Measuring Corporate Commitment

Through Executive Leadership

Phase I Session objectives and guidelines What is supplier diversity Why do companies pursue supplier diversity

Case Study

Phase II Supplier Diversity in the Corporate sector What the supplier diversity program

means to you The Procurement Process Tier I and Tier II overview The scope of the supplier diversity program

Phase III Data tracking and trend activity Q & A and wrap up Appendix

2

3

Provide a general overview of supplier diversity

User feedback

Review potential strategies and mission

Knowledge sharing

Discuss process, issues, and trends

around diverse business activity

Group interaction

Session Objectives and Guidelines

4

1960s 1970s 1980s 1990s 2000s

The Office of Minority Business Enterprise was established

The National Minority Supplier Development Council

The Office of Minority Business Enterprise change to Minority Business Development Agency

Minority Business Programs were primarily compliance driven

Loose certification process

Increased proliferation of minorities in manufacturing and professional service industries

The National Business Council was created

Congress passed the Women’s Business Ownership Act

Supplier Diversity becomes a business imperative

Formalization of a certification process

Genesis of second tier initiatives

The Women’s Business Enterprise National Council was founded

Issuance of several Executive Orders expressing strong Executive Branch endorsement of Diverse business utilization

The Evolution of Supplier Diversity

National Gay and Lesbian Chamber of Commerce

Women-owned Businesses added to The Small Business Act for Federal Government Acquisitions

5

A management program to increase contracting opportunities for minority and women-owned business, and to maximize the volume of goods and services purchased from these businesses.

Like all management programs, it must have the endorsement of top management and be conducted in accordance with sound business practices including goal setting, implementation, monitoring and accountability.

What

is a

Sup

plier

Div

ers

ity P

rogra

m?

Compliance

No tracking

• No outreach

• No trade fairs

• No materials

• No budget

• A “contact person” to answer calls

Basic

• Subcontracting Plan

• Program coordinator

• Program Brochure

• Limited Trade Fair Participation

• Program is compliance driven

Traditional

• Local/National NMSDCmembership

• Visible program manager

• Little or no senior management involvement

• Limited program tracking

• Limited outreach

• Few opportunities in professional services

• Program is outside of core corporate strategy

Advanced

• Active Local/National NMSDC membership

• Involved CEO/Senior Management

• Resource deployment

• Buyer/manager training

• Basic second tier program

• Superior tracking program

• Strategic communication

plan

• Innovative supplier development initiatives

• Process involves all business units

World Class

• Integrated with other corporate initiatives

• Senior management leadership

• Tied to annual performance objectives

• Focus on supplier development

• Productive second tier program

• Superior communications/

marketing strategy

• Contribution to market share and shareholder equity

• Part of cross functional process improvement teams

Source : National Minority Supplier Development Council6

A women or minority owned business enterprise is defined as:

➢ Privately held, at least 51% owned, operated and controlled by women or minority group members

➢ A for-profit enterprise, regardless of size➢ Physically located in the United States or its trust territories

➢ Currently recognized minority groups include:

➢ African / Black American➢ Hispanic American➢ Native American➢ Asian-Pacific American➢ Asian-Indian American➢ Women ➢ LGBT➢ Physically-Challenged➢ Veteran

➢ Organizations recognized as leaders in supplier diversity efforts include:

➢ National Minority Supplier Development Council (NMSDC)➢ Women Business Enterprise National Council (WBENC)➢ National Gay and Lesbian (GLBT) Chamber of Commerce (NGLCC)➢ National Hispanic Chamber of Commerce (NHCC)➢ U.S. Department of Commerce (SBA)

7

8

Focused Outreach

Mentoring

Certification

Accountability

Commitment/Top

Strengths and Challenges

Some key elements of successful programs*

*Source – National Women’s Business Council

Community Partnership

9

Historically, companies have encountered

the following challenges

Internal Resistance to change

Awareness of qualified diverse companies

Inclusion of supplier diversity goals

10

11

Compliance

Business

Imperative

Corporations

Benefit

Why do Companies Pursue Supplier Diversity Programs?

*Source : National Minority Supplier Development Council

12

0

50

100

150

200

250

300

350

400

450

500

1986 1990 1994 1998 2002Year

Number of National Members

Corporate Members with NMSDCCorporate membership in NMSDC has grown from 153 in 1986 to 470 in 2007.

13

In 1997, 11 corporations became members of WBENC. In 2017, corporate membership reached approximately 356 members.

*Source : Women Business Enterprise National Council

0

50

100

150

200

250

300

350

400

1997 2000 2002 2003 2007 2017

Number of Corporate Members

14

0

200

400

600

800

1000

1200

2004 2005 2012 2013 2015 2017

Since 2004, the NGLCC has certified 983 companies and there are 157 Corporate members

Number of Businesses

Number of Companies Certified with NGLCC (LGBT)

INDUSTRY SEGMENTATION OF MINORITY-OWNED AND NON-MINORITY-OWNED COMPANIES

Note: Typically smaller, minority-owned businesses cover the same industries in roughly the same proportion as non-minority-owned businesses. For example, 11% of minority-owned businesses offer professional, scientific, and technical services, compared to 15% of non-minority-owned firms.

15

012345678

2002

2007

16

Millions

U. S. Census Bureau

17

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

9000000

10000000

Number/Firms

Number of Firms

U. S. Census Bureau

18

$-

$500,000,000

$1,000,000,000

$1,500,000,000

Sales/Revenues ($1,000)

Sales / Revenue ($Trillions)

U. S. Census Bureau

19

20

Case Study – A New Corporate Initiative

The New Name Corporation was establishing its first Diversity and Inclusion Initiative into the company’s culture. Although it was growing, it was unable to compete for qualified talent of experienced executives and professional resources to consider it as a preferred place to work. Neither had it demonstrated itself to be a viable company for career growth opportunities, and a company that embraced fairness among existing employees. The company was focused on increasing its brand and enhancing its reputation within the industry and the socially conscience communities it served.

Procurement and Supplier Diversity were requested to identify and obtain proposals from qualified companies to be considered for the award. Several stakeholders made recommendations to procurement for considerations. After the proposals were submitted for review five companies were selected to make presentations to the company, which included key stakeholders. The business classification of the suppliers were: majority-owned; women-owned; LGBT; minority-owned; and veteran-owned.

The considerations in selecting the awarded supplier by the selection committee are based on the following:• Company A – qualified; extensive D&I experience in the federal/public sector; moderately priced• Company B – current provider of legal services in human resources; no knowledgeable D&I experience;

maintained a long-term pricing history with the company• Company C – clients consisted of a large number of FORTUNE companies; higher pricing model;

compelling presentation• Company D – experienced in leading D&I initiatives; good mid-level presentation; moderately priced• Company E – clients included private and public sector entities; higher in price; mid-level presentation

As a member of the Selection Committee you are tasked with voting for the preferred Company. Based on the list and the culture of your company, which service provider would you select?

On what basis? Why?

Supplier Diversity in the Corporate Sector

21

22

Straight forward

Value proposition

Leader or Follower

The objective is to be included in the corporate mission and vision statement.

What is your role?

What will be your contribution?

How will the company be observed/industry?

Create the Company’s Vision Statement

23

Procurement

Operations

➢Strategic

Sourcing

➢Supplier Diversity

Team

Business Unit

Leaders

➢Information

Technology

➢Accounts Payable

➢Marketing/Sales

Support

Senior

Executives

➢Communications

Plan

➢Legal

Compliance

What does Supplier Diversity Mean to the Supply Chain organization

There are many doors to ensure inclusion and recognize results/benefits.

24

Supply Chain

Leaders

Supplier Diversity Advisory Group

Indirect Category Managers

Direct Category Managers

Business Unit Leaders

Department Heads

Division Leaders

Chief Information Officer

Corporate Officers

A broader communication plan will increase leadership involvement and commitment

Extend your range of champions as far as possible.

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Business Culture

• Strategic Sourcing

• Leadership

• Image

Business

Imperative

• Leadership

Commitment

• Customer Base

• Industry Leaders

Report Success

• To the company

• Agencies/clients

• Business

organizations

Success in Promoting Supplier Diversity

Executive commitment is key to successful implementation and performance.

26

Performance

Management

Internal

Infrastructure

Benchmarking

Sourcing

Strategy

Education

Curriculum

Communication

Plan

Approach and Strategy

…and this is only the beginning.

These are suggested key activities to building a successful Supplier Diversity program.

Strategic Sourcing

➢ Supplier Diversity to be integrated into the procurement process➢ Include standard Supplier Diversity language / questions in all RFx

documents➢ Sourcing managers leverage supplier diversity team to assist in

identification of prospective MWBE suppliers for inclusion in RFx efforts ➢ When spend category not a fit for Tier I MWBE suppliers Tier II

opportunities to be considered➢ Supplier Diversity team should participate in RFx assessments/scoring

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• Include standard Supplier Diversity language / questions in all RFx documents

•Sourcing managers leverage supplier diversity team to assist in identification of prospective MWBE suppliers for inclusion in RFxefforts

•When spend category not a fit for Tier I MWBE suppliers Tier II opportunities to be considered

• Include Standard Supplier Diversity language/questions in all Contracts with suppliers

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Ensuring that stakeholders buy into this process is critical.

A➢A purchase order or contractual

agreement from company A (buyer) to

company B (seller)

B➢An agreement between A and B, but the

materials are drop-shipped or delivered

by company C

➢Note: If B is an MWBE, all incremental

services must be value-added.

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A

➢The buyer (company A) and the prime supplier

(company B) reviewed ways to strategically integrate

the use of MWBEs into the contractual process

B

➢ If company C is an MWBE, it qualifies as a 2nd Tier or

subcontractor of company B

C

➢The buyer and the prime supplier have agreed on the

reporting procedure for 2nd Tier activity

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31

Inclusion for the RFP

1. ABC supports and encourages the growth and development ofminority and women-owned businesses (MWBE) or diverse businesses.

2. Does the company have a strategic or tactical Supplier Diversity Program?

3. Does the company have distributors or affiliates as part of its service network?

Client

Company

Tier 1

Tier II Tier II

Tier 1

Tier II

Tier III Tier III Tier III

Tier IV Tier IV

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Strong value added businesses will enable larger companies to look better towards

participation.

33

Broaden

Commitment

Promote

Utilization

Collect DataBrand Image

Regulatory

Compliance

➢ Common themes: competitive advantage; supplier incentive to perform; and marketing.

The Importance of Tier II

34

ABC

National Services Group

Second Tier Supplier Diversity Reporting

Calendar Year 2016 - 1st Qtr. 2016

Purpose: Provide c lient revenue data for the calendar year

AAA BBB CCC DDD EEE FFF GGG

1st Ouarter - CY 2016 1,557,890 3,936,048 5,789,914 1,257,883 8,017,239 19,217,133 4,916,836

2nd Quarter - CY 2016 1,544,873 6,467,881 4,542,776 953,337 6,100,360 10,533,624 3,217,796

3rd Quarter - CY 2016 2,463,870 6,249,671 2,427,721 363,174 2,565,288 7,990,358 3,252,958

4th Quarter - CY 2016 1,827,023 2,770,133 3,081,547 986,479 2,589,351 11,845,946 3,506,488

CY 2016 Total $7,393,656 $19,423,733 $15,841,958 $3,560,873 $19,272,238 $49,587,061 $14,894,078

Notes:

To address clients reporting requirements w e are considering Q1 as periods 8-11; Q2, periods 12-1; Q3, periods 2-4, and Q4, periods 5-7.

prepared 04/28/2017.

Data Tracking and Trend Information

35

36

37

TOP INDUSTRY CATEGORY REVENUES (BY MINORITY GROUP)

(Percentages)

NATIVE AMERICAN ASIAN

AFRICAN AMERICAN HISPANIC

NATIVE HAWAIIAN

WOMEN-OWNED VETERANS

CONSTRUCTION 15.9 15.1 13 15.5

RETAIL 12.3 11.8 8.1

PROF.SCVS/SCIENCE/TECH 10.1 13.8 8.5 14.1 16.9

HEALTHCARE 10.6 10.6 19 10.4 15.8

ACCOMO/FOOD SVCS 8.6

ADMIN. SUPPORT 9.6 11.3 13.9 10.1

REPAIR/MAINTENANCE 14.6 18.5 18.6 14.9 13.9 16.1 9.9

REAL ESTATE/RENTAL/LEAS. 8.9

TRANSPORTATION 8.8 8.9

OTHER 39.3 36.2 33.8 39.6 73.1 32.2 40.9

Ethnicity Tracking

U.S. Census Bureau

38

MWBE SPEND FY13 FY14 FY15 FY16

DVBE $.4mil

WBE $22.8mil $27.0mil $45.1mil $46.9mil

MBE $27.8mil $41.0mil $62.1mil $62.2mil

MWBE $50.6mil $68.0mil $107.2mil $109.5mil

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

FY13FY14

FY15FY16

WBE MBE MWBE

Statistics

39

40

Corporate

Managers

Strategic

Alliances

Corporate

Website

Links

National Trends in Supplier Diversity Programming

➢ Create a Supplier Diversity Advisory Committee

➢ Establish internal champions

➢ Identify a Mentor Protégé candidate➢ Identify key alliances/partnerships

➢ Establish a Performance Management Criteria➢ Recognize key contributors/engagements

41

Q&A

43

44

45

Organizations

Institute for Supply Management National Urban League Business for Social Responsibility Joint Center for Political and Economic Studies U. S. Chamber of Commerce Bureau of the Census Department of Commerce

Minority-Owned Business

National Minority Supplier Development Council (NMSDC) Minority Business Development Agency (MBDA) Minority Business Development Group (ISM) Federal Acquisition Regulation Small Business Administration U. S. Hispanic Chamber of Commerce U. S. Pan American Chamber of Commerce U. S. Pan Asian American Chamber of Commerce National Black Chamber of Commerce BusinessLINC

46

Women-Owned Business

Asian Women in Business SBA – Office of Women’s Business Ownership Women’s Business Enterprise National Council

(WBENC) SBA – Online Women’s Business Center Womenbiz.com

Disability

DisabilityResources.org DisabledPerson.com

The following are a list of references and resources from which you can obtain or review current information on supplier diversity activities.

Appendix B

Purchasing.com Minorities and Women in Business Minority Business News – USA Hispanic Business Fortune.com Diversity Information Resources

◦ Minority Business Information Resources Directory (MBIRD)

Inc.

47

Essence Black Enterprise DiversityInc.com Minorities in Business Entrepreneur.com Div2000.com

Appendix B – cont.

Organizations, Business Links, Media

48

Thomas Register (Thomas Publishing Company)

Local Chambers of Commerce

Local, State, and Federal Government Agencies

National Minority Supplier Development Council (NMSDC)

◦ Regional Affiliates

Diversified Business Resources Inc. (Try Us)

Div2000/DiversityBusiness

49

19.702 Statutory requirements. ◦ Any contractor receiving a contract for more than the simplified

acquisition threshold must agree in the contract that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns will have the maximum practicable opportunity to participate in contract performance consistent with its efficient performance. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns.

19.703 Eligibility requirements for participating in the program. ◦ (a) To be eligible as a subcontractor under the program, a concern must

represent itself as a small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business,

small disadvantaged business, or woman-owned small business concern.

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95-507 Subcontracting Assistance

◦ The Act directs that Federal Government contracts greater than the simplified acquisition threshold shall contain a clause entitled, Utilization of Small Business Concerns and Small Business Concerns Owned and Controlled by Socially and Economically and Socially Disadvantaged individuals.

◦ For larger contracts, i.e., those over $500,000 ($1,000,000 for construction), the law also re- quires a subcontracting plan… the prime contractor must describe the efforts it will take to assure that such firms have an equitable opportunity to compete for subcontracts.

◦ For large negotiated contracts, the contracting officer may approve, cause to be modified, or reject the submitted subcontracting plan… If the contracting officer determines that the plan provides "the maximum practicable opportunity" for small, small disadvantaged, and women-owned business concerns to participate as subcontractors in the performance of the contract, the approved plan is incorporated as part of the contract.

◦ For large sealed bid (as opposed to negotiated) contracts, the plan submitted by the successful bidder is incorporated into the contract and, if not carried out, can constitute a material breach.

◦ Requirements for subcontracting plans do not apply to: small business prime contractors; contracts under the prescribed amounts; prime contracts not offering subcontracting possibilities; or contracts which are to be performed entirely outside the United States.

51

BusinessLINC: Learning, Information, Networking and Collaboration, Department of the Treasury, Washington, D.C., 1998.

Dobler, Donald W. and David N. Burt: Purchasing and Supply Management, Text and Cases, McGraw-Hill, New York, 1996.

General Services Administration: Federal Acquisition Regulation, www.arnet.gov/far, Washington, D.C., 2004.

Moore, Ralph G. and Sharon Castillo: Reengineering the Minority Business Development Program, Chicago, 1996.

National Minority Supplier Development Council: Annual Report, 2002.

National Women’s Business Council: 1999 NWBC Best Practices Guide: Contracting with Women, Washington, D.C., 1999.

U.S. Census Bureau, 2012 Survey of Business Owners

Williams, Reginald: Doing Business with Minority Vendors, Copyright Office, Peachtree City, 1985.

Williams, Reginald: 2ND Tier Minority Purchasing, Effective Strategies in Supplier Diversity, Copyright Office, Peachtree City, 1995.

Women’s Business Enterprise National Council: Creating Opportunities-Recognizing Excellence, Washington, D.C., 2003.