Supply Chain Diversity Programs Gonzalo Masias Michael Cheng Scott Olson Kim Lepin

Overview What are Supply Chain Diversity Programs? What are Supply Chain Diversity Programs? Components of a Supply Chain Diversity Program Components of a Supply Chain Diversity Program Drivers Drivers Challenges Challenges How to achieve diversity goals within the context of overall goals How to achieve diversity goals within the context of overall goals

Supply Chain Diversity Programs When an organization includes the underrepresented groups who can provide goods or services to the organization. These groups include minority, women, and disabled veteran-owned business enterprises (MWDVBE) or historically underutilized businesses (HUB). When an organization includes the underrepresented groups who can provide goods or services to the organization. These groups include minority, women, and disabled veteran-owned business enterprises (MWDVBE) or historically underutilized businesses (HUB). To qualify as a HUB the company needs to be 51% owned by such individuals. To qualify as a HUB the company needs to be 51% owned by such individuals.

Components Apple Example Apple Example –Outreach –Certification –Qualification –Development –Utilization

Drivers Government Government –Support –Example (Missouri and Connecticut) Good business sense Good business sense –Increases market share –Customer expectations Benefits Benefits

Benefits ECONOMICAL ECONOMICAL –Better access to specialized skills and attractiveness to customers with range of backgrounds –Cost reduction opportunities. Smaller companies have smaller overhead costs –More involvement and commitment

Benefits SOCIAL SOCIAL –Ability to help Minority groups improve living standards, as well as education and facilitate business development –Minority suppliers create jobs in urban areas –Important to have a supply chain that looks like the company’s employee base and potential markets

Benefits FLEXIBILITY FLEXIBILITY –Smaller = More agile and flexible. More creative. –FedEx example. Supplier moving closer to its customer.

Benefits BUILDING RELATIONSHIPS BUILDING RELATIONSHIPS –Suppliers’ workers likely to develop affinity for their customers products. –IBM know-how passed to their suppliers.

Challenges Top management/Company buy-in Top management/Company buy-in –Contracts, Time, Costs Implementing diversity programs and training Implementing diversity programs and training –IBM Developing Relationships Developing Relationships –Cost of mentoring smaller suppliers Quality Assurance Risk Quality Assurance Risk –Finding a company that fits Lack of suppliers for certain commodities Lack of suppliers for certain commodities

Achieving Diversity Goals Within Overall Supply Chain Goals Lucent Example Lucent Example –Supply Chain Goals  Increase Quality  Reduce cycle times  Lower Costs –Diversity Supply Chain Goals  Increase spending with diverse suppliers  Utilizing the skills of a diverse range of people

Achieving Diversity Goals Within Overall Supply Chain Goals How Lucent ties them together How Lucent ties them together –Benefit from their diverse suppliers experience, location, and technology –Improve their ability to meet the changing market demands, while achieving significant economies –Diverse cultures create new markets with a demand for new products and services –Suppliers are certified and meet their standards, Lucent is able to provide their customers with high- quality, cost-efficient products and services on a timely basis

Achieving Diversity Goals Within Overall Supply Chain Goals Qualifications Qualifications –Be certified as a MWDVBE by a third party  51% owned, proof of US citizenship, and effective management of business  National Minority Supplier Diversity Council NMDSC –  Women’s Business Enterprise Council WBENC –  Association for Service Disabled Veterans ASDV – –Preferably be ISO certified or at least ISO compliant –Be EDI Capable –Be able to demonstrate financial viability –Exercise internal MWDVBE initiatives –Present a diverse workforce

Summary As managers this is important because of the benefits that it can bring to your business. With support from upper management and the proper supplier diversity program in place it will be easier to accomplish your overall supply chain goals. As managers this is important because of the benefits that it can bring to your business. With support from upper management and the proper supplier diversity program in place it will be easier to accomplish your overall supply chain goals. Class exercise Class exercise

Sources Paige, L. Buying into Diversity, Materials Management in Health Care, August Paige, L. Buying into Diversity, Materials Management in Health Care, August Armstrong, Julie. "Ford Motor tries to gauge minority supplier spending." Automotive News (2004): 8-8. Business Source Premier. 29 May Armstrong, Julie. "Ford Motor tries to gauge minority supplier spending." Automotive News (2004): 8-8. Business Source Premier. 29 May Huber, Sig. "Supplier relations are the key to Toyota's North American success." Purchasing (2006): Business Source Premier. 29 May Huber, Sig. "Supplier relations are the key to Toyota's North American success." Purchasing (2006): Business Source Premier. 29 May Burke, Erin. "A passion for diversity." Materials Management in Health Care 14.8 (2005): 2-2. Business Source Premier. 29 May Burke, Erin. "A passion for diversity." Materials Management in Health Care 14.8 (2005): 2-2. Business Source Premier. 29 May Carbone, James. "IBM says diverse suppliers are good for business." Purchasing (2006): Business Source Premier. 29 May Carbone, James. "IBM says diverse suppliers are good for business." Purchasing (2006): Business Source Premier. 29 May Avery, Susan. "Only the best suppliers will do." Purchasing (2006): Business Source Premier. 29 May Avery, Susan. "Only the best suppliers will do." Purchasing (2006): Business Source Premier. 29 May Vijayan, Jaikumar. "Diversity in IT Supply Chain Pays Off, CIOs Say. (Cover story)." Computerworld (2004): Business Source Premier. 29 May Vijayan, Jaikumar. "Diversity in IT Supply Chain Pays Off, CIOs Say. (Cover story)." Computerworld (2004): Business Source Premier. 29 May

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