Supplier Diversity – The Next New Buying Power
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| Attending events held by organizations that promote inclusion (area chambers of commerce, for example) provide many opportunities for networking and relationship-building activities for their members. |
By Sherry Chamblee, Motion Industries and Pamela Kan, Bishop-Wisecarver
There is a reason why major corporations such as Facebook and GE are actively supporting supplier diversity programs – and it’s not just because diversity is a culturally good concept to embrace. The reality is that a successful relationship between a distributor and diverse supplier represents an enormous opportunity to help both companies economically and drive long-term growth. This relationship often represents untapped buying power, taking it from a nice-to-have option to an economic differentiator that matters to the bottom line of both distributor and supplier.
As the advantages of a successful supplier/distributor relationship are many, it is worth the time to seriously consider our recommendations on how to make it as successful as possible. We are passionate about this, because we’ve experienced the benefits first-hand from our own two companies working together. One of us represents a large distributor (Motion Industries) and another is a diverse supplier (Bishop-Wisecarver), and we’ve developed a symbiotic working relationship over the past several years that has leveraged each other’s strengths, and helped increase revenue for us both.
| What is Supplier Diversity?
According to the Sourcing Industry Group, Supplier Diversity is, “An organization's documented intent and program to provide economic development opportunities for small, diverse business enterprises, which include, but are not limited to, small enterprises, minority, women and disabled veteran-owned suppliers. …Supplier diversity or diversity in contracting are programs that can be either mandatory (i.e., requirement to fulfill state or federal contracts) or voluntary (i.e., procurement/social responsibility strategy).” 2 • Minority (Hispanic, Native American, Asian Indian, Asian American, African American) “Whether your organization chooses diverse suppliers for advocacy and social responsibility reasons, to comply with state or federal regulations, or to simply meet your stated requirements and work scope, the benefits of supplier diversity can have lasting impacts on your community and your organization.” 2 |
As with all relationships, it takes effort, but the benefits far outweigh the work required.
Why Choose a Diverse Supplier – Because Everyone Wins
When it comes to supplier diversity, the entire chain wins. How often can everyone be a winner? Here are just a few top level benefits:
The Distributor: Most distributors are under government mandate to work with a certain percentage of diverse suppliers. MRO and industrial supplier contracts also often have soft requirements of their distributors to work with and utilize diverse suppliers. Supplier diversity programs help them fulfill that goal. In addition, distributors often find that diverse suppliers provide a unique set of skills and are very motivated to deliver superior goods and services. The 2017 Supplier Diversity Study1 from The Hackett Group found that nearly all diverse suppliers met or exceeded buyers’ expectations and in fact, brought additional benefits such as new revenue opportunities.
The Diverse Supplier: Through this relationship, the diverse suppliers get access to leading distributors who are able to introduce them to new customers and open up relationships that they otherwise would not be able to form. This is especially true with reaching large companies where the smaller supplier would find it difficult to reach the decision makers. Reaching larger customers, in turn, helps the suppliers sell more products. Additionally, if the distributor has a supplier diversity program in place, it can also create an extended marketing arm for the diverse supplier outside of the usual marketing channels. They now also have a champion who internally and externally supports their product in order to further their own cause. They can provide support to vendors with product announcements, sourcing assistance, presentation opportunities, exposure via product fairs, supplier listings, and introductions, to list a few.
Proof That It Works
Using our companies as an example, Bishop-Wisecarver and Motion Industries have had the chance to approach the customer as a team with solutions to create more efficient ways to operate and bring cost savings, while at the same time helping them to reach their supplier diversity goals. Additional advantages of our diverse supplier relationship include:
- Visibility and Scale – Bishop-Wisecarver works with Motion’s marketing and sales teams to meet customers (end users) and help win new business. This provides Bishop-Wisecarver with a much larger opportunity for sales. Further, with a broader target audience spanning many industries, Bishop-Wisecarver has the ability to scale their products into other new industries outside of where it has traditionally sold. On the flip side, smaller diverse suppliers can reach out directly to end users and customers and bring appropriate opportunities to the distributor. This builds confidence with the distributor that the supplier is dedicated to them and provides stronger solutions to valued customers.
- Administrative – As a larger distributor, Motion handles the process of reporting to the government and large customers the amount of Bishop-Wisecarver products they sell. This administrative task is often a huge burden for smaller companies so when the distributor takes on this role, it’s a significant advantage. Bishop-Wisecarver can now showcase that they are a top diverse supplier without having to handle the time-intensive administrative work this entails.
- Greater Product Variety – A smaller company such as Bishop-Wisecarver is able to bring creative solutions and create niches that are not so easily attainable at a larger supplier, due to the rules and time-consuming processes of a corporate environment. This helps Motion provide better products and solutions to their global customer base.
- Leveraging the Diversity Ecosystem – The leading diversity certification agencies such as National Minority Supplier Development Council (NMSDC), Women’s Business Enterprise National Council (WBENC) and other organizations that promote inclusion (area chambers of commerce, for example) provide many opportunities for networking and relationship-building activities for their members. They comprise the footing and the gathering place that brings everyone together; which benefits both the suppliers and distributors as we attend some events jointly, share contacts and make introductions.
The Future is Diversity
Diversity is clearly leading the way into the future of business, and the economic benefits to the distributors, suppliers, and in turn the customers, can be significant. The distributor and diverse supplier relationship plays an important role in delivering long-term benefits that both parties can experience. However, building and maintaining this strong relationship is key to making that happen. Our two companies are just one example proving it is not only possible, but also desirable and enjoyable. We hope that by sharing our experience and recommendations, we inspire others to create the same. The higher the number of strong distributor and diverse supplier relationships that exist, the faster the benefits of diversity will be realized and then championed at all levels. And that makes everyone a winner.
References
1 “Top Supplier Diversity Programs Broaden Value Proposition To Drive Increased Market Share, Other Revenue.” The Hackett Group. February 2017. https://www.thehackettgroup.com/news/top-supplier-diversity-programs-broaden-value-proposition/
2 Resources for Supplier Diversity Programs. SIG (Sourcing Industry Group). https://sig.org/resources-supplier-diversity-programs
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| Chamblee | Kan |
Sherry Chamblee is Motion Industries’ Supplier Diversity Program Manager. In this role since 2004, her responsibilities include identifying and evaluating diverse suppliers, supporting community and professional associations, and performing internal status reporting and spend analysis. Chamblee’s activities also include developing extensive customer and supplier interface (minority, woman, small, veteran, HUB Zone). She has also served as an Executive Committee Board of Directors member for Southern Region Minority Supplier Development Council (SRMSDC) and the Women’s Business Enterprise Council South (WBECS), for 13 and 10 years respectively. For more information, visit MotionIndustries.com/industrialsupply. To be considered for Motion Industries’ supplier diversity program, please send an email to Supplier.Diversity@MotionIndustries.com.
Pamela Kan has served as president of Bishop-Wisecarver (BW) since 1999 and helps the company leverage its 70 years of experience to provide proven motion solutions that are expertly designed and delivered to perform, enabling customers to solve their toughest industrial automation challenges. Kan has received numerous awards for her entrepreneurial vision and commitment to customer service, as well as her work in both regional and national organizations focused on promoting manufacturing as a strong career option.
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