Supplier diversity

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Supplier diversity refers to the use of minority-owned businesses as suppliers, and a supplier diversity program is a proactive business program which encourages such use within an organisation's supply chain. Minority-owned includes black and minority ethnic business ownership, women owned, veteran owned, LGBT-owned , service disabled veteran owned, historically underutilized business, and Small Business Administration (SBA)-defined small business concerns. [1] It is not directly correlated with supply chain diversification, although utilizing more vendors may enhance supply chain diversification. Supplier diversity programs recognize that sourcing products and services from previously under-used suppliers helps to sustain and progressively transform a company's supply chain, thus quantitatively reflecting the demographics of the community in which it operates by recording transactions with diverse suppliers.

Contents

United States

Paul D. Larson links the establishment of supplier diversity concerns to the American civil rights movement in the 1960s. [2] : Page 3 

Diverse- and women-owned business enterprises are among the fastest-growing segments of the U.S. economy. Diverse-owned businesses generated an estimated $495 billion in annual revenue in 1997 [3] and employed nearly 4 million workers, while women-owned firms employed about 19 million people [4] and generated $2.5 trillion in annual sales.

Alongside the Women-Owned Small Business Program, the US Small Business Administration also operates an Economically Disadvantaged Women Owned Small Business (EDWOSBs) program for preferential award of federal contracts in certain industries. [5]

The Hackett Group, in their 2019 study of supplier diversity, found that US companies increasingly adopt supplier diversity programmes to achieve objectives associated with reputation management, their own corporate diversity culture and investment in their local communities, rather than reasons connected with legal compliance, and there are a growing number of companies who aim to extend supplier diversity within their tier 1 supply chain but also set expectations for tier 2 supply chain engagement activities to include supplier diversity language. [6]

Public contract bidding

Certain states within the United States, as a part of their bidding process, incentivize Minority Business Enterprises (MBEs) and women-owned business enterprises (WBEs) to bid for publicly awarded construction or service contracts. They may also declare that a percentage of the work performed on a contract be awarded to an MBE or WBE. [7] [8] [9]

In New York State, a goal was set in 2014 for the award of public contracts to women and minority businesses to increase from 20% in 2014 to 30% by 2019. [10] When the target was increased, the Association of General Contractors (AGC) sued the state for failing to release documents via New York's Freedom of Information Law (FOIL). The AGC was concerned that the state had not conducted a proper contract analysis before declaring the increase of the MWBE goal to 30%. [11] The AGC stated that the 30% goal did not reflect the availability of MWBEs statewide. The AGC also questioned a later study - performed by Mason Tillman Associates Ltd. of Oakland, California - which was paid for by the state in consideration of its employment goals for state contracts. [12]

In 2018, the state was also considering establishing goals for the workforce of contractors awarded public contracts, but insisted these goals were not quotas. If contractors could not make a "good faith" effort to reach the goals, contractors might not be eligible for future public contracts for a length determined by the state. [12]

There have been cases where contractors have been charged with crimes for impersonating MBEs. In New York in 2018, Eastern Building & Restoration was charged for fraudulently receiving over $1 million from public construction contracts by impersonating as an MBE during the years 2012 - 2014. [10]

Canada

In Canada, supplier diversity is supported and facilitated by five councils:

The Supplier Diversity Alliance Canada, formed in 2016, draws together the work of these councils (although the Canadian Council for Aboriginal Business is not directly involved in the alliance). [2] : Page 4 

New Zealand

Supplier diversity initiatives in New Zealand are aimed in particular at engaging with Pasifika businesses. [13]

See also

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Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or services through this practice, it is referred to as public procurement.

National LGBT Chamber of Commerce

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Minority business enterprise (MBE) is an American designation for businesses which are at least 51% owned, operated and controlled on a daily basis by one or more American citizens of the following ethnic minority and/or gender and/or military veteran classifications:

  1. African American
  2. Asian American or Pacific Islander
  3. Hispanic American - A U.S. citizen of true-born Hispanic heritage, from any of the Spanish-speaking areas of the following regions: Mexico, Central America, South America and the Caribbean Basin only. Brazilians shall be listed under Hispanic designation for review and certification purposes.
  4. Native American, including Aleuts

City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989), was a case in which the United States Supreme Court held that the minority set-aside program of Richmond, Virginia, which gave preference to minority business enterprises (MBE) in the awarding of municipal contracts, was unconstitutional under the Equal Protection Clause. The Court found that the city failed to identify both the need for remedial action and that other non-discriminatory remedies would be insufficient.

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Robert Cornegy American politician

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Supply Nation is a non-profit organisation that aims to grow the Aboriginal and Torres Strait Islander business sector through the promotion of supplier diversity in Australia. The organisation was founded in 2009 by Michael McLeod and Dug Russel, co-founders of Message Stick Communications, with pilot funding from the Federal Government.

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EyeMail Inc. American communications technology company

EyeMail Inc. is an American communications technology and digital marketing company based in Atlanta, Georgia. Founded by entrepreneur Lisa S. Jones, EyeMail Inc. is both a black and woman-owned business enterprise (WBE), and is an officially certified Minority Business Enterprise (MBE) by the NMSDC.

Lisa S. Jones American businesswoman and entrepreneur

Lisa S. Jones is an American businesswoman and entrepreneur, best known for being the founder of Atlanta-based video email company EyeMail Inc. As both a black and woman-owned business, EyeMail Inc. is classified as a Minority Women Business Enterprise (MWBE). Her company began as a start-up, eventually growing exponentially through partnerships with Microsoft, Delta Air Lines, Time Warner, Porsche North America, the Atlanta Tech Village, PepsiCo and, most notably, The Coca-Cola Company, through which EyeMail Inc. got selected by Microsoft as a premier MWBE supplier in digital marketing.

References

  1. ↑ Small Business Administration, Small Business Size Regulations, accessed 31 March 2016
  2. 1 2 Larson, P. et al, The State of Supplier Diversity Programs in Canada: the Buyer's Perspective, published September 2021, accessed 8 June 2022
  3. ↑ "SBA's Office of Advocacy" (PDF).
  4. ↑ "Center for Women's Business Research: Publication Details". Archived from the original on 2008-01-05. Retrieved 2008-02-03.
  5. ↑ Small Business Act, 15 USC 637(m)
  6. ↑ Hackett Group,Supplier Diversity: Moving Beyond Compliance Drive Meaningful Value, presentation by Fong, A. and Peters, G., published April 2019, accessed 4 March 2021
  7. ↑ "New York State Contract System". ny.newnycontracts.com. Retrieved December 7, 2018.
  8. ↑ "MWBE Certification Eligibility Requirements (NYS Empire State Development)". esd.ny.gov. 4 April 2017. Retrieved December 7, 2018.
  9. ↑ "Minority and Women Owned Business Enterprises Program (NYS Dept. of Transportation)". www.dot.ny.gov. Retrieved December 7, 2018.
  10. 1 2 Gavin, R., "Colonie contractor faces prison in minority-ownership scam". www.timesunion.com. December 7, 2018. Retrieved December 7, 2018.
  11. ↑ Karlin, Rick (June 1, 2017). "Contractors sue state over FOILS and MWBE goals". www.timesunion.com. Retrieved December 7, 2018.
  12. 1 2 DeMasi, Michael (February 5, 2018). "Cuomo wants sweeping changes to New York's MWBE law". www.bizjournals.com. Retrieved December 7, 2018.
  13. ↑ Sharma, A., Increasing supplier diversity in our region, Gisborne Herald, published 7 December 2021, accessed 8 June 2022
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