Supplier Diversity and Its Economic Impact.pptx

Supplier Diversity is a core component of corporate sustainability and ethical business practice

1. Supplier Diversity and Economic Impact: Driving Business Growth and Community Development Exploring Benefits and Approaches to Inclusive Sourcing. Greg DeShields, CHE, CDE https://gregdeshieldsconsulting.com/

2. Agenda Overview Understanding Supplier Diversity Business Rationale for Supplier Diversity Measuring the Economic Impact of Supplier Diversity Best Practices for Implementing Supplier Diversity Programs Overcoming Challenges and Maximizing Value

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5. Understanding Supplier Diversity

6. Historical Overview and Evolution Key Historical Figures Ron Brown (1990s ) - As Secretary of Commerce, advocated for Supplier Diversity as a critical tool for economic empowerment Dr. Dorothy B. Brothers - As Bank of America, Senior Vice President and National Director of Supplier Diversity and Development Created significant policy changes in procurement space for minority-owned businesses Alfred C. Liggins - CEO of Urban One, Inc., the largest African American-owned multimedia company in the United States. Under his leadership, he become a significant advocate for supplier diversity, particularly in the media industry.. Evolution Timeline 1960s-1970s Rise in civil rights movements and recognition of economic importance of minority and women-owned businesses The first significant legislative The Civil Rights Act of 1964, prohibited discrimination on the basis of race, color, religion, sex, or national origin. This was a catalyst for Executive Order 11458, signed by President Nixon in 1969. Creating the Office of Minority Business Enterprise (OMBE), promoting growth and competitiveness of minority-owned businesses. OMBE in 1971 gave rise to the National Minority Purchasing Council, now known as the National Minority Supplier Development Council (NMSDC), in 1972. 1980s Corporations began realizing the value of diverse suppliers for innovation and market expansion Today Supplier Diversity is a core component of corporate sustainability and ethical business practice

7. Categories of Diverse Suppliers Minority-Owned Businesses Businesses owned by individuals from racial or ethnic minority groups, promoting inclusion and economic growth. Women-Owned Businesses Enterprises led by women, supporting gender equality and empowering female entrepreneurs. Veteran-Owned Businesses Businesses founded by military veterans, bringing discipline and leadership to the marketplace. LGBTQ and Disabled-Owned Businesses Businesses owned by LGBTQ individuals and persons with disabilities, fostering diversity and accessibility.

8. Key Executive Orders & Government Action Recent Executive Orders Supporting Supplier Diversity Executive Order 13985 (2021) Advancing Racial Equity and Support for Underserved Communities Executive Order 14005 (2021) Ensuring the Future is Made in All of America by All of America's Workers Executive Order 14013 (2021) Rebuilding and Enhancing Programs to Advance Racial Equity Executive Order 13974 (2020) Establishing the National Strategy for Advancing Domestic Manufacturing Recent executive orders have strengthened the foundation for supplier diversity initiatives

9. Definition and Key Concepts of Supplier Diversity Proactive Sourcing Supplier diversity emphasizes actively sourcing from businesses owned by underrepresented groups to promote inclusion. Economic Participation This approach encourages equitable economic participation by supporting minority-owned and diverse suppliers. Support for Diverse Suppliers Supplier diversity supports various supplier types, enhancing innovation and community development.

10. Organizations Involved in Supplier Diversity These organizations provide certification, networking, and advocacy for diverse suppliers Key Organizations National Minority Supplier Development Council - Focuses on advancing business opportunities for certified minority business enterprises (MBEs). Women's Business Enterprise National Council - Supports women-owned businesses through certification and advocacy. Veteran-Owned Business Association (VOB) Supports veteran entrepreneurs and their inclusion in business opportunities. National Gay & Lesbian Chamber of Commerce - Advocates for LGBTQ+ owned businesses in the corporate supply chain. Disability:IN - Promotes the inclusion of businesses owned by individuals with disabilities.

11. US Government and Supplier Diversity U.S. Small Business Administration Minority Business Development Agency General Services Administration While federal support for supplier diversity has experienced policy shifts, ongoing initiatives at both the federal and state levels continue to promote inclusivity in government contracting.

12. Business Rationale for Supplier Diversity

13. Benefits to Organizations and Stakeholders Supply Chain Resilience Engaging diverse suppliers strengthens supply chain resilience by reducing dependency on single sources. Market Expansion Working with diverse suppliers opens access to new markets and customer bases. Enhanced Brand Reputation Commitment to supplier diversity enhances brand reputation among stakeholders and consumers.

14. Enhancing Innovation and Competitiveness Value of Diverse Perspectives Diverse suppliers bring unique viewpoints that enhance creativity and drive innovative solutions. Competitive Advantage Leveraging supplier diversity provides companies with a strategic edge in rapidly changing markets .

15. Measuring the Economic Impact of Supplier Diversity

16. Direct and Indirect Economic Benefits Direct Economic Impact $400 billion Annual Revenue Estimated total annual revenue generated by minority-owned businesses in the United States. Supplier diversity drives direct spending in the economy, boosting revenue for diverse businesses. Business Representation Minority-owned businesses account for approximately 30% of all U.S. businesses. Indirect Economic Opportunities Diverse supplier spending stimulates secondary business opportunities and economic growth within communities.

17. Job Creation and Community Development Diverse Supplier Engagement Engaging a variety of suppliers promotes inclusive growth and strengthens local business ecosystems. Employment Growth Job creation through supplier diversity leads to increased employment opportunities within communities. Sustainable Community Development Supporting local economies fosters long-term sustainability and revitalization of communities. "When diverse businesses thrive, communities prosper, creating a positive cycle of economic empowerment."

18. Best Practices for Implementing Supplier Diversity Programs

19. Developing Effective Supplier Diversity Policies Clear Policy Objectives Ensure senior executives demonstrate commitment to supplier diversity. The process needs to be top-down to be successful. Effective policies should start with clear, measurable objectives to guide supplier diversity efforts. Defining Diverse Supplier Criteria Policies must clearly define what qualifies a supplier as diverse to ensure consistent inclusion. Provide training to internal teams about the value of supplier diversity. Clearly communicate opportunities to suppliers. Integrating Diversity Goals Incorporate diversity goals directly into procurement processes to promote supplier inclusivity effectively.

20. Supplier Outreach and Engagement Strategies Building Relationships Establishing strong connections with diverse suppliers is vital for successful outreach and trust development. Offering Training Providing training helps suppliers improve capabilities and better meet procurement requirements. Implement mentorship and development programs for diverse suppliers. Partner with supplier diversity councils for resources. Facilitating Access Helping suppliers access procurement opportunities encourages participation and strengthens the supply chain.

21. Top Technologies for Supplier Diversity Arkestro provides supplier matching, spend analysis, and contract management, automating tasks and improving efficiency. Avetta verifies supplier diversity status and collects necessary documentation, reducing risk and ensuring compliance. SimplifyVMS manages contingent workforce programs, including supplier relationships and compliance. Ford implements a tier 2 program that requires suppliers to report their spending with diverse subcontractors, promoting transparency and accountability. GenAI addresses gaps, offers a means of creating fairer and more competitive supplier ecosystems at scale.

22. Monitoring, Reporting, and Continuous Improvement

23. Overcoming Challenges and Maximizing Value

24. President Trump's Executive Orders On Supplier Diversity Executive Order 14173: Signed on January 21, 2025 This order rescinded Executive Order 11246, which had prohibited discrimination in federal contracting based on race, color, religion, sex, sexual orientation, gender identity, or national origin. Executive Order 14151: Issued on January 20, 2025 This order mandated the termination of all DEI-related activities within federal departments. It led to the dissolution of DEI offices, removal of DEI-related content from federal websites, and the termination of DEI-related contracts. Executive Order 14148: Signed on January 20, 2025 This order rescinded 68 executive orders and 11 presidential memoranda from the Biden administration, including those related to DEI. It directed federal agencies to end the implementation of DEI policies and instructed the National Security Advisor to review national security memoranda for potential harm. The Trump administration's executive orders aimed to shift the focus of diversity initiatives

25. Impact on Federal Supplier Diversity These executive orders have led to a significant shift in federal supplier diversity policies: Elimination of DEI Considerations in Procurement: Federal agencies are no longer required to consider a company's DEI practices when making procurement decisions. Rescission of Affirmative Action Mandates: The revocation of Executive Order 11246 and related directives has ended affirmative action requirements for federal contractors. This move restores merit-based hiring practices and eliminating discriminatory DEI programs. The Office of Federal Contract Compliance Programs (OFFCP) to stop promoting diversity and holding federal contractors accountable. Dissolution of DEI Offices and Programs : Federal departments have dismantled DEI offices, removed DEI-related content from their websites, and terminated DEI-related contracts. The Trump administration's executive orders aimed to shift the focus of diversity initiatives President Trump's Executive Orders On Supplier Diversity

26. Broader Implications These actions represent a significant shift in federal policy, moving away from promoting supplier diversity through DEI initiatives. Reducing opportunities for minority-owned businesses and undermine efforts to address systemic inequalities. Businesses seeking to engage with the federal government, these policy changes mean that DEI certifications and diversity initiatives may no longer be considered in procurement decisions. Companies will adjust their strategies, focusing on demonstrating value and capability. These are federal policies, state and local governments, private sector companies, may still have their own DEI requirements and initiatives in place. The Trump administration's executive orders aimed to shift the focus of diversity initiatives President Trump's Executive Orders On Supplier Diversity

27. Illegal DEI and The whistleblower Program Illegal DEI refers to DEI programs like supplier diversity that are considered discriminatory under current federal anti-discrimination laws and violate EO 14173. Federal contractor or grantee, engaging in these programs expose you to False Claims Act liability. Whistleblowers play a central role—they can bring FCA suits and claim substantial rewards for reporting alleged false certifications regarding DEI compliance. Under the False Claims Act (FCA), whistleblowers (called “relators”) can bring qui tam lawsuits on behalf of the U.S. government. If successful, they can recover treble damages and monetary penalties.

28. Words Banned or Flagged by Federal Agencies

29. Companies Rolling Back Supplier Diversity Efforts McDonald’s - Backed away from diversity and inclusion initiatives, setting aside representation goals and DEI pledge for suppliers. Meta Platforms (formerly Facebook) - Made cuts to DEI programs, including those related to hiring, training, and supplier diversity. Target - Significantly rolled back DEI initiatives, including altering its supplier diversity program. Amazon - Among several major companies that have reduced or restructured their DEI efforts. Lowe’s Companies - Announced scaling back diversity, equity, and inclusion (DEI) efforts in August 2024.

30. Common Obstacles and Barriers Limited Supplier Capacity Supplier limitations can hinder project progress and affect overall outcomes adversely. Lack of Awareness Insufficient knowledge about processes or benefits reduces stakeholder engagement and success. Internal Resistance Resistance within organizations often slows adoption of new ideas and solutions.

31. Strategies for Increasing Diverse Supplier Participation Mentorship Programs Mentorship helps diverse suppliers gain knowledge and confidence to participate effectively in procurement. Simplified Procurement Simplifying procurement processes reduces barriers and makes it easier for diverse suppliers to engage. Inclusive Culture Fostering an inclusive culture encourages diverse supplier participation and builds stronger partnerships.

32. Many Large Companies Actively Promote Supplier Diversity Programs Accenture: Accenture's program focuses on inclusion and innovation, providing diverse suppliers with access to mentorship, networking, and training. Comcast: Comcast integrates diverse businesses, such as minority-owned, women-owned, and LGBTQ+ businesses, into its supply chain. Intel: Increased spending with diverse suppliers, achieving their goal of $2 billion. Intel's program aims to create inclusive and equitable supply chain including diverse-owned businesses in the bidding process and encouraging diverse spending in larger contracts. PepsiCo: PepsiCo's Supplier Diversity Program has been running for 40 years and spends over $1 billion annually with certified diverse suppliers. Novo Nordisk: Novo Nordisk is committed to a diverse supplier base that represents the patients they serve, offering development opportunities and mentoring. These companies demonstrate how supplier diversity can be successfully integrated into business strategy.

33. States Actively Support Supplier Diversity Programs New York: Executive Law Article 15-A and Article 17-B mandate state agencies and contractors to promote opportunities with specific goals set for MWBEs (30%) and SDVOBs (6%). California: The Statewide Supplier Diversity Program focuses on integrating diverse businesses into the state's procurement process, promoting economic resilience, and creating data-driven tools to support these businesses. Colorado: The Statewide Supplier Diversity Program aims to reduce disparities in the state's use of small and diverse businesses, identifying barriers to access and strengthening the local economy. Connecticut: The Department of Administrative Services oversees supplier diversity initiatives. Delaware: The Office of Supplier Diversity works to promote participation of diverse businesses in state contracting.

34. National Chambers of Commerce

35. Future Trends and Opportunities Technological Advancements Emerging technologies will enhance supplier diversity programs and improve efficiency and outreach. Evolving Regulations Changing laws and policies will influence how organizations implement and manage diversity initiatives. Sustainability Focus Increasing sustainability emphasis will drive eco-friendly and socially responsible supplier selections.

36. Thank You Conclusion