Today’s world is fraught with competition on many levels – among races, religions and ethnicities over both real and perceived access to goods, services and resources. Whether the drama is played out in Somalia, South Africa, South Central Los Angeles or right here in Birmingham Alabama, there is mounting tension between those who have traditionally held economic power and those who were once locked out and are now clamoring to claim their fair share of the economic pie.

During the past quarter century, the most important tool in “leveling the playing field” and providing equal access to those who have traditionally been denied business opportunities in Corporate America has been the concept known as “Supplier Diversity.”

Supplier Diversity means that a corporation actively seeks out and trades with minority-owned businesses in industries and business fields where they have traditionally been excluded or under-represented. But some in Corporate America, particularly those who have traditionally held economic power, hold a dim view of Supplier Diversity.

Arguments Not Valid
The most prevalent argument I hear from Corporate America against Supplier Diversity is that it seems the program gives preference to under-qualified minority suppliers and excludes qualified non-minority suppliers. This argument is flawed on several counts.

In this argument lies the assumption that non-minority suppliers are more productive than minority suppliers. I have searched extensively for conclusive empirical evidence to support this claim. I have yet to find any company that hires a minority supplier to displace a “more qualified” non-minority supplier without considering the minority supplier’s qualifications in terms of price, product and the ability to deliver on time.

With the current emphasis on cost reduction being stronger than ever, combined with the slow recovering economy, a company engaging in such poor behavior simply would not be able to compete and excel in today’s business environment.

The second most common misconception is that it is simply “code” for unjustified quotas or minority spending targets.

Few companies meet sales targets or other objectives without setting measurable goals, establishing timetables and implementing strategic plans for meeting them.

The inclusion of minority suppliers in a company’s procurement process should be no exception. It seems the only time that goal-setting is deemed inappropriate for business is when it comes to minority suppliers.

If most corporations believe that equal opportunity for minority suppliers is a worthwhile and profitable objective, then their beliefs should lead them to set measurable goals and to invest the time, money and energy to meet those goals.

Making the Case
Another question that I am consistently faced with is, “How do you make the business case for Supplier Diversity within the corporate structure?” Though corporations create a variety of products and or services, there are some common themes concerning the need for a Supplier Diversity program that hold true in any business.

First, when making the business case for Supplier Diversity, it is imperative to keep the focus on economics.

Andrew Brimmer, a prominent African American economist and former Federal Reserve board member, noted in his column in Black Enterprise magazine that “racial bias primarily through the denial of equitable educational and employment opportunities to (minorities) – deprived the American economy of about $215 billion…” Now, that’s a lot of money that could be going into Corporate America’s bottom line!

Building support for minority inclusion must be fully integrated into a corporation’s philosophy, business goals and financial expectations. Successful Supplier Diversity programs are an integral part of business planning, not an add-on or feel-good gimmick.

It should go without saying that a good Supplier Diversity program has to be market-driven. Responding to marketplace changes means reshaping and modifying the program based on these changes.

The population growth projections in minority and ethnic communities in America suggest that a company’s greatest opportunity for increasing market share is increasing its customer base in those communities. As in any other business, those companies that are the first to respond to the ever-changing needs and wants of their existing and prospective customer base are those that stay in business and lead their industries.

All successful corporate Supplier Diversity programs must actively involve their purchasing and/or procurement department, where the money meets the road. This department must ensure that its purchasing patterns mirror the company’s strategy to reach its existing and desired customer base. In areas where the company’s minority customer base is high, the case for Supplier Diversity in those areas carries more weight.

Any program that fails to make a case for the bottom line will not succeed. Supplier Diversity is no exception.

But if a company sees where the demographic shifts are occurring, knows where to find qualified minority businesses, and understands how this knowledge meets company goals to stay profitable and at the top of its field, then making the business case for a Supplier Diversity program in their company should be a no-brainer.

Scott Vowels is the President of the South Regions Minority Business Council (SRMBC). You can reach him at info@srmbc.org.