor in the administration of President                                                      innovation and U.S. economic growth.
      Bill Clinton and former director of the                                                       The challenge of globalization, as corpo-
      Women’s Bureau in the administration of                                                       rations master new international market
      President Jimmy Carter, which expanded                                                        realities, dictates that the dynamic entre-
      governmental initiatives for women’s                                                          preneurial economy remains vibrant,
      business owners in the late 1970s, said                                                       scalable and innovative — essential driv-
      globalization is bringing about rapid                                                         ers for future U.S. economic growth.
      change in the way business is conducted                                                       Entrepreneurial companies help to sus-
      today. “The changes we are seeing are                                                         tain the U.S. economy through job cre-
      unprecedented, both in terms of the                                                           ation and economic and community
      rapidity of the change, but also how the                                                      development, according to Greenhalgh
      change itself is so revolutionary. It is one                                                  — noting that many of today’s major
      thing to say it has changed and it is no                                                      corporations, including Microsoft, Apple
      longer A and it is now B. What we’re                                                          and Wal-Mart, all began as small, not
      saying is it is not A and it is no longer B.                                                  large organizations. “If we are not sup-
      It’s now C and D and E and F. The pace                                                        porting minorities in the entrepreneurial
      of the change is what makes business so                                                       economy, we are going to be face-to-face
      incredibly different today,” Herman said        Alexis Herman                                 with withering competition from China
      in an interview with Minority Business                                                        and India, where the wage rates are a tiny
      News USA.                                       found impact and brings with it continu-      fraction of what we have to pay people in
           The Migration Policy Group, an             ous pressure on corporate supply chains       the United States. If that sourcing goes
      independent Brussels-based organization         to emphasize the lowest cost of labor and     away from all of those small firms, then
      committed to improving policy develop-          capital and place the highest priority on     we will have a workforce dilemma. It
      ment on immigration and the related             best quality and innovation in the pro-       behooves larger companies to use smaller
      issues of diversity and anti-discrimina-        curement of goods, raw materials and          companies to make sure that they stay in
      tion through the promotion of facilitated       services. Simply, sourcing is going over-     business. The small companies are a vital
      exchanges between key stakeholders in           seas as U.S. corporations pare down sup-      part of this economy,” Greenhalgh said in
      Europe, North America and the interna-          plier lists in search of favorable supply     an interview.
      tional community, highlighted the imper-        chain economics.                                    An October 2002 examination of the
      ative for international supplier diversity           The plus side of globalization is that   entrepreneurial economy by the Kansas
      in a 2002 paper, titled, “Supplier              it opens up many opportunities for virtu-     City, Missouri-based Ewing Marion
      Diversity: The Case of Immigrant and            ally any U.S.-based business to sell          Kauffman Foundation supports
      Ethnic Minority Enterprises.” According         goods and services throughout the world,      Greenhalgh’s point. The study,
      to the Migration Policy Group, “In a            said Leonard Greenhalgh, a professor of       “American Formula for Growth: Federal
      globalising economy, with enhanced              management at the Tuck School of              Policy & the Entrepreneurial Economy,
      mobility of persons, goods, services, cap-      Business at Dartmouth College, who is         1958-1998,” noted that “once, small
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                                                                                                    conference theme was “Leveraging Local
                                                                                                    Diversity for Global Profit” with partici-
                                                                                                    pants examining global and trans-
                                                                                                    Atlantic diversity activities to drive cost
                                                                                                    savings, productivity gains and new rev-
                                                                                                    enue opportunities. Key was bridging the
                                                                                                    world’s two largest economies, the
                                                                                                    European Union and the United States;
                                                                                                    both economies face major competitive
                                                                                                    threats from developing nations, but they
                                                                                                    also contain diverse populations that will
                                                                                                    influence the workplace, entrepreneur-
                                                                                                    ship, consumer and financial markets.
                                                                                                    World Diversity Leadership Summit
                                                                                                    Founder Douglas Freeman commented:
                                                                                                    “The EU and U.S. need to become closer
                                                                                                    trading partners to maintain global com-
                                                                                                    petitiveness. Diversity is potentially at
                                                                                                    the center of this new partnership. From
                                                                                                    our aging demographics, to our Western
                                                                                                    culture, both markets have greater simi-
                                                                                                    larities than differences.” Another organ-
      James O’Neal
                                                                                                    ization, Brussels-based European
                                                                                                    Supplier Diversity Business Forum, is
      entrepreneurial companies changed the          workers to education and skill. As demo-       composed of multinational corporations
      world as they created whole new indus-         graphic forecasts show, minority-group         that help funnel business opportunities in
      tries or radically changed the course of       individuals, many of whom are employed         Europe to companies owned by ethnic
      the established industries they entered.       by diverse businesses, increasingly are        minorities, immigrants, women or dis-
      From a macro-economic perspective,             the dominant factor in the workforce.          abled people. The forum provides pro-
      these small entrepreneurial companies          “Globalization is a fact. If people try to     curement and diversity managers with
      have been important drivers of economic        get in the way, they are going to get run      strategic and practical support for build-
      growth in the United States.” The              over. If they try to build walls around        ing supplier diversity programs. Other
      Kauffman paper further noted that entre-       countries, it is going to cause a big          forum goals include building capacity of
      preneurial companies create two-thirds of      depression. People are going to have to        members to deliver supplier diversity
      all new U.S. jobs, more than two-thirds        learn to live with it. It’s about education    programs in Europe and enabling mem-
      of the innovation in the economy, and          and skills. While it is creating lots of       bers to measure their programs against
      account for two-thirds of the differences      confusion on how [one competes], on the        best practice benchmarks. The initial
      in economic growth rates among indus-          bright side there has been a lot of people     focus has been on France, Germany, the
      trialized nations. “They have been the         lifted out of poverty. The world is a bet-     Netherlands, the United Kingdom and
      change-agents in the economy and socie-        ter place as a result of it,” O’Neal said.     Sweden.
      ty, forcing the country to new productivi-          Indeed, economic and social factors             In tackling international business
      ty levels and radically transforming           are combining to encourage corporate           opportunities, diverse suppliers will need
      whole industries,” according to the paper.     executives, supply chain managers and          to prove their value and insinuate them-
            James O’Neal, retired former presi-      public officials to rethink their approach-    selves into corporations’ total supply
      dent and chief executive officer of Frito-     es to supplier diversity. In February          chains, clearly articulating and closely
      Lay International, the unit of PepsiCo,        2006, the World Diversity Leadership           linking a business case for global suppli-
      and a former chairman of the executive         Summit, a New York-based nonprofit             er diversity to corporate strategic impera-
      committee of the National Minority             membership organization that addresses         tives. Global companies, meantime, are
      Supplier Development Council, said             corporate and community challenges             challenged as well to think differently
      globalization parallels the rapid conver-      globally in the field of diversity, gathered   about the roles diverse suppliers can play
      sion of U.S. industry from one that was        corporate officials, experts and policy-       in reaching a variety of emerging con-
      manufacturing-based to a knowledge             makers in Prague, Czech Republic, to           stituencies through integration of supplier
      economy, which shifts the emphasis of          focus on global diversity practices. The       diversity initiatives into overall global

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      corporate strategies.
            Herman said diverse firms need to
      develop a “global mindset” — under-
      standing that they cannot be U.S.-centric
      about what it takes to do business in
      today’s global economy. “We need to be
      prepared to travel outside of the country
      and inspect and investigate other coun-
      tries where you think there is an opportu-
      nity and where you can have the right
      partnerships. We have to do more work
      in this country with global trade associa-
      tions, working more closely with interna-
      tional communities within the United
      States to build those relationships that
      can help you with those bridges that you
      need to do business with other coun-
      tries,” Herman said.                             Ralph Moore                                   Leonard Greenhalgh
            Global diversity-supplier spending is
      minimal and largely undocumented.                presentations from experts in supplier        Dartmouth College, and faculty director
      Additionally, little consistent support exists   diversity and deliberations among partici-    for programs for minority and women-
      to compel the implementation of supplier         pants in breakout groups.                     owned business enterprises; Wes Bean,
      diversity programs globally, and informa-                                                      director of strategic sourcing, global pro-
      tion about supplier diversity’s impact on the    Summit objectives were as follows:            curement, Wal-Mart, a veteran of global
      global bottom line is lacking. The World            Provide thought leadership                 procurement who has worked in more
      Diversity Leadership Summit pointed out             around global supplier diversity           than 20 foreign countries; Daniel Heath,
      that while the vast majority of Fortune             Explore the business case for              associate director, White House National
      1000 companies employ diversity programs            global supplier diversity                  Economic Council and expert on small
      in the United States and operate globally,          Identify elements of the business          business and entrepreneurship; Barina
      less than 15 percent actively pursue diversi-       case                                       Opong-Owusu, chief operating officer for
      ty strategies and practices outside the             Determine ways to encourage corpo          Bridgewater Interiors LLC, an automo-
      United States because regulatory and social         rate executives to embrace global          tive interior parts company, an economist
      environments do not require them to do so.          supplier diversity                         and accountant who has worked in global
      Therefore, leading companies, like those            Share best practices                       purchasing and supply chain risk man-
      belonging to the Billion Dollar Roundtable,                                                    agement; Michael K. Robinson, program
      focus on the profit potential as a business                                                    director, IBM Global Supplier Diversity,
                                                       PANEL DISCUSSION
      imperative for global diversity.                                                               whose unit operates in the United States,
                                                       A panel discussion, “Establishing the
                                                       Business Case for Global Supplier             Latin American, Canada, Asia and
                           BDR NEW                     Diversity,” set the stage for deliberations   Europe.
                           YORK SUMMIT                 at the 2007 BDR Summit in New York –
                                                       and subsequent recommendations con-           Here is a summary of each presenter’s
                          In the spirit of pro-
                                                       tained in this paper. Consultant Ralph        presentation:
                          moting and sharing
                          best practices in sup-       Moore of Ralph G. Moore & Associates
                          ply-chain diversity          (RGMA), a Chicago based management            Leonard Greenhalgh, Dartmouth
                          excellence, the BDR          consulting firm, served as moderator.         College: Greenhalgh linked the business
                          convened its 2007            Presenters discussed various perspectives     case for global supplier diversity to
                          annual summit May            about the business case for global suppli-    demographics and the U.S. system of
                          23 in New York City.         er diversity, including views from acade-     education. There is no question that the
                          More than 100 partic-        mia, corporate, government and best           demographic makeup of the United
                          ipants pursued a day-        practices. The five presenters were           States is changing dramatically, where
      long examination of the business case for        Leonard Greenhalgh, a professor of man-       today’s minority groups will make up the
      global supplier diversity, buttressed by         agement, Tuck School of Business,             majority of the workforce by 2050,

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      Greenhalgh said. This shift will create
      implications for future U.S. economic
      growth, wealth building and entrepre-
      neurial vitality. Greenhalgh cautioned
      that if the nation remained on its current
      trajectory regarding poverty and eroding
      educational opportunities for minorities,
      the promise of the global economy will
      pass the nation and its citizens by.
      “Education is the key to prosperity.
      Where we are today, and tomorrow, is
      that the knowledge economy is rising in
      prominence. It really has some tremen-
      dous implications for the workforce and
      the entrepreneurial sector of the econo-
      my,” Greenhalgh said. With U.S. urban
      high school dropout rates exceeding 50
      percent, Greenhalgh said minorities             Wes Bean                                       Daniel Heath
      would not possess the knowledge or
      skills to take their places in the global       chain versus integrated-value-chain,”          appropriate partnerships with diverse
      economy. “We are going into a knowl-            Greenhalgh said. “You need suppliers           suppliers. Because small suppliers are
      edge economy with an increasing propor-         and go-to-market partners to be as good        often intimidated by Wal-Mart’s scale
      tion of minority workers and entrepre-          as they can be. In the future, many of         and believe they lack the might to supply
      neurs who don’t know how to do this             those are going to be minorities.”             the corporation, Wal-Mart, through its
      stuff (technology, computers, biotechnol-                                                      buying organization, works often with
      ogy, etc.). That’s the reality. With the        Wes Bean, Wal-Mart: Bean discussed             suppliers to service one store or region at
      knowledge economy, it’s not about hav-          the world’s largest retailer’s approach to     a time, Bean said. Wal-Mart’s “Store-to-
      ing strong backs and weak minds for             assuring supplier diversity in its massive     Community” concept allows managers to
      industries like agriculture and rust-belt       supply chain that includes more than           understand the role they play within their
      manufacturing, but how much do you              61,000 U.S. suppliers serving more than        communities in order to support the cus-
      know,” according to Greenhalgh. That            7,000 retail stores in five different retail   tomer base and manage the merchandis-
      places corporate future workforces in           formats in 13 countries. Wal-Mart’s buy-       ing mix. The corporation’s pursuit of
      jeopardy when compared with emerging            ing organization includes more than            business in the U.S. urban menswear seg-
      economies in China and India, which             2,000 different retail buyers. Wal-Mart        ment, for instance, led to successful part-
      produce 350,000 trained engineers annu-         does not have a formal, global supplier        nerships with diverse suppliers, Bean
      ally compared with 65,000 in the United         diversity program that crosses each of its     said. “As we begin to enter new urban
      States. “You have a highly literate techni-     13 markets, creating a corporate chal-         markets, we are looking for the right sup-
      cal workforce overseas. As we look into         lenge on how to drill down and establish       plier partnerships that can help us under-
      the future, you’ve got an undereducated         relationships on a personal level “to get      stand what are the trends and where they
      major proportion of the U.S. population         more granular,” Bean said. “Now that we        are going,” Bean said.
      that is never going to get there on the tra-    have scale, our challenge is “how do we
      jectory where we are now. If this doesn’t       begin to understand the local communi-         Daniel Heath, White House National
      make the business case for global suppli-       ties that originally supported us and          Economic Council: With his perspective
      er diversity, I don’t know what will,”          helped us grow and become relevant in          from government, Heath said supplier
      Greenhalgh said. Entrepreneurial growth         those particular markets?” Given that          diversity in the United States is no longer
      serves the economy by replacing large           breadth, Wal-Mart focuses on educating         viewed like in the past as assuaging dis-
      companies that are no longer competitive        diverse suppliers initially at the buyer’s     content, being charitable or pursued by
      or relevant with up- and-coming compa-          level about how to do business with the        corporations as good public relations and
      nies, Greenhalgh said. “You need to have        conglomerate, Bean said. Wal-Mart takes        marketing strategies. Nations of the
      that constant revitalization. Companies         an analytical approach, employing data         world, including the United Kingdom
      don’t compete business-to-business any-         to understand market demographics              and South Africa, are seeking to catch up
      more. They compete integrated-value-            where it operates in order to seek the         with the United States on supplier diver-

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                                                                                                     tally enhance global competitiveness
                                                                                                     must include expanding the practice of
                                                                                                     supplier diversity internationally. Opong-
                                                                                                     Owusu outlined three imperatives for
                                                                                                     expanding supplier diversity: the global
                                                                                                     demographic is changing in the market-
                                                                                                     place, workplace and community; ele-
                                                                                                     ments of the success of the business case
                                                                                                     for supplier diversity in the United States
                                                                                                     also apply internationally; and alignment
                                                                                                     of supplier diversity activities with
                                                                                                     strategies of key stakeholders is critical.
                                                                                                     “The elements of the business case for
                                                                                                     supplier diversity apply wherever there
                                                                                                     are historically underutilized population
                                                                                                     groups,” Opong-Owusu said, citing
      Barina Opong-Owusu                              Michael Robinson                               demographics, economics and competi-
                                                                                                     tive advantage. Corporations can collabo-
                                                                                                     rate with diverse companies for a com-
       sity and the competitive and entrepre-         in this country. We may not always brag        petitive advantage when incumbent sup-
       neurial opportunities it creates. Supplier     about it, but compared to other countries,     pliers have poor performance, lack engi-
       diversity is a theme “that is robust and       particularly European countries, where         neering/design capability, refuse to fol-
       developing and one that suggests real          they are basically tribal nations, we have a   low businesses processes and fail to par-
       opportunity now for supplier diversity to      genuine history of all cultures feeding into   ticipate in cost reduction strategies,
       be in a prime position in the discussion,”     the national character and the national        Opong-Owusu continued. “Today, cus-
       Heath said. In the United States, demo-        ethos. We have an inherent advantage in        tomers all over the world have a choice
       graphic change is imminent — as “the           the United States. That is something we        and consumers have to be targeted for
       minority population becomes the majori-        should be building upon, rather than rest-     their business,” he added.
       ty” — and has a profound economic              ing upon,” Heath said.
       impact, Heath noted. The Office of                                                            Michael K. Robinson, IBM: Robinson
       Advocacy of the U.S. Small Business            Barina Opong-Owusu, Bridgewater                is program director for IBM global sup-
       Administration, for instance, reported         Interiors: Opong-Owusu said                    plier diversity, part of IBM Global
       that minority-owned businesses is one of       Bridgewater, a minority-owned company          Procurement, with corporate responsibili-
       the nation’s fastest growing economic          formed in 1999, epitomizes why diverse         ty for implementing supplier diversity
       segments, growing at a rate that is six        companies should be nurtured and sup-          programs and measuring the success and
       times that of all U.S. businesses in the       ported. Bridgewater, which manufactur-
       country. Revenues and job creation for                                                        growth of these programs’ diverse
                                                      ers interior seating and overhead systems
       these firms are increasing correspondingly                                                    groups. IBM’s Supplier Diversity
                                                      for automakers, including Jeep, Cadillac,
       as well, government statistics show.                                                          Program spans the globe by promoting
                                                      F-150, Honda and Lincoln Navigator
       Minorities are needed to sustain national                                                     the utilization of diverse suppliers in
                                                      models, has established a record of con-
       strength and growth not only as owners of      tributing to workforce and community           every country where the corporation
       business, but also through management          development in Detroit. Company annual         operates. Additionally, IBM adheres to
       ranks, supply chains and as workers who        revenues exceed $1 billion, Opong-             the local laws and regulations regarding
       think in an entrepreneurial way, Heath         Owusu said. Bridgewater also has bene-         the implementation of global supplier
       said. “It becomes, for policy thinkers, an     fited from a significant partnership with      diversity objectives. IBM believes that
       issue for national security. It becomes not    BDR member Johnson Controls, and               building and maintaining a community of
       just an issue of balancing the budget and      Opong-Owusu is a former executive at           diverse suppliers increases the corpora-
       being strong economically, but how that        JCI. Of its 1,400 workers, 58 percent are      tion’s opportunity to hear new ideas,
       translates into [strength] around the globe    African American and 39 percent are            apply different approaches and gain
       to defend American interests and               female. “We are one of a living example        access to additional solutions that
       American values. Chief among those val-        of diversity,” Opong-Owusu said. He            respond to customer needs. IBM Global
       ues is multiculturalism that is a tradition    said corporate strategies that fundamen-       Procurement requires its U.S. purchasing

                                                                                                                           Continued on page 78...
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      managers and global commodity teams to         Breakout Groups                              members to “change and/or break” estab-
      submit strategies and objectives, in per-      Deliberations and recommendations of         lished rules necessary to developing a
      centages and dollars, for purchases from       summit breakout groups contribute great-     future point of view. The goal was for
      diverse suppliers. IBM operates Global         ly to the summit thought process. Each       innovative ideas to emerge by looking
      Commodity Councils to source goods             breakout group, typically composed of        ahead and devising a best-case scenario.
      and services strategically through a net-      about 10 members, concentrated on a          Patterson encouraged group members to
      work of international, regional and            specific area of discussion. BDR CEO         be practical, yet push boundaries of
      emerging suppliers for IBM’s varied            Sharon Patterson set the stage for how       thought. In looking forward, participants
      businesses. Robinson’s program fulfills        deliberations were to occur and what         conversely are planted ideas that are
      corporate policy through IBM’s commit-         results were expected. As a spur to delib-   actionable today. Each group prepared a
      ment to expand relationships with certi-       erations, groups were to envision            summary of the highlights of their dis-
      fied diverse firms. Each Global                Minority Business News USA preparing         cussion for consumption and review by
      Commodity Council has a diversity              an in-depth article on why the successful    all groups and participants.
      advocate assigned it by the corporate          improvement in supplier diversity on a
      supplier diversity manager. In his presen-                                                  The group topics were:
                                                     global basis has been so dramatic over
      tation, highlighting best practices in                                                          Impact of Changing Demographics
                                                     the past 10 years. The article publication
      global supplier diversity, Robinson said                                                        Certification and Cultural Change
                                                     date would be May/June 2017. Groups
      IBM began in the late 1990s and early                                                           Changing Supply Chain Sourcing
                                                     would articulate major reasons why the
      2000s to move procurement spending             business case for global supplier diversi-
                                                                                                      Identify Key Drivers
      offshore for competitive reasons.              ty is firmly entrenched in corporate
                                                                                                      Competitive Advantages
      Simply, corporations go offshore for           strategies in 2017 — whether through
                                                                                                      Benefits and Values
      sourcing for new opportunities, accord-        breakthrough strategic thinking about            Opportunities/Threats/Challenges
      ing to Robinson. He encouraged suppli-         global supplier diversity, the establish-        Next Steps
      er diversity managers to be sure to            ment of large diverse businesses with
      measure and report their offshore sourc-       strong capabilities that have been inte-     Here is a sample of deliberations from
      ing activities. Robinson said while all        grated into the global supply chain or       each breakout group, keeping in mind the
      foreign markets are not open to diverse        that the use of emerging domestic mar-       mythical landscape for global supplier
      firms, it is incumbent on minority and         kets as growth engines for diverse busi-     diversity is 2017:
      woman managers to understand how to            nesses and major corporations became
      break into markets and follow through.         commonplace – Patterson explained.
      In 2003, IBM launched its Global                                                            Group 1: IMPACT OF CHANGING
                                                          Within this context, each group was
      Supplier Diversity outreach program to                                                      DEMOGRAPHICS
                                                     tasked with exploring the components of
      provide supplier education, development                                                        Communication and knowledge are
                                                     the business case for global supplier
      and outreach events around the world.                                                          seamless and more proactive in
                                                     diversity. Patterson encouraged group
                                                                                                     meeting customers’ needs
                                                                                                     Demographics are changing, not just
                                                                                                     in the United States, but also in
                                                                                                     Access to information will be stan-
                                                                                                     dardized, via media like Web
                                                                                                     browsers and software
                                                                                                     Technology lowers communication
                                                                                                     Sourcing will shift in Asia from
                                                                                                     China to countries like Vietnam to
                                                                                                     be more cost effective

                                                                                                  Impact of Changing Demographics
                                                                                                  in the United States
                                                                                                       Diversity is the nation’s greatest

                                                                                                                       Continued on page 80...
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           national asset, not just in the spoken     Perspective: In 2017, the BDR will be            standards of acceptance
           language, but the ability to under         the $10 Billion Dollar Roundtable and            Mainstreaming the “reciprocity prin-
           stand people in other countries            encompass globalization.                         ciple”
           Diverse suppliers will not be seen as                                                       Successful minority- and woman-
                a burden, but as a great asset        Group 3: CHANGING SUPPLY                         owned enterprises are reciprocating
           Diverse businesses will take corpo-        CHAIN SOURCING NEEDS                             successful outcomes with other
           rations multinational                      What is needed to be a global                    diverse businesses
           A behavioral change will occur as          player in 2017                                   Technology transfers to diverse busi-
           diverse businesses no longer think             Bicultural and bilingual capabilities        nesses
           of themselves as disadvantaged                 Increased revenue
           businesses                                     Reduced costs                            Perspective: U.S.-based supplier diversi-
           Technology and communication                   Increase buying power and wealth         ty initiatives have to grow for interna-
           enhancements will distribute                   management                               tional programs to flourish (and not be
           Requests for Proposals across the              Lower cost via diverse suppliers will    short-circuited).
           globe and across borders                       help achieve objectives
           Talent will surface regardless of              Quality standards                        Group 5: COMPETITIVE
           location                                       Reduction in cycle times                 ADVANTAGES
           Demographic changes will spur new              Education of domestic and global         Key drivers
           ideas from diverse suppliers                   suppliers                                   Provides diverse suppliers the ability
           Business necessities demand inclu-             Domestic and international partner-         to enter/retain ability to manage
           sion of minorities and women                   ships within the diversity arena            global supply chain
                                                          Understanding of complex diversity          Allows corporations to stay relevant
                                                          models                                      within local marketplace globally
       Perspective: Select countries in each of
                                                          Development of Tier 3 procurement
       the world’s regions will see the value of
                                                          in the supply chain                      Implications
       supplier diversity. By 2017, half of
                                                          Internal corporate awareness of the         Requires technically capable suppliers
       nations will understand the impact of
                                                          global diversity process                    Requires diverse suppliers of scale
       supplier diversity on their governments
                                                                                                      that can add value to the supply
       including the impact on job creation and
                                                      Perspective: Countries will have their          chain
       economic growth, though some coun-
                                                      own diversity councils to define under-         Bureaucracy within corporations
       tries, such as China, will not comply
                                                      utilized populations and track results.         allows diverse suppliers to provide
       without external pressure.
                                                      Auditing bodies will certify results.           ideas
                                                                                                      Understanding of social/economic
       Group 2: CERTIFICATION AND                     Group 4: IDENTIFY KEY DRIVERS                   challenges
       CULTURAL CHANGE                                Statement: Global supplier diversity has        Understanding of market dynamics
       Statement: In 2017, supplier diversity         to be market-driven around the world and
       will be globalized on a region-to-region       be sustainable.                              Outcome of Using Diverse Suppliers
       basis, contingent on cultural, religious,      Elements of success                          Globally
       gender and ethnic sensitivities with over-          Must prove the value proposition           Increases ability to penetrate global
       all principles of inclusion and fairness.           Pilots and incentives have a role          markets
                                                           Define what is “diverse” or “histori-      Creates, enhances brand loyalty
       Certification                                       cally utilized”                            Broadens consumer branding
           Standards for supplier diversity will           Micro-financing                            Economic advantage to local markets
           be clearly defined                              Recognition of third-party organiza-
           Standards will be openly communi-               tions by government and corporate       Group 6: BENEFITS AND VALUES
           cated                                           sector, based on local factors          Definition – U.S. and Offshore
           Standards will be accepted by organ-                                                        Stronger corporate value chains
           izations doing business in the region      Outcomes                                         Stronger economies
           Global federations of certifying bod-         Established standards                         Education and familiarity with dif-
           ies will ensure standardization               Successful corporations are driving           ferent cultures
                                                                                                                         Continued on page 82...

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       Stronger economies will bring                         Rules of engagement (the art of lis-   Integration
           Education of diverse suppliers and                tening)                                    Establish best practices
           supplier management through                       Government stability/volatility            Mentorship among CEOs
           sophisticated business models                     Upgrading of the management team           Educational components (i.e.
           U.S. population is forced to embrace                                                         Kellogg, Tuck schools)
           other cultures                              Expected Outcomes                                Create champions to carry message
           Increased thought process driven by            Multiple sourcing opportunities
           G7 nations                                     Supply chain efficiencies                 Legislative Support
                                                          Increased revenue                             Inform local, state and national
       Benefit to corporations                            Diversification                               legislators and legislative organiza-
            Facilitating international growth             MBE-to-MBE increased growth and               tions
            because U.S. suppliers understand             spend
            corporate culture standards                                                             Diversity Training
            Forces diverse supplier management         Group 8: NEXT STEPS                              Product offerings to educational insti
       to embrace change and risk taking                                                                tutions, regional supplier development
                                                       Communication of Recommendations
            American standards (wages) may be                                                           councils, supply chain managers
                                                       in the BDR policy paper
       translated to improve other (foreign)                                                            Train supplier diversity professionals
                                                            Forward copies to CEOs of the
       lifestyles                                                                                       Train user groups and industry
                                                            National Minority Supplier
            Facilitates diverse supplier sustain                                                        groups
                                                            Development Council, Women’s
            ability and growth                                                                          Offer Web site training
                                                            Business Enterprise National
                                                            Council and other groups, along with
       Perspective: If corporations drive the                                                       2008 London Summit
                                                            governmental organizations that
       growth, they can ease and shorten the                serve small, minority- and woman-       In February 2008, the BDR will further
       learning curve for diverse suppliers                 owned business, including the U.S.      examine the business case for global sup-
       because the corporations know what they              Small Business Administration and       plier diversity through co-sponsorship
       need                                                 Minority Business Development           with the mayor’s office of the city of
                                                            Agency, and regional, national and      London during an international summit
       Group 7:                                             global media                            on establishing the Business Case for
       OPPORTUNITIES/THREATS/                               Present findings at NMSDC national      Global Supplier Diversity. Others in the
       CHALLENGES                                           conference                              United Kingdom assisting in the event are
       Statement: Globalization of supplier                 Articulate findings through public      the London Development Agency,
       diversity depends on a proven domestic               service announcements                   Confederation of British Industry and
       track record of success – service deliv-             Promote the BDR                         British Chamber of Commerce. The city’s
       ery, pricing, value add, strategic partner-                                                                        Continued on page 84...

           Local market knowledge and com-
           Financial wherewithal
           Technology competency

          Corporate structure has the ability to
          operate in foreign countries
          Tax/legal requirements
          Human resources (holidays, vaca-
          tion, local customs)

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      supplier diversity initiatives are promul-      U.K. and sometimes contentious. Issues          for global supplier diversity indeed is
      gated through its Diversity Works for           of diversity and fair access to sourcing        firmly established despite obvious chal-
      London campaign, which engages public           are more problematic than in United             lenges. Obstacles going forward that will
      and voluntary sectors in promoting equali-      States from a legislative perspective.          confront corporate executives, supplier
      ty and workforce and supplier diversity. It           London’s Mayor Ken Livingstone is         diversity professionals, public policy
      seeks to enable businesses to ensure that       eager to address corporate supplier diver-      makers and diverse business owners
      all levels of their workforce reflect the       sity, London officials said, and looks for-     include the minimal support that exists to
      diversity of London’s population, and pro-      ward to input from the BDR. “It is vital        compel the implementation of supplier
      motes best business practices.                  that London’s business community takes          diversity programs globally; supply chain
            The principal aim of the summit will      a leading role in promoting diversity, not      issues that may restrict supplier diversity
      be the strategic, high-level engagement         only for reasons of legal compliance, and       growth; cost cutting; the downsizing of
      of United Kingdom companies and major           not only because the principles of fair-        supplier organizations; mergers and
      public procurement agencies with the            ness and a level playing field are so fun-      acquisitions; and outsourcing. The task
      BDR on the issue of supplier diversity.         damental to sound business practice, but        ahead will be to provoke discussion glob-
      The summit will invite top executives of        because in the global marketplace diver-        ally about supplier diversity’s positive
      companies with substantial United               sity is good for London. I look forward         impact on the corporate bottom line and
      Kingdom supply chains. Heads of ethnic-         to seeing many more of London’s busi-           integrate supplier diversity initiatives into
      owned businesses will also participate.         nesses benefiting from the diversity and        overall global corporate strategies. In
                                                      wealth of talent that London offers. I          fact, as the emerging business case is
      Specific summit objectives include:             look forward to seeing companies benefit        being developed, thought leaders are
          Providing thought leadership regard-        from taking part in my Diversity Works          already looking forward to the future.
                                                      for London programme. London’s con-             “We have to go beyond the business
          ing international supplier diversity
                                                      tinued success is dependent on it,”             case, which talks about why. We have to
          Presenting the business case for
                                                      Livingstone said.                               go to execution, which is the how,”
          international supplier diversity
                                                                                                      Moore said.
          Identifying elements that support the
                                                      CONCLUDING PERSPECTIVE                                       See photos from BDR on page 86…
          growth of international supplier
                                                      The BDR’s 2007 policy paper, “The
                                                      Business Case for Global Supplier               M.V. Greene is an independent writer
          Encouraging London-based corpo              Diversity,” represents the beginning of the     and editor based in Owings Mills, MD,
          rate principals to embrace supplier         BDR’s journey into the issues and chal-         and Washington, D.C., and a writer for
          diversity                                   lenges that will shape the inclusion of         the Billion Dollar Roundtable. Mr.
          Sharing best practices                      diverse companies into global markets.          Greene reports on business, technology
          Helping support the involvement of          That examination will evolve as the busi-       and supplier diversity.
          diverse suppliers in the building of        ness case becomes clearer. Ralph Moore,
          2012 Summer Olympics facilities             founding president of Ralph G. Moore &
                                                      Associates, who moderated the panel dis-
      Supplier diversity initiatives in the
                                                      cussion at the BDR’s 2007 New York
      United Kingdom are primarily public-
                                                      Summit, noted that linking supplier diver-
      sector based largely in health, education
                                                      sity to the global economy has been long
      and social services, according to London
                                                      in coming. “We drive Japanese cars. We
      officials. Formal supplier diversity initia-
                                                      wear Italian suits. We look at Korean TVs.
      tives in European countries are acknowl-
                                                      We buy gas at Dutch-owned petroleum
      edged to lag those in the United States by
                                                      companies. We bank with Swiss-owned
      many years. Private U.K. corporations
                                                      banks. At what point are we going to
      typically do not direct specific dollars in
                                                      finally realize that this is an international
      supply-chain procurement to ethnic com-
                                                      economy and stop talking about supplier
      panies. The U. K. views supplier diversi-
                                                      diversity being a domestic-only program.
      ty more in the context of “fair access” in
                                                      The reality is for those of you who lead
      the public sector rather than as affirma-
                                                      supplier diversity programs, it’s time for
      tive action, according to officials.
                                                      you to embrace global supplier diversity,”
      Additionally, much of the terminology of
                                                      Moore said.
      minority supplier development in the
                                                           Moore and other summit participants
      United States, such as “multiculturalism”
                                                      supported the view that the business case
      and “affirmative action,” is new in the

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                       Continued from page 84

                                            SCENES FROM THE
            BDR ROUNDTABLE

      86 Minority Business News USA | October 15 - November 15, 2007

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Description: Supplier Diversity Business Case document sample