Why You Need to Make Room in Your Budget for Supplier Diversity

 

For many busy supply-chain and procurement leaders, supplier diversity falls near the bottom of the list when budget time rolls around. That’s partly because supplier diversity programs may seem more like a regulatory requirement or a corporate social responsibility than a genuine business opportunity.

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This misguided perception is rooted in three facts about supplier diversity in the United States:

  1. The federal government is still the single largest customer for minority- and women-owned suppliers and vendors.
  2. State and local governments generally require that a certain amount or percentage of their budgets must be spent with minority- and women-owned businesses.
  3. Many corporations and other organizations – especially those with large government contracts – must also comply with similar requirements.

Given all the many government requirements and regulations every company must follow, there’s more to the story than simple compliance. Want to know the real reason why are more and more top corporations investing so heavily in supplier diversity? The answer is simple – a more diverse and inclusive supply chain is helping them to grow and expand.

Not Easy, But Worth the Effort

For public- and private-sector procurement managers, many of whom are also coping with budget cuts, meeting all these layers of diversity requirements can be challenging. To fulfill their fiscal and diversity obligations, managers need not only organizational buy-in, but also strong procurement processes that help support a more diverse supply chain.

But does a business case exist for establishing programs that actively recruit qualified minority- and women-owned suppliers? An increasing number of supply-chain thought leaders say yes. Manufacturers and other organizations with robust supplier diversity programs are benefitting from:

  • Stronger relationships with their supply base,
  • New business opportunities, and
  • A more agile supply chain.

Consider this statistic: The combined “buying power” of African American, Hispanic, and Asian American-owned businesses is now about $3 trillion dollars. With the multicultural population experiencing such amazing growth, it’s no wonder more and more businesses are embracing supplier diversity to stay competitive.

Good Times, Bad Times

Any procurement manager who has experienced a few business cycles understands that it can be tough to keep diversity in mind during periods of economic downturn or uncertainty. But it can be done. For example, a few years back Cargill had to cull back its select suppliers from 17 to 12 to improve efficiency. Because the giant manufacturer made it a strategic priority not to eliminate suppliers from traditionally underrepresented groups, no Black-, Latino- or women-owned businesses were cut in the process.

In fact, “Having diverse and inclusive perspectives and practices in our organization will be even more crucial in the face of unprecedented economic challenges,” says Pat Hemingway Hall, president and CEO of HCSC. “To be as innovative as possible, we must capitalize on the talents and skills of all of our employees. At the same time, we need to continue to anticipate and respond effectively to the needs of our increasingly diverse customer base who will be facing their own unique challenges during this difficult time.”

Diversity as a New Business Generator

Executives at Milwaukee-based Johnson Controls Inc. say they can directly trace more than $6 billion worth of business to its commitment to supplier diversity. A Tier 1 supplier to General Motors and other automakers for years, the company’s notable focus on diversity helped the company gain business from GM in the late 1990s.

To differentiate itself, Johnson Controls approached GM and offered to form a joint venture with a minority-owned firm to help GM meet its minority-produced content targets. Now known as Bridgewater Interiors LLC, this joint venture has expanded over the years to supply components to several other major carmakers.

Smaller Can Be Better

Like many other defense contractors to the federal government, Lockheed Martin must search for certified minority-owned or small businesses to provide a percentage of its content. The federal government’s definition of a minority-owned business includes small businesses and companies owned by veterans or service-disabled veteran.

This has proven to be a competitive advantage rather than a handicap, because smaller companies are often more agile and flexible than their larger competitors. “What these small businesses do is really bring innovation to our corporation in a much faster method to market than a real large corporation like Lockheed Martin,” said Nancy Deskins, Lockheed Martin’s director of corporate agreements and supplier diversity.

There is also huge untapped potential in reaching out to women-owned suppliers. While women control a tremendous amount of purchasing power worldwide, women-owned vendors typically represent less than 1% of sales to large multinationals.

Corporations interested in partnering with women-owned businesses can find potential leads through WEConnect International, a nonprofit organization that collaborates with various international agencies, including The World Bank Group and the U.S. State Department, to identify and certify women-owned businesses globally.

Still think you can’t afford to build a world-class supplier diversity program into your annual budget? It’s high time to rethink your priorities – and calculate the potential benefits of greater inclusion.


STAY TUNED! Next time, we’ll show you how supplier diversity can help your company navigate today’s competitive landscape.

 

Links:

http://www.sdcexec.com/article/10246927/time-to-get-started-with-supplier-diversity

http://www.diversityinc.com/supplier-diversity/a-win-win-companies-thrive-communities-get-a-boost-with-supplier-diversity/

http://www.industryweek.com/leadership/business-case-supply-chain-diversity

http://weconnectinternational.org/en/

WHY SUPPLIER DIVERSITY SHOULD TOP YOUR TO-DO LIST

 

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Did you make any New Year’s resolutions this January? Okay, how many of those commitments have already fallen by the wayside? Here are some important reasons you shouldn’t let implementing a diverse supply chain program become one of those “should have, could have, didn’t” items on this year’s to-do list.

While supplier diversity (SD) is just one element of modern supply chain planning, it’s becoming increasingly important to private companies, government agencies, and not-for-profits alike. “Supplier diversity” means a strong commitment to creating and maintaining a diverse supply chain that ensures the inclusion of diverse groups in their procurement plans, including women- and minority-owned businesses.

MORE THAN QUOTAS

It’s a mistake to think of supplier diversity as just a quota system or a social program designed to help selected social groups, while adding minimal value to your supply chain. In fact, a commitment to meaningful SD can give your organization a measurable competitive advantage in several ways:

  • Greater return on investment (ROI). A major study by the Atlanta-based Hackett Group showed actual financial benefits from business relationships with diverse suppliers. Based on a study of 50 companies from both the service and manufacturing sectors, the research demonstrated that companies with a strong SD focus generated a 133% greater procurement ROI than the average comparable business, driving an additional $3.6 million to their company’s bottom line.
  • Lower operating costs and higher profits. These same companies spent an average of 20% less on their buying operations, and reported procurement staffing levels less than half of similar companies without SD programs. The statistics also showed that companies who actively pursue a diverse supply chain are more profitable than companies who don’t.
  • Other benefits. A strong commitment to supplier diversity can also:
    • Promote innovation by introducing new products, services, and solutions
    • Expand your range of procurement channels for goods and services
    • Drive increased competition (on price and service) between current and potential vendors
    • Open up new opportunities for business expansion by highlighting new consumer needs driven by shifting demographic trends
    • Display your organization’s commitment to doing business in multicultural markets with rapidly growing consumer groups

REAPING THE REWARDS

Progressive-thinking companies are leading the way in a multicultural marketplace by finding creative new ways to incorporate supplier diversity into their business processes. Two of these have developed particularly strong relationships with minority business owners — and are enjoying the benefits.

  • In 2007 alone, Wal-Mart spent more than $3.9 billion with nearly 2,000 minority-owned suppliers, using community outreach to help develop their network. As Hispanic businesses scale up, Wal-Mart is using them to meet customer needs. For example, Ruiz Foods, the largest Mexican frozen food company in the United States, is one of Wal-Mart’s largest domestic product suppliers.
  • IBM was the first IT company to pass the $1-billion mark with minority suppliers, spending $2.3 billion with diverse companies in business services, facility management, travel, and technical subcontracting in 2007.

Many companies and organizations set out to implement a diverse supplier group with no real expectations of a tangible return on investment. They may even anticipate increased costs and a greater administrative burden.

The pleasant surprise is that a robust SD program doesn’t have to cost more … and can bring unexpected business benefits that help your bottom line.

DOWNLOAD THIS BLOG IN PRINTABLE PDF FORMAT


STAY TUNED! In the next installment, we’ll explore some simple guidelines that can help you navigate today’s changing competitive landscape with the aid of supplier diversity.

Contact sales@connxus.com for more information on ConnXus products or to schedule a demo.

Links:

Staff Member Spotlight: Jennifer O’Neal-Douga

 

ConnXus Senior Account Development Manager, Jennifer O’Neal-Douga, joined the team in July of 2015.

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“What motivates me to jump out of bed every morning is the thrill of seeing what surprises the day has in store for me and the interesting problems I will solve at ConnXus,” says Jennifer.

In the fairly young business environment at ConnXus, Jennifer’s role is especially crucial to maintain a clear plan for client onboarding and engagement. Her top three responsibilities as ConnXus Senior Account Development Manager include new client onboarding, project management and strategic business growth.

The entrepreneurial and family friendly company culture at ConnXus is what drew Jennifer to work at the Mason, Ohio office. When asked what song best describes the ConnXus work environment, she responded with “Eye of the Tiger,” by Survivor.

When she’s not working, Jennifer enjoys spending her time outside hiking—her favorite local trails are at Winton Woods and Miami Whitewater.

With over 15 years of accomplished leadership experience in the financial, retail and insurance industries, Jennifer brings exceptional strategic planning and operations management skills to the ConnXus team.

Jennifer obtained her bachelor of arts (BA) in history from Georgetown University, and her masters of business administration (MBA) from Xavier University. 

Ep2S Compensation Solutions

Supplier Spotlight: EP2S Compensation Solutions

Ep2S Compensation Solutions

Eugene Epps, a certified compensations professional, made the ultimate decision to embark on a new journey after 30 years of experience in the corporate human resources industry. Today he is the founder and managing partner of 11-year old EP2S Compensation Solutions, LLC, a minority-owned business and ConnXus+ supplier based in Houston, TX.

Hands down, HR rewards and benefits’ programs should not decrease a company’s bottom-line—instead, HR programs should, “provide a positive impact and return on the organization’s HR dollar, as well as encourage career development that benefits the company and its employees,” explains Epps.

Since its founding in 2004, EP2S Compensation Solutions, prides itself on developing employee pay, retirement and healthcare programs that produce maximum return-on-investment (ROI) for both the company and employees. The consulting firm is also known for developing and implementing sound reward programs that support a company’s strategic business and HR objectives.

For example, today’s employer-sponsored health insurance plans (fully insured or self-insured) annually cost a company and its employees thousands or millions of dollars, while producing a negative impact and return on the organization’s healthcare dollar, cash-flow, operations and bottom-line. EP2S Compensation Solutions has recently launched a new and innovative healthcare pay program called EP2S Healthcare Benefit Rewards. This new “Program” is designed to annually save a company and its employees thousands to millions of dollars while producing a positive impact and return on the organization’s healthcare dollar, cash-flow, operations and bottom-line.

To learn more about the new healthcare pay program, Epps has published the book EP2S Health Care Benefit Rewards Program that can be ordered on line by visiting www.ep2s.net.

Eugene Epps Supplier SpotlightWhen asked about the firm’s major milestones in its 11-years of operation, Epps responded, “I am most proud of the development and implementation of our revolutionary job evaluation system—EP2S Broadbanding. The system was developed on behalf of a client’s need to simplify and streamline its organization as well as the job writing and evaluation process, all while reducing labor costs.” Epps has a book published on the EP2S Broadbanding job evaluation system.

Additionally, the firm developed and implemented an innovative pay program for Kinder Morgan’s non-exempt field operations employees. This new program simplified their client, Kinder Morgan’s, ability to train, classify and offer reward programs for their non-exempt field employees. Also among EP2S Compensation Solutions clients are Occidental Petroleum Corporation, Dow Corning–Settlement Facility Trust and Spectra Energy.

Epps, a member of the National Association of African Americans in Human Resources (NAAAHR), has been a ConnXus+ supplier for one year and on Wednesday, November 18.

Supplier Spotlight: The Deciding Factor

 

Karen Meyers Holzer, President of The Deciding Factor, invited ConnXus into their Mason office to learn the logic behind the “Marketing That Makes up Minds.” The 13- year old women-owned integrated marketing firm, based in Mason, Ohio, is a ConnXus+ and Marketplace member. The company has been a friend and supporter of ConnXus since its launch in 2010.

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Breaking down the strategy-based marketing differentiator of The Deciding Factor, Holzer explains, “What makes us different from other firms is that we always start with a strategy. First we ask clients: What are you trying to achieve? What marketing have you done in the past? What are your business goals, and how are you going to track it? From this initial assessment, we begin to fabricate our strategic marketing efforts in line with those goals.”

In other words, it’s not just creating a brochure and hoping it gains traction. It’s asking who the audience is, where the strategy will be utilized and the ROI the clients will reap. It’s about being a smart marketer. Marketing efforts should align with business goals, whether you are a small, mid-sized or large company.

The integrated marketing firm works in B2B and B2C website development, digital content management, social media and e-marketing as well as traditional marketing, such as billboard advertising, and increasingly more public relations.

Meredith Raffel, Executive Director of The Arts Alliance in Mason remarks on the transformation her company gained from The Deciding Factor marketing, “The slippery slope of pro-bono is a dance. It’s a marriage of giving and receiving. But what The Deciding Factor gave to The Arts Alliance was a voice. Never strong armed into any idea, The Deciding Factor walked us through this process of growth and change. They gave us the chance to realize ‘what speaks to us’ about the future of our organization.”

Creating that emotional connection with a brand is the key to success. Humans make decisions intellectually and emotionally. Whether you are buying a coffee cup or a new car, you do your research and emotionally invest.

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Holzer enlightens us further, stating, “60% of your buying decision is made online before you even call to ask questions or go into the store,” explaining why it is absolutely crucial to have an emotional hook that the competing product/service lacks. Whether you recognize it or not, Product A and Product B are probably very similar in quality and price, so there has to be something else that makes up their mind. And that’s the brand. As humans we experience such things on multiple levels.

Explaining the connection between a brand and emotion, Holzer says, “What I love is watching a company go from being a marketing skeptic and what we can show them is that marketing doesn’t have to be scary, it is a tool for them. We can show them through analytics and metrics that their customers are engaging with their brand.”

As a ConnXus Marketplace partner, The Deciding Factor offers exclusive marketing pricing for ConnXus+ members. The firm is currently working with a ConnXus+ member to revamp their logistics marketing efforts. As a startup, the young company is literally “on the road” expanding its network and services. The Deciding Factor is building up its marketing efforts to strengthen its brand, logo development and webpage design.

The firm has taken full advantage of their ConnXus+ membership, having responded to several RFQ and RFP opportunities and presenting their expertise in the ConnXus Webinar Series, not once but two times. After the first webinar presentation, 15 participants reached out to The Deciding Factor requesting more information about their marketing strategies and services.

In addition to digital marketing and website development, the integrated marketing firm specializes in crisis communication and implementation plans. As the saying goes, smart public relations means planning for the worst and hoping for the best. Crisis communication plans, Holzer explains, “prepare you for an incident that is handled carefully and hopefully diffuses before turning into a drawn-out crisis. In today’s social media arena, crises blow up exponentially faster than they would have even five years ago.”

Especially for manufacturing companies, the idea that something hazardous will happen due to a malfunction of heavy equipment or welding torch accident, means a crisis communication plan is vital for the company’s survival.

Holzer notes that consistent internal communication absolutely must be coherent before being publicly disseminated, whether it’s a response to a crisis or the launch of a new product.

Sensitive to the fact that startup companies are still trying to pave their own road, the firm realizes that marketing efforts are still in the emerging phase, and often times gets put on the back burner. Smaller suppliers also have a rational fear of contracting with big companies and ConnXus bridges that gap for people. The Deciding Factor helps startups and small companies phase in different aspects of marketing materials.

Supplier Spotlight: Evolution creative solutions

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This month, the President of Cincinnati-based WBE-certified Evolution creative solutions’ spoke with ConnXus on behalf of their 21-year-old commercial printing supplier services. Since its launch in 1994, Evolution has been recognized for their award-winning print services for clients such as AAA, Anthem, St. Elizabeth Healthcare and University of Louisville. Evolution has been a ConnXus+ member since 2010.

Holding customer branding to the highest of standards, Evolution is notably the only commercial printer in Ohio and Kentucky with an all-encompassing seven-color digital press that can print on 3000+ substrates including plastics, wood and thick stock.

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Cathy Lindemann, President of Evolution creative solutions, proudly stands behind her creative team as she tells her story about becoming a majority owner of the company. She says, “In 2004, I was teaching high school chemistry and working part-time in various departments at Evolution (KPB at the time), and not too long after I joined the team, the CEO asked me to start lending a hand in running the company.” Honored by this offer, Lindemann accepted and began to make positive innovations for the company. “I knew I wanted the company to offer more than just printing services. I took a risk, changed the name to Evolution creative solutions to more accurately reflect the vast majority of creative services we offer, and it paid off.”

Since then, the firm has expanded their in-house printing services to include promotional products such as apparel, embroidery and direct-to-garment printing, as well as other creative solutions like graphic design and brand curation. Lindemann tells her clients, “If your logo is on it—we can produce it!”

The company’s new state-of-the-art even-color digital press has full capabilities to print vast breadth of colors to ensure that each customer’s brand is consistent with their style guide. Additionally, the company prints on a wide format machine that offers white and silver printing. Lindemann elaborates, “The blend of the two machines allows our creative team to confidently match products across all customer’s desired marketing pieces.”

Evolution’s work has been recognized by the following prestigious industry awards:

 

For more information on Evolution’s creative solutions, please visit http://www.evo-creative.com

 

 

 

 

Are you at ConnXus+ member? Interested in featuring your company in the Supplier Spotlight blog? Contact ConnXus Marketing Coordinator, Shannon Frohme at shannon@connxus.com

Supplier Spotlight: GFG Asset Management

 

Duane Garth, Chief Investment Officer of GFG Asset Management, a Michigan Minority Supplier Diversity Council (MMSDC) certified minority-owned business, recently spoke with ConnXus.

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Founded in 2008, GFG Asset Management is a ConnXus+ member of two years. The company is based in Southfield, Michigan, a suburb of the reviving city of Detroit. With over 20 years of experience in the investment industry, including 12 years as a Merrill Lynch executive and six years as the founder of wealth management group, Garth Financial Group, Duane Garth brings a longstanding history of financial trust to GFG clients.

The asset management firm specializes in strategically selecting publicly traded small- and medium-sized companies for investor portfolios. These companies typically have a market cap of less than $20 billion in assets.

To ensure enterprise clients that their portfolios are being closely monitored, GFG holds the stocks until one or more of the following events occur, Garth tells ConnXus:

1. The price of the stock reaches the target price, set by the investor and GFG.

2. The price of the stock is overvalued versus what the industry indicates.

3. An extraordinary occurrence that causes the performance of the stock to drop.

Garth also has several recommendations for corporate entities or high net-worth individuals looking to work with an investment advisor. Most importantly, be sure to research the firm’s performance track record, as well the individual that will manage your portfolio. Look for a good fit between the firm’s management style and your own. For example, if you’re looking to invest internationally, find a firm that specializes and has a trusted track record in that specific cap space in order to maximize long-term capital growth.

On a similar note, Garth highly suggests, “Be sure to know the individual portfolio manager’s strength in order to have confidence in what added values they’ll bring to the table when managing your pension plans, bonds and/or real estate.”

Select for May’s Supplier Spotlight: The Deciding Factor

Staff Member Spotlight: ConnXus West Coast

 

As Tim Scruta approaches his 2nd year anniversary with ConnXus, we’d like to shine the spotlight on our Product Services Manager as he settles into the new ConnXus Portland office. Before working with ConnXus, he was a student at Bowling Green State University where he achieved a Bachelor of Science and Business Administration degree with a specialization in Supply Chain Management.

TimHere’s what he had to say:

What are your main responsibilities as Product Services Manager?

Scruta: For anyone who has ever worked for a start-up, you’ll understand when you walk in the office door each morning, your duties can change significantly from day today. We joke that we, the team members, wear many hats. Whether this means performing account manager duties for the afternoon, changing the water cooler or performing sales calls in order to help support one another. Aside from my many “hats”, my main responsibilities are being the product expert and providing our customers the support they need in order for them to be successful. This includes demonstrating our products, answering any product-related questions, and providing analysis on their current supplier diversity initiatives. Additionally, I am heavily involved throughout the sales and contraction process, providing the education and material our client needs.

How have your responsibilities progressed since you first started with ConnXus?

Scruta: Initially, I was hired in July 2013 to split my time between ConnXus and Rod Robinson’s other company Accel Advisors. On the ConnXus side, I was involved with the day to day customer service tasks and researching vendors as a part of the manual data validation process. For Accel Advisors, I was working as a sourcing analysis and consultant for a prominent real estate management client. On January 1st, 2014, I transitioned into a project management role with ConnXus where I was responsible for managing the scrub process from start to finish. Additionally, I was responsible for revolutionizing the scrub product from a basic flat spreadsheet to a dynamic interactive scrub Xperience for our clients. With this transition, I helped support and manage the supplier diversity program for a client within the medical industry. My main responsibilities included training the prime suppliers on how to report their tier II spend and developing strategies on how to increase our client’s supplier diversity spend. Most recently, I relocated to Portland, Oregon where I transitioned into my current role today. I am continuing my previous responsibilities along with creating brand awareness and selling the ConnXus Xperience.

What should existing and potential West Coast clients anticipate the most from ConnXus’ Portland expansion?

Scruta: Our existing and potential West Coast clients can anticipate industry-leading supplier diversity solutions and experience the customer-centric philosophy we pride ourselves on. Additionally, small and minority West Coast suppliers can anticipate great opportunities to work with our existing clients on the east coast, along with new clients in their backyard. Creating this bi-coastal connection within the supplier diversity space will be an exhilarating Xperience both our clients and suppliers will not want to miss.