Supply Chain Diversity Programs

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

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

3. 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). • To qualify as a HUB the company needs to be 51% owned by such individuals.

4. Components • Apple Example • Outreach • Certification • Qualification • Development • Utilization

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

6. Benefits • 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

7. Benefits • 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

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

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

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

11. Achieving Diversity Goals Within Overall Supply Chain Goals • 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

12. Achieving Diversity Goals Within Overall Supply Chain Goals • 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

13. Achieving Diversity Goals Within Overall Supply Chain Goals • 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 – www.nmsdc.org • Women’s Business Enterprise Council WBENC – www.wbenc.org • Association for Service Disabled Veterans ASDV – www.asdv.org • 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

14. 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. • Class exercise

15. Sources • www.apple.com/supplierdiversity/ • www.scportal.lucent.com/DMS/index.jsp • www.scportal.lucent.com/DMS/diversity/www/qualification.htm • www.scportal.lucent.com/DMS/diversity/www/supplier.htm • www.nmsds.org/who_we_are/certification.html • http://www.wbenc.org/certification/index.html • www.slmbc.org • www.firstgov.gov • http://www.eds.com/industries/aerospace/downloads/Aerosp_V2_GenericPlane_US.pdf • http://www.diversityinbusiness.com/dib2002/dib20202/ExecInsight_RMoore.htm • http://www.eei.org/magazine/editorial_content/nonav_stories/2006-05-01-DIVERSITY.pdf • http://www.ibm.com/ibm/responsibility/pdfs/ibm_crr_supply_053105.pdf • http://www.primerevenue.com/what/pdfs/MWBE.pdf • http://www.das.state.ct.us/Purchase/SetAside/SAP_Search_Vendors.asp • http://www.oa.mo.gov/oswd/faq.htm#targets • http://www.ni.com/company/procurement/supplierdiversity.htm • http://procure.rutgers.edu/supplierglossary.html • Paige, L. Buying into Diversity, Materials Management in Health Care, August 2005. • Armstrong, Julie. "Ford Motor tries to gauge minority supplier spending." Automotive News 79.6113 (2004): 8-8. Business Source Premier. 29 May 2006. http://search.epnet.com. • Huber, Sig. "Supplier relations are the key to Toyota's North American success." Purchasing 134.13 (2006): 58-58. Business Source Premier. 29 May 2006. http://search.epnet.com. • Burke, Erin. "A passion for diversity." Materials Management in Health Care 14.8 (2005): 2-2. Business Source Premier. 29 May 2006. http://search.epnet.com. • Carbone, James. "IBM says diverse suppliers are good for business." Purchasing 134.13 (2006): 27-28. Business Source Premier. 29 May 2006. http://search.epnet.com. • Avery, Susan. "Only the best suppliers will do." Purchasing 134.13 (2006): 56-57. Business Source Premier. 29 May 2006. http://search.epnet.com. • Vijayan, Jaikumar. "Diversity in IT Supply Chain Pays Off, CIOs Say. (Cover story)." Computerworld 38.11 (2004): 1-16. Business Source Premier. 29 May 2006. http://search.epnet.com.

16. Questions