"The Fierce Urgency of Now": Why working with minority suppliers still matters
Some corporations have been questioning the importance of minority-owned businesses to their commercial relationships and supply chains. Yet, the author explains in this essay, it's become increasingly clear that diversity and inclusion fuel growth for businesses as well as for the economy at large.
Joset Wright-Lacy is President of the National Minority Supplier Development Council (NMSDC), which advances business opportunities for certified minority business enterprises (MBEs) and connects them to corporate members.
Earlier this year I had the opportunity to participate in a Martin Luther King Day celebratory march in Raleigh, North Carolina. The event was very well attended, with a mix of young and old, black, white, and brown, able and disabled. I was especially heartened to see a large contingent of black fraternities and sororities, including college-age "Greeks" for whom Martin Luther King exists only in the stories of their elders. As my husband and I walked on that brisk and sunny day, a placard that read "The Fierce Urgency of Now," a phrase from Dr. King's famed "I Have a Dream" speech, caught my eye. It resonated with me to the core.
In my work with the National Minority Supplier Development Council (NMSDC), I have recently felt a deep sense of urgency as corporations begin to question the importance of minority-owned businesses to their commercial relationships and supply chains. The refrain is, "What is the 'value proposition' for minority supplier development?" That is, of what value is it for corporations to pursue stronger relationships with minority business enterprises (MBEs) in their supply chains? The question itself is deeply troubling, because it suggests both a belief that minority suppliers have to make a "special case" for inclusion in business opportunities and an assumption that minority suppliers can't deliver service, value, and quality. This kind of thinking can lead to the placement of artificial barriers in front of minorities and usually leads to excuses for dropping support for supply chain diversity when corporate budgets are cut.
This is shortsighted, as there is clear and strong evidence that working with minority-owned suppliers provides business benefits for both buyer and supplier. Moreover, these relationships have a beneficial impact not only on local communities but also on the national economy. In fact, the state of minority-owned businesses is a critical measure of the nation's economic health. NMSDC prepared a study in 2014 that illustrated the economic impact of certified MBEs.1 The study found that MBEs in the United States generate more than $1 billion in economic output every day. That equates to nearly $401 billion annually, in direct, indirect, and induced output effect. Taking a closer look, NMSDC-certified MBEs were directly responsible for more than $139 billion in sales of products and services offered to customers. The increased purchases made by certified MBEs from their suppliers produced indirect output of $116 billion. And the employees and families of certified MBEs contributed significant induced output by purchasing $145 billion of goods and services from other merchants within the United States. By the same calculation and methodology, in 2014, NMSDC-certified MBEs were responsible for the maintenance or creation of more than 2.2 million jobs and generated more than $48 billion in tax revenue to local, state, and federal governments.
While we are awash in news about the state of the U.S. economy, we often fail to recognize that MBEs are part of the nation's growth equation. Think about $1 billion in daily economic output: that's money in the hands of workers and their households that represents the ability to pay for cars, clothes, travel, college educations, and more. And most important, in some minority communities it represents an opportunity to buy a new home, and to move away from grinding poverty and blighted neighborhoods.
The more jobs consumers have and the more wages they earn, the more they are able to participate in the economy, whether that means buying healthy foods or snacks, durable goods or over-the-counter drugs, life's essentials or entertainment, even cars and houses. We cannot expect to have a truly robust economy unless everyone can participate. Putting people to work at good wages is good for what ails the American economy. Corporations that understand this macroeconomic principle are figuring out ways to make sure MBEs have the opportunity to participate in job creation so minorities can participate in the economy.
Minority supplier development drives growth
There is no question that a contract with a minority-owned business is more likely to create a job for a minority individual. This will become more important as U.S. demographics shift and minorities constitute a greater percentage of the population—more than 50 percent by the year 2045, according to current projections. If that demographic group does not have access to well-paying jobs, the U.S. economy will suffer. It calls to mind the words of President Richard M. Nixon, who in 1969 signed an Executive Order creating the precursor to NMSDC, the Office of Minority Business Enterprise: "The opportunity for full participation in our free enterprise system by socially and economically disadvantaged persons is essential if we are to obtain social and economic justice for such persons and improve the functioning of our national economy."
Many corporations and minority suppliers have been engaged in this work for more than 40 years. Yet minority-owned businesses supporting the nation's supply chains still face obstacles that other suppliers do not experience, because minorities' personal and family wealth is dramatically less than that of non-minority entrepreneurs, and there is less opportunity for minorities to fund their own businesses. The NMSDC's 2015 "National Survey on Access to Capital Among Minority Business Enterprises" shows that minority suppliers lack access to early-stage, growth, acquisition, and expansion financing on the same terms and conditions as non-minority suppliers.2 This is due in part to historical and statistical discrimination as well as to unconscious biases and cultural resistance, but also, as the report says, to "several key internal factors, including lack of a growth-oriented exit strategy, lack of knowledge, lack of engagement, MBE certification requirements, and negative perceptions about institutional funding sources."
To help its certified MBEs overcome these barriers, NMSDC is working on key educational goals in such areas as knowledge of financing options beyond bank loans and exit strategies that satisfy private equity and venture capital requirements; outreach and engagement goals focused on strengthening relationships between investors, corporations, and MBEs (for example, through the annual NMSDC Conference and Business Opportunity Exchange, which draws more than 6,000 participants); and certification policy goals that permit MBEs to raise venture capital or private equity without endangering their status as minority-owned businesses.
Often, minority suppliers must demonstrate their ability to "ramp up" production to meet a company's national procurement needs, overcoming both the internal and external barriers to their ability to win contracts. In a corporate environment where "old boy network" relationships sometimes predominate in the supply chain, MBEs may lack access to opportunities even to demonstrate their qualifications and show their capabilities to corporate decision makers. And yet despite these barriers, both internal and external, minority entrepreneurs are still more likely to start a business. NMSDC's 2014 "Economic Impact Report" cites a joint report from the Milken Institute and the Minority Business Development Agency that suggests that the number of minority business owners in the United States (an estimated 3.3 million when the report was published) is growing at a rate of 17 percent annually—"a staggering six times faster than the growth rate of all firms."3
This, then, is the "value proposition" of minority supplier development: it fuels economic growth. "Diversity and inclusion" is not just a catchphrase—it actually contributes value to the corporate bottom line. This is a principle that's long been known but is not always recognized by corporations that don't understand the potential benefits. Quoting from a Wall Street Journal article, now 10 years old: "When a company announces a relationship with a minority supplier, investors and analysts tend to file that news release under 'social good' and move on. But companies that seek out such business relationships see financial benefits, too. New research from Atlanta business consultant Hackett Group shows that companies that 'focus heavily on supplier diversity' generate a 133 percent greater return on procurement investments than the typical business." The article goes on to point out that minority suppliers "may price their products and services better than larger competitors or operate more efficiently" and "also can create sales opportunities for companies that use them, meaning they are benefiting the bottom and top lines."4
More recent reporting and company statements add to the evidence. Consider, for example, this quote from Susannah Raheb, supplier diversity leader for Lockheed Martin Corporation, in the publication Inc.: "We value and leverage the agility, ingenuity, and new perspectives we gain when partnering with small businesses to help us solve a wide variety of challenges and drive affordability into our products, which is a priority for us. ... If there is a more efficient way to do something, we want to know about it. Having a diverse supplier network is one way we leverage a broad spectrum of expertise."5 The retailer Macy's, on its web page describing the "Importance and Value of Vendor Diversity," notes that its programs "help us present distinctive assortments of unique merchandise in our stores—setting us apart from the competition and making our stores the 'go-to' destination for shoppers wanting fresh and exciting choices. Additionally, working with a wide spectrum of vendors helps Macy's support the economic health of the communities where we do business."6 And, to return to the Hackett Group for a contemporary analysis, "On average, supplier diversity programs add $3.6 million to the bottom line for every $1 million in procurement operation costs. The high return on investment is undeniable. ... A positive ROI that boosts socially conscious reputation should push supplier diversity to the forefront of business strategy."7
Now is the time
There is no time like the present to forge links between minority business owners and opportunities in corporate America.
That day in 1963, when Martin Luther King spoke the words I saw on the placard during the march in North Carolina, it was in part "to remind America of the fierce urgency of NOW. This is no time to engage in the luxury of cooling off or to take the tranquilizing drug of gradualism." It may be, as Dr. King said, that minorities live "on a lonely island of poverty in the midst of a vast ocean of material prosperity." But, he added, "We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation." And finally, as Dr. King observed—and as I observed at the march in Raleigh—many people have come to realize that the economic destinies of all citizens, both those who are in the majority and those who are minorities, are tied together.
Now is the time for corporations to affirm their commitment to minority entrepreneurs who live in the communities and among the consumers that they serve, not only because it is the right thing to do, but indeed to ensure their own corporate financial well-being and the country's social prosperity.
Container flows at dozens of U.S. East Coast and Gulf Coast ports shuddered to a simultaneous stop this morning when dockworkers launched a promised strike over pay levels and job automation.
The action is affecting work at major locations such as New York/New Jersey, Savannah, Houston, Charleston, Norfolk, Miami, Baltimore, Philadelphia, New Orleans, Jacksonville, Boston, Mobile, Tampa, and Wilmington. That broad span of geographic locations will affect imports and exports for industries spanning retail, automotive, agriculture, food and beverage, and manufacturing, according to an analysis by Overhaul.
Those impacts are forecast to grow rapidly with each additional day the strike continues, since more than 100 vessels are estimated to arrive at the 36 affected ports this week alone, according to analysis by supply chain visibility provider Project44. The recovery from that backup could take some time, as some shippers estimate that for every one week of strike, it will take 4-6 weeks to fully recover, the firm said.
Because of the sudden stop, logistics providers today are quickly reaching out to shippers and other clients to plan for future cargo movements. Specifically, the strike immediately froze a range of work such as the movement of import and export containers and the loading and unloading of containers, according to German maritime transportation provider Hapag-Lloyd AG. “As a result of this situation, which is beyond our control, we will need to adjust our services or temporarily suspend operations as conditions evolve. Our priority remains the protection of your cargo during this period,” Hapag-Lloyd AG said in a note to shippers.
Despite those large impacts, the timeline is unclear for finding a resolution of negotiations between the union—the International Longshoremen’s Association (ILA)—and the port management group, United States Maritime Alliance (USMX).
Under those conditions, retail and manufacturing groups have renewed their calls for their White House to step in and force workers back on the job while negotiations resume.
One of those voices came the National Retail Federation (NRF). “NRF urges President Biden to use any and all available authority and tools — including use of the Taft-Hartley Act — to immediately restore operations at all impacted container ports, get the parties back to the negotiating table and ensure there are no further disruptions,” NRF President and CEO Matthew Shay said in a release. “A disruption of this scale during this pivotal moment in our nation’s economic recovery will have devastating consequences for American workers, their families and local communities. After more than two years of runaway inflationary pressures and in the midst of recovery from Hurricane Helene, this strike will result in further hardship for American families.”
Perfect Planner, a cloud-based platform designed to streamline the material planning and replenishment process, and Flying Ship, an unmanned ground-effect maritime cargo craft, took home the second annual “3 V’s of Supply Chain Innovation Awards” tonight at the Council of Supply Chain Management Professionals (CSCMP) annual EDGE Conference in Nashville, Tennessee.
This awards contest is hosted by Supply Chain Xchange and 3 V’s framework creator and supply chain visionary Art Mesher. It serves to recognize those companies that have created technology or automation solutions that exemplify Mesher’s 3 V’s framework of “embracing variability, harnessing visibility, and competing with velocity.”
Business Innovation Award
Art Mesher, creator of the 3 V's Framework (left) and Rick Blasgen (right), former CSCMP President and CEO, present Tom Biel (center), CEO of Perfect Planner, with the 3 V's Business Innovation Award.
Susan Lacefield
Perfect Planner won the 3 V’s Business Innovation Award for its software solution that uses artificial intelligence to automatically generates daily "to-do lists" for material planners/buyers. All the “to-do’s” are ranked in order of criticality. The solution also uses advanced analytics to understand and address inventory shortages and surpluses.
The two other finalists for the Business Innovation Award were AutoScheduler AI, a predictive warehouse optimization platform, and Davinci Micro Fulfillment, which provides a micro fulfillment service out of a network for small distribution centers across the United States.
Best Overall Startup Award
Flying Ship was awarded the Best Overall Startup Award. The company has designed an unmanned flying ground-effect maritime vessel. Although the Flying Ship looks like a small aircraft or large drone, it is classified as a maritime vessel because it does not leave the air cushion over the waves, similar to a hovercraft.
According to Flying Ship CEO Bill Peterson, the craft is 75% less expensive than a traditional aircraft and “faster than anything on water.” The prototype has a wingspan of 6.5 feet and can be scaled up to deliver 10,000 pounds of freight to “anywhere with a coastline” using autonomous systems.
The other startup finalist included Arkestro, a predictive procurement orchestration solution, and Provision AI, an optimized replenishment and transportation scheduling solution.
On Monday morning at CSCMP’s 2024 EDGE Conference, Darcy MacClaren, chief revenue office, digital supply chain, at technology company SAP, lead a lively discussion with a panel of women supply chain leaders on how to recruit, retain, and empower future supply chain leaders.
Panelists included Cindy Cochovity, executive vice president of strategic development at software company FreightPath; Heather Dohrn, chief commercial officer at trucking company Dohrn Transfer Company; Jennifer Kobus, senior vice president of supply chain planning and operations at retailer Ulta Beauty; Ammie McAsey, senior vice president of customer distribution experience at pharmaceutical company McKesson; and Michelle Williams, a supply chain teacher at Clyde C. Miller Career Academy, a high school in St. Louis, Missouri.
Touching on more than just the challenges they faced in supply chain as women, the panelists spoke about creating “destination" companies—places where top talent can work, grow, and thrive. According to MacClaren, younger workers “want more than just competitive compensation—they want to feel appreciated, involved, and inspired. They seek a workplace with a strong, inclusive culture that aligns with their values, offers meaningful work, and provides an opportunity for growth and development.”
The panel covered an array of topics including how to inspire the next generation of talent, strategies for engaging and coaching young professionals, how to attract diversity, and how to address change management. In addition, they shared personal experiences that helped them achieve their leadership roles and ended with some key takeaways for the audience members.
Here’s a snapshot of action items from the discussion:
1. Ensure a diverse slate of candidates for open positions.
2. Leverage internal and external networks to find diverse candidates.
3. Nurture and mentor new hires to help them thrive.
4. Remain authentic, vulnerable, and transparent as a leader.
5. Advocate for yourself and your career progression, not just for your team.
6. Seek out mentors and advocates, especially other women in leadership positions.
7. Open doors and bring others in, regardless of your own position.
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Supply Chain Xchange Executive Editor Susan Lacefield moderates a panel discussion with Supply Chain Xchange's Outstanding Women in Supply Chain Award Winners (from left to right) Annette Danek-Akey, Sherry Harriman, Leslie O'Regan, and Ammie McAsey.
Supply Chain Xchange recognized four women who have made significant contributions to the supply chain management profession today with its second annual Outstanding Women in Supply Chain Award. The award winners include Annette Danek-Akey, Chief Supply Chain Officer at Barnes & Noble; Sherry Harriman, Senior Vice President of Logistics and Supply Chain for Academy Sports + Outdoors; Leslie O’Regan, Director of Product Management for DC Systems & 3PLs at American Eagle Outfitters; and Ammie McAsey, Senior Vice President of Customer Distribution Experience for McKesson’s U.S. Pharmaceutical division.
Throughout their careers, these four supply chain executive have demonstrated strategic thinking, innovative problem solving, and effective leadership as well as a commitment to giving back to the profession.
The awards were presented at the Council of Supply Chain Management Professionals (CSCMP) annual EDGE Conference in Nashville, Tenn. In addition to the awards presentation, the leaders discussed their leadership philosophies and career path during a panel discussion at the EDGE conference.
The surge of “nearshoring” supply chains from China to Mexico offers obvious benefits in cost, geography, and shipping time, as long as U.S. companies are realistic about smoothing out the challenges of the burgeoning trend, according to a panel today at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
Those challenges span a list including: developing infrastructure, weak security, manual processes, and shifting regulations, speakers said in a session titled “Nearshoring: Transforming Surface Transportation in the U.S.”
For example, a recent Mexican government rail expansion added lines to tourist destinations in Cancun instead of freight capacity in the Southwest, said panelist Edward Habe, Vice President of Mexico Sales, for Averitt. Truckload cargo inspections may rely on a single person looking at paper filings on the border, instead of a 24/7 online system, said Bob McCloskey, Director for Logistics and Distribution at Clarios, LLC. And business partners inside Mexico often have undisclosed tier-two, tier-three, and tier-four relationships that are difficult to track from the U.S., said Beth Kussatz, Manager of Northern American Network Design & Implementation, Deere & Co.
Still, dedicated companies can work with Mexican authorities, regulators, and providers to overcome those bottlenecks with clever solutions, the panelists agreed. “Don’t be afraid,” Habe said. “It just makes sense in today’s world, the local regionalization of manufacturing. It’s in our interest that this works.”