Current Supplier Diversity Policies and Federal Regulations You Should Know Presented by Linda J. Denny President Emeritus, WBENC

History of Supplier Diversity Based on civil rights movement of 1960’s and the racial unrest of 1970’s o Affirmative Action Programs o Corporate Response 1.Early Supplier Diversity Programs created over 40 years ago: a.IBM 1968 b.Proctor & Gamble 1972 o Government response 1.Public Law enacted October 1978

Public Law Applied special provisions to federal procurement to benefit small, disadvantaged or minority businesses o Prime contractors required to subcontract o Oversight of large contracts by government contracting officer o OSDBU established o Required goals by statute for federal contracting dollars

Public Law Today the Federal Government statues require Federal contracting dollar goals of: o 23% to small firms o 5% to small disadvantaged business enterprises o 5% to small women-owned firms o 3% to service disabled veteran enterprises o 3% to Hub Zone You note that disabled business enterprises, other than those owned by veterans are missing in the goals.

Corporate Supplier Diversity Created the concept of supplier diversity o Early programs at IBM, Proctor & Gamble Today set and meet goals from 5%-35% 17 corporate members of the Billion Dollar Roundtable o At least $1billion spent with diverse suppliers o Walmart leads with $10.5 billion (2010) Many companies spending less than $1 billion have excellent programs

The Federal Government is the biggest purchaser of goods and services in America.

Situation Today There are both private and public sector Supplier Diversity Programs These programs are driven by: o Compliance—government contract rulings o Voluntary—commitment and understanding of the value drivers for inclusion o A blend of both compliance and voluntary

Private Sector Corporate Program Divers: Desire to: o Broaden Market Competition o Spur innovation & creative problem solving o Manage business through all economic cycles— adds stability throughout the supply chain o Adds a competitive advantage o Ensure products and prices relevant to customers o Create wealth in diverse communities, making them better customers o Have supply base reflective of demographic diversity of consumer marketplace o Spur economic growth for better overall economy

Characteristics of Excellence in Supplier Diversity Programs Driven from the top—CEO & Board Knowledgeable consultant used to help design program Sound business case based on business drivers Defined policies, goals and metrics

Characteristics of Excellence in Supplier Diversity Programs Strategic plan that outlines achievement of goals and desired metrics o IT used to accurately identify diverse supplier spend o Quarterly reports to senior management Adequate budget & staff with authority and accountability Close integration with sourcing organization

Characteristics of Excellence in Supplier Diversity Programs Internal awareness program Supplier information sessions & mentoring programs Established Tier II programs with metrics and “teeth” Partnership with advocacy & certification organizations: o USBLN NGLCC o WBENC o NMSDC

Advocacy Important Influence Spurred changes in the Bureau of Veteran’s Affairs o Influenced more rigorous certification/validation process, now including site visits Gives individual business owners a more powerful and influential voice to gain access and favorable policies

Globalization Corporate programs are going global o Establishing policies in global sourcing to ensure diverse small business participation in other countries 1.Problem in finding local suppliers 2.International certification programs being developed o Help US based diverse suppliers compete globally o Tier II programs

Improvements Needed For diverse firms to meet the needs of large enterprises: o Improved management skills o Infrastructure & systems improvements o Secured sources of credit & financing For Corporations: o Mandate to prime suppliers that supplier diversity goals are not optional o New systems of measurements not solely focused on dollars spent

Future Focus of Corporate Supplier Diversity Programs Internal alignment and collaboration Education, development & mentor programs Diverse partner firms that align with the corporation’s strategic direction Strong niche players with a specialty versus being a “jack of all trades” Firms that are nimble & customer service- oriented Smaller diverse firms that are the incubators for the next great idea!

Linda J. Denny President Emeritus Women’s Business Enterprise National Council