The Value Proposition for Minority Supplier Development

1. Wright on …
The Value Proposition for
Minority Supplier Development
Corporations, like the economy, go through cycles and phases.
New programs are introduced to address the needs of the always-
changing marketplace. Other programs are shelved because leadership decides they no longer
add value. Unfortunately, minority supplier development may become the next target of a
corporate re-shuffling. In the last several months, an increasing number of supplier diversity
professionals are questioning the value of minority supplier development and membership in the
NMSDC. They are quick to say that they personally understand the value proposition, but their
leadership team wants the business case to support the programs.
I have to admit a degree of disappointment and frustration that this question is still being asked
as NMSDC marks its 40th anniversary this year. I first got involved with minority supplier
development in 1987. Even then, supplier diversity was embedded in the company's
procurement process. Asking about the value proposition of supplier diversity would have been
equivalent to asking about the supplier evaluation process; or in modern parlance, it would be
equivalent to asking about the business proposition for corporate social responsibility. Of
course, I now realize that I was fortunate to have been in an industry that had learned—
sometimes, the hard way—that Asian, Black, Hispanic and Native American suppliers are
valuable partners in the corporate supply chain. The telecommunications industry, like the
automotive and consumer products industries, understood strong supplier diversity processes
produced two related outcomes: innovative, capable suppliers and potential customers.
That value proposition has not changed.
Strong minority suppliers are important engines for economic growth in the United States. Here
are some facts to consider. Minority business is growing at a faster rate than non-minority
business. Depending on the ethnic classification, the growth is 6% to 10% faster than non-
minority business. Gross sales receipts for minority-owned firms are also growing at a faster rate
than for non-minority firms; that growth ranges from 30% to 50%. In addition, employment
growth among minority businesses shows significant increase, while employment growth for
non-minority firms is on the decline.

2. Minority businesses are more likely to hire minority employees, an important demographic for
future marketing and sales activity. Perhaps the most important fact for corporations looking for
new markets to consider: the combined buying power of Asian, Blacks and Hispanics is nearly
$3 trillion.
This is all good news. Continued utilization of minority suppliers will not only enhance the
growth of the minority business community, but it will also enhance employment opportunities
for minorities and the buying power those minorities represent. NMSDC is the link between
corporate America and those minority businesses waiting for that opportunity to grow.
Despite all of this good news, there is still work or NMSDC and corporate America to do. There
is one area where minority businesses have not kept pace. As a group, minority-owned firms
continue to lag behind their non-minority peers when it comes to economic parity. Equal access
to contracting opportunity lags for minority businesses. This is true even when you control for
size and type of business. NMSDC is committed to making sure that capable certified MBEs
have an equal opportunity to compete for contracts with their non-minority peers.
Joset B. Wright
President
National Minority Supplier Development Council