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 95-507 enacted October 1978
Public Law 95-507
• 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 95-507
• 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
o WBENC
o NMSDC
NGLCC
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:
oImproved management skills
oInfrastructure & systems improvements
oSecured sources of credit & financing
• For Corporations:
oMandate to prime suppliers that supplier
diversity goals are not optional
oNew 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 serviceoriented
• Smaller diverse firms that are the incubators
for the next great idea!
Linda J. Denny
President Emeritus
Women’s Business Enterprise National Council
ljdenny888@yahoo.com
202-905-7564