Wright On May 2012


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The Value Proposition for
Minority Supplier Development

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Wright On May 2012

  1. 1. Wright on … The Value Proposition for Minority Supplier Development         Corporations, like the economy, go through cycles and phases. New programs are introduced to address the needs of the always-changing marketplace. Other programs are shelved because leadership decides they no longeradd value. Unfortunately, minority supplier development may become the next target of acorporate re-shuffling. In the last several months, an increasing number of supplier diversityprofessionals are questioning the value of minority supplier development and membership in theNMSDC. They are quick to say that they personally understand the value proposition, but theirleadership team wants the business case to support the programs.I have to admit a degree of disappointment and frustration that this question is still being askedas NMSDC marks its 40th anniversary this year. I first got involved with minority supplierdevelopment in 1987. Even then, supplier diversity was embedded in the companysprocurement process. Asking about the value proposition of supplier diversity would have beenequivalent to asking about the supplier evaluation process; or in modern parlance, it would beequivalent to asking about the business proposition for corporate social responsibility. Ofcourse, I now realize that I was fortunate to have been in an industry that had learned—sometimes, the hard way—that Asian, Black, Hispanic and Native American suppliers arevaluable partners in the corporate supply chain. The telecommunications industry, like theautomotive and consumer products industries, understood strong supplier diversity processesproduced two related outcomes: innovative, capable suppliers and potential customers.That value proposition has not changed.Strong minority suppliers are important engines for economic growth in the United States. Hereare some facts to consider. Minority business is growing at a faster rate than non-minoritybusiness. Depending on the ethnic classification, the growth is 6% to 10% faster than non-minority business. Gross sales receipts for minority-owned firms are also growing at a faster ratethan for non-minority firms; that growth ranges from 30% to 50%. In addition, employmentgrowth among minority businesses shows significant increase, while employment growth fornon-minority firms is on the decline.
  2. 2. Minority businesses are more likely to hire minority employees, an important demographic forfuture marketing and sales activity. Perhaps the most important fact for corporations looking fornew markets to consider: the combined buying power of Asian, Blacks and Hispanics is nearly$3 trillion.This is all good news. Continued utilization of minority suppliers will not only enhance thegrowth of the minority business community, but it will also enhance employment opportunitiesfor minorities and the buying power those minorities represent. NMSDC is the link betweencorporate America and those minority businesses waiting for that opportunity to grow.Despite all of this good news, there is still work or NMSDC and corporate America to do. Thereis one area where minority businesses have not kept pace. As a group, minority-owned firmscontinue to lag behind their non-minority peers when it comes to economic parity. Equal accessto contracting opportunity lags for minority businesses. This is true even when you control forsize and type of business. NMSDC is committed to making sure that capable certified MBEshave an equal opportunity to compete for contracts with their non-minority peers.Joset B. WrightPresidentNational Minority Supplier Development Council