21st Century Integration of Diverse Suppliers Into Corporate Supply Chains

By Dean L. Jones, C.P.M.

The evolution of electronic data interchange (EDI) systems of the 1960’s increasingly brought on a plethora of value-added reviews for corporate executives, in particularly how to better examine expenditures and investments for goods and services. Expedient data retrieval produced new transparencies of annual spend in the processing, storing, and distributing of material. Among many features, this transparency gave rise to how well black-owned business enterprises were routinely included (or excluded) within corporate outsourcing and procurement decisions.

Fast forward a half century and you readily see how advanced supply chain management (SCM) and supplier diversity programs have evolved with parallel executive decision making processes. Knowledgeable corporate executives take advantage of financial transaction transparencies to ensure outsourcing contributes to the bottom line and where company service territories benefit when diverse suppliers are provided opportunities to provide products and services. The architects of EDI processes helped to elevate transparency of the make or buy decisions, thereby dispelling an old stigma that procurement was merely a clerical function into a business management science, thereby combining the outcomes with corporate responsibility for a function of sound socioeconomic development.

In the larger scheme of supplier diversity, most would believe that it is a great project and has significant merit for socioeconomic progress. The statistical numbers of those doing business with major corporations has tremendously increased, and without question the dollars disbursed to target ethnically and gender-based diverse firms has risen tremendously since its basic inception of the 1960’s. However, the emerging investments to diverse firms are considered slow when compared to economic equality. Whenever you attend and participate in conferences focused on the growth of small business the contracting barriers and challenges to engage such firms remain stagnant, as if advanced SCM processes do not exist.

Frequently, the capacity building discussions lean solely on small business development and in contrast corporate supply chain programs are assumed primed for diverse supplier integration. But, when you take a snapshot of corporate programs they all appear faulty when it comes to engaging black-owned business enterprises, particularly those owned, controlled and operated by males. Any corporation that does not have economic investment equality leaves room for self-imposed capacity building for more proficient inclusion of diverse suppliers.

The days of discussing and highlighting how ethnically owned-business enterprises lack certain management skills to service major corporate requirements are metaphorically sounding like an outdated broken record. Diverse suppliers are operated with the same level of understanding and delivery of Six Sigma, Optimization Functionality, Constraint-based Management, and the like.  For the better part of the 20th Century, the basic rule of thumb for engaging new suppliers was to examine the lowest price and the leanest processes to complete the delivery with the lowest level of risk. Outsourcing specialists’ built-in barrier dialogue surrounding corporate procedures associated with bonding, potential material shortages, critical on-time delivery challenges, and compatible product fulfillment.  Furthermore, supply chain managers continue to push inappropriate barrier discussions to opportunities with terms associated with global logistics, green energy, aggregated bundling and even geological factors expanding the appearance to exclude diverse suppliers to bidding opportunities and contract engagement practices.

Local trade missions are a distant memory, where major corporations toured their service territories for businesses with surplus capacity to conduct business opportunities. There are no buses or car pools sourcing the streets of east/south Los Angeles, Bellflower, Carson, Gardena, Inglewood, Hawthorne, Compton, Lancaster, Lawndale, north Long Beach, Lynwood, Lennox, Palmdale, or Paramount. Unlike the ballyhoo communities like Santa Monica, Marina del Rey/Playa del Rey/West Los Angeles, Manhattan Beach, Topanga, Culver City, Pasadena, Calabasas/Thousand Oaks, Mar Vista, Malibu/Palisades, and Brentwood that routinely receive high attention contracting awards for occupied business within these communities.  Socioeconomic development means that all communities receive equality to investments, not just those communities that reflect a more favorable population.

With the 2011 Baseball World Series underway, I am reminded of a social behavior story from the 1960’s related to the late great baseball hall of fame inductee, Elston Howard, who became the first black player for the New York Yankees in 1955. After nine World Series (won 4), Golden Glove and Most Valuable Player awards, in 1964 Elston Howard was denied access to rent an apartment in Fort Lauderdale, Florida as landlords(likewise a number of hotels, restaurants, etc.) throughout the state refused to conduct business with a ‘Negro’ person.  Racial discrimination was a crisis in this nation and that sick apartheid belief was a component of shaping poor business policies and practices that have a potentiality of carryover to the 21st Century, unless we work to remove exclusionary thought patterns.

That is why the 1960’s are significant in knowing that evolution of SCM requires corporate capacity building for inclusion on a socioeconomic level of diverse suppliers.  Optimization is achieved when the SCM includes local based businesses to enhance the future sales of the company.  Dormant markets within the County of Los Angeles or any major economy can work to achieve optimum sales levels as well as to meet supply demands. This requires a larger understanding of the whole dynamics for doing business. For corporate managers with investment decision making capacities and are lacking an appreciation of the optimization formula, then economic equality is unattainable. Capacity building is necessary for those managers to lessen the socioeconomic responsibility gap and to make improved practices of producing a true deliverable of integrating the movement of goods and services within all communities.

In conclusion, we are all in this experience together and the ultimate in SCM works to build communities.  We are time travelers in one space module, which is why we speak global, not for competitive edge but inclusion of mankind. Helping realize the untapped growth within communities for supplying goods and services is a true calling for procurement professionals. Customizing solutions that include contract engagement in aforementioned neglected communities makes a vast difference in doing effective business. Whereas, if corporations are to rightly continue publicizing their respective experience and expertise in logistics engineering and technology then that have to make a steadfast commitment to personalize the inclusion of communities routinely squeezed from the negotiation table. That is where the capacity building is
needed in the thinking processes to include a greater geographical sphere in wealth of corporate annual spend.