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Stateside Companies Looking For Minority-owned Suppliers

Most want approximately 5% of their suppliers to be minorities


October 10, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

Minority business enterprise (MBE) suppliers sold more than $50 billion in goods & services to U.S. companies in 2000, according to statistics from the National Minority Supplier Development Council (NMSDC).

Last week the Puerto Rico Supplier Development Council (PRSDC) held a forum designed to increase the number of MBEs on the island. Three members of the PRSDC’s Supplier Diversity Pharmaceutical Committee spoke about their companies’ supplier best practices procedures and MBE guidelines.

"These sessions can condense into one day what might take six months if suppliers had to make appointments with each corporation. So the forum really accelerates the process of making connections, adding value for the members," said Mark Graham, Pharmacia supplier diversity manager.

So far the PRSDC has approximately 70 certified suppliers and 30 corporate members. Last week’s forum gave suppliers and buyers both information and a networking opportunity.

Another advantage to belonging to an organization such as the PRSDC is that members have an opportunity to bond with their peers, people with whom they might want to join forces or share their experiences. Companies might also become each other’s customers.

"Supplier diversity is a method used by most of our organizations to expand our supplier base," said Gwendolyn Turner, Pfizer supplier diversity manager for global sourcing. "[Companies] purchase different things from different suppliers, but typically they haven’t included businesses owned by women, African-Americans, Asian-Americans, Native-Americans, or other minority groups.

"On top of that," added Turner, "we are concerned about businesses owned by veterans, the handicapped, and service-disabled veterans. In Puerto Rico we are trying to focus on disadvantaged small businesses [those in economically disadvantaged markets with a net value of less than $750,000] and those with 8A sole-source, noncompetitive certification."

According to Turner, companies are looking to diversify their supplier base to reflect their good corporate citizenship. "If we look at our portfolio of suppliers, it doesn’t mirror our consumer base," she said. "We have a lot of drugs that are catered to minority consumers [such as those for the treatment of hypertension and diabetes]. But if we look at the number of consumers we have vs. the number of minority suppliers, it doesn’t pan out. What we are trying to do is even the numbers out, doing more in minority communities. It helps us become better corporate citizens."

Companies interested in selling their products or providing services to NMSDC corporate members must be certified by the organization, which indicates that the business is owned, operated, and controlled by minorities. Certified MBEs are allowed access to the organization’s more than 3,500 corporate members in its nationwide network.

Although minorities represent 26% of the U.S. population, MBEs make up 11% of businesses, 6% of gross receipts, and only 3% to 4% of corporate purchases.

An examination reveals that supplier diversity goals average 5% of a company’s total procurement. Some sectors, such as the automotive and telecommunications industries, reach or exceed those goals. The pharmaceutical industry in general doesn’t because of the high costs involved in providing high-technology supplies & services.

Each company can establish its own supplier diversity goals, though some U.S. government agencies, such as the Small Business Administration (SBA), have set standard goals for companies participating in their programs. The SBA’s goals vary according to the minority: women (5%), small business (23%), veterans (7%), service-disabled veterans (3%), hub zones (3%)–i.e., economically disadvantaged areas where 35% of the employees reside. A business can also fall into several categories.

"We are doing very good in the areas we know we can influence," said Ingrid M. Shereta, Bristol-Myers Squibb Co.’s supplier diversity associate director for global strategic sourcing. "It’s some of the other areas that are more of a challenge. For example, the veteran and hub zone goals are hard to make. But the women and the minority goal hasn’t been much of a challenge.

"Now, because of the different minority business councils available, [corporate supplier diversity officers] can go to their databases and look at the lists of MBEs registered. Years ago we couldn’t find them," Shereta added. "The national NMSDC website now provides us with profiles of companies by location, commodity, and size. Belonging to the NMSDC helps MBEs enhance the visibility of their capabilities, and it is an organization we all support."

E-commerce has proved to be a valuable tool for suppliers, and the PRSDC has been creating a website, "We are working on a Web application module whereby corporate members will be able to post their needs," said PRSDC Executive Director Jacqueline Matos. "The website should be ready by November. MBEs will then be able to visit the site, see corporate procurement opportunities, and make bids directly to the companies."

Next February the PRSDC will host the 2003 NMSDC Conference & Business Fair in Puerto Rico, whose theme will be "Primero Relaciones, Luego Beneficios" (First Networking, Then Profits). Participating suppliers will be able to network with NMSDC corporate members and pursue procurement & business opportunities.

This Caribbean Business article appears courtesy of Casiano Communications.
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