Supplier Diversity is Broken

Unfortunately, space constraints don’t allow me to explain all that is broken, so let’s just look at the big issues as well as what isn’t broke.

The Small Business Act of 1958 required that government sub-contractors place a fair portion of their business with small and disadvantage businesses. The Civil Rights Act of 1964 said that federal agencies and their subs could not discriminate based on race, color or national origin, and was later amended to include gender. These were the seeds of supplier diversity, as well as the weeds that have taken control.

Today, most federally funded programs count only SBE and DBE spend. The parameter of what qualifies a small or disadvantage business does not specify ethnicity or sex. This is why a project like the Ultimate I-4 has goals so much lower than what the Amway Center or the Performing Arts Center experienced.

For Corporate America, those that have supplier diversity areas, the process of accounting for supplier diversity has created several issues. To start with, the system must be credible, so a certification is required for each diverse supplier. This expense is the supplier’s responsibility and must be renewed each year and does not guarantee even an opportunity to bid. Non-diverse suppliers do not incur this cost. Next, the diverse supplier must register within a corporation’s supplier diversity database and upload their certificate. This too, must be done each year and for each corporation that supplier wishes to do business with. This also does not guarantee an opportunity to bid. Non-diverse suppliers do not have to register each year in multiple databases. While the corporations are trying to promote the use of diverse suppliers, they have built a system that is costly and discriminatory.

To be fair, most supplier diversity teams for corporations are small and are responsible for justifying their existence each year. This means they are spending much of their time trying to find out what their corporate needs will be for the near future, influencing both buyers and decision makers on utilizing new suppliers and pulling together numbers on how much was spent over a period of time. They also spend most of their budget on exhibiting at 3 or 4 national conferences.

So what is right with supplier diversity that makes a supplier want to participate? When a community comes to work together to find ways to make the process work. A great example is how Orlando addressed the construction projects of the Amway Center, the Performing Arts Center with the Orlando Blueprint Program. Achieving high diversity spend such as 32% and 26% has set the bar for other local projects to step up. One of the biggest challenges is getting noticed. The successful suppliers focus their efforts on a small group of potential corporations and become known through multiple networking engagements. Events like the recent matchmaker of the HCCMO is beneficial in assisting the supplier to meet and explain their capabilities as well as having someone to follow-up with. Establishing a relationship is the quickest way to success and fixing what is broken with supplier diversity.