Even in cautious economic times,
MBEs get through some big doors
Heavy hitters like Ford, International Paper, Toyota and Microsoft maintain diverse supplier philosophies and strategies
“Companies that align their core business with Microsoft’s goals will be best positioned to have fruitful conversations.” – Fernando J. Hernandez, Microsoft
By Skip Waugh
Industries and companies are rebounding in the aftermath of the economic downturn. Most continue to take a cautious approach to spending money, whether it’s on employees, supply chain or capital investments.
The current health of minority business enterprises (MBEs) varies by their size and location. MBEs looking to be a part of a major corporation’s supply chain may still have to pick their spots to find opportunities.
“If you are a $10 million-plus company, you probably are seeing more opportunities even if you are not necessarily winning them,” says Terri Quinton, national minority business enterprise input committee chair at the National Minority Supplier Development Council (NMSDC).
Unfortunately, those firms below the $10 million level continue to struggle, she says. She believes these MBEs must get creative to compete.
“Corporations these days are rationalizing their supply chains,” says Quinton. “They are looking for larger suppliers to do business with, and that means working with fewer companies.” She notes that cost savings have become a top corporate priority.
“The opportunities for smaller minority businesses may be with the major corporations’ prime suppliers,” she says. Those suppliers are more willing to listen to pitches by minority businesses because corporations continue to insist on a diverse pipeline. Tier 2 spending by their major suppliers is a way to achieve that goal.
Minority businesses should be prepared to take advantage of any alignment with corporations or prime suppliers, separately or together. Collaboration among several small MBEs can produce an attractive package. “First, make sure you can have a good business,” Quinton says. “Then look for how you can parlay your strengths into doing business as a minority.”
Certification is important, and often a prerequisite. Companies work with the regional affiliate councils of the NMSDC to qualify as certified MBEs. The certification process is laid out at www.nmsdc.org.
Ford Motor Company: an early commitment to supplier diversity
Ford Motor Company (Dearborn, MI) has a commitment to diverse businesses that reflects its overall mission to empower diverse communities. The automaker is recognized as a pioneer in supplier diversity.
Ford launched its U.S. supplier diversity development (SDD) program in 1978. Ford’s leaders felt that the company had a social responsibility to provide business opportunities to minorities and communities that were historically, socially and economically disadvantaged.
Helping MBEs join the competition
At the time of the SDD launch, very few minority-owned and operated companies were capable of delivering the goods and services required by the company and other automotive manufacturers.
At the direction of Henry Ford II, the SDD program was tailored to identify and assist high-potential minority entrepreneurs in developing their companies to become effective competitors for the business of Ford as well as other automotive firms.
“Our efforts paid off,” says Carla Traci Preston, director of supplier diversity development. “Since the establishment of our supplier diversity development program, Ford has sourced more than $74 billion in business with more than 400 diverse suppliers.” Ford requires MBE certification from its minority suppliers.
Preston notes that in addition to sourcing business, the company provides the operational, technical and financial assistance that diverse suppliers need to succeed and thrive. Ford’s Joint Technology Framework program, launched in 2008, provides qualified diversity suppliers with access to Ford patents and intellectual property.
“We hope this access will serve as the catalyst for new product innovations, improved competitiveness, and ultimately new business opportunities. We recognize that to meet and exceed the expectations of our consumers in diverse global markets, we need to partner with a supply base reflective of diversity,” says Preston.
Chrysan Industries: Ford partner
Chrysan Industries (Plymouth, MI) is a Ford Motor Company supplier. The company produces automotive lubricants and specialty chemicals. It’s also a supplier of process cleaners, greases, rust inhibitors and specialty chemicals. It has facilities around the world.
Chrysan emphasizes diversity within its own supply chain, so much so that the company has won a number of awards from Ford and various business groups for its efforts. It is an active participant in the Michigan Minority Supplier Development Council, a regional affiliate of the NMSDC.
Dr Kook-Wha Koh founded the organization in 1977. She received several patents in metalworking fluid technology and formulated cutting oils, synthetic coolants and stamping fluids for the metalworking industry. The company’s first customer was Arrow Metal Products (Detroit, MI), a small stamping company that supplied parts to the automotive industry.
Chrysan’s association with Ford began in 1985 at the Ford Livonia plant when Dr Koh developed a Chrysan product line and began selling it at the plant.
Today the company is run by Dr Koh’s son, Suk-Kyu Koh. The younger Koh is the president and CEO and serves on the board of the Asian Pacific American Chamber of Commerce (APACC). Koh is also a founding member of the Michigan Minority Chemical Association and the MBE chair of the Michigan Minority Business Development Council (MMBDC) Ann Arbor roundtable. He received a bachelor of arts in chemistry from Cornell University in 1989.
International Paper provides a range of supportive services to diverse suppliers
The diverse supply base at International Paper (Memphis, TN) has been creating value for more than thirty years. The organization counts on suppliers such as MBEs to support its production of paper and packaging products.
Debra Voss is manager of global sourcing for diverse business solutions at International Paper. She works with diverse suppliers and internal purchasing professionals to build lasting relationships. She’s been with International Paper for eight years, and in her current position since 2010.
Voss led the team that helped the company take a proactive approach to supplier diversity. She developed and manages the diverse supplier strategic sourcing process to ensure that diverse suppliers are given full consideration.
She also oversaw the launch of an online portal for supplier registration and launched a tier 2 program. “The tier 2 program requires reports from the company’s major suppliers on how they are including diverse suppliers in their own supply chains,” says Voss. During her tenure, there has been a 28 percent increase in the number of diverse suppliers.
A growing program grows MBEs
Since 2008, International Paper has spent more than $1.9 billion with diverse-owned businesses. Spending exceeded $400 million in 2013, an increase of 16 percent over 2012. According to the company’s 2013 sustainability report, Voss’s team was instrumental in developing and implementing key strategies to help the company achieve its goals.
MBEs looking to International Paper for opportunities will find a company committed to making sure its diverse suppliers are successful contributors, Voss says. Information about the company’s supplier diversity program and its registration process for diverse suppliers is at ipaper.cvmsolutions.com.
Toyota: Billion Dollar Roundtable member
Jim Holloway is general manager of purchasing and supplier relations for Toyota’s North American headquarters in Erlanger, KY. He’s been with the company since 1992, filling various roles in the purchasing division including buying, planning and supplier preparation.
“Our supplier diversity program spreads awareness of opportunities within the Toyota supply chain and advocates for the capable MBEs our buyers work with,” says Holloway. The supplier diversity section of Toyota’s supplier relations department serves as the go-between for the organization and MBEs hoping to join the supplier pool.
Toyota’s supplier diversity program began in 1987. Today, the program has a staff of five dedicated to applying best practices in supplier diversity. It focuses on partnerships, value-added procurement opportunities and accountability throughout the supply chain. “By partnering with a diverse array of suppliers who provide innovative ideas, we are able to add value throughout the organization,” Holloway says.
Toyota is a member of the Billion Dollar Roundtable, an association of corporations recognized for spending $1 billion or more each year with minority and woman-owned suppliers. The association also promotes and shares best practices in supply chain diversity.
More than car parts
“You would think that Toyota supplier diversity focuses on car parts and the materials needed to make those parts, which is true,” says Holloway. “However, we also utilize MBEs for a variety of services like plant construction and maintenance, consulting and marketing.”
The company requires its suppliers to be certified. “We work closely with organizations like NMSDC to help raise awareness for business opportunities not only with Toyota, but with many other companies as well.”
Prymus Group provides Toyota with IT staffing
“Toyota takes supplier diversity very seriously,” says Tony Cunningham, founder and CEO of Prymus Group (Troy, MI). “They do what they say they are going to do.”
Cunningham’s Prymus Group is a business and technology consulting firm launched in 2002. The company is a certified MBE that specializes in software solutions, executive management and engineering/professional placement services.
Prymus provides IT staffing: professionals who work in enterprise solutions, and .Net personnel, web-based and Java, who build IT applications. It also has two custom applications in the works, one for onboarding and managing contract personnel and one for home healthcare. The onboarding app is being developed for a tier 1 Toyota supplier.
Prymus’s initial connection to Toyota came via cold calls. “It took me probably a year,” says Cunningham. He followed up with a buyer regularly, and got the chance to prove himself in 2003. Prymus provided scientists to do research and testing on alternative fuels in Toyota’s materials research department.
Perseverance, patience and openness may be the key for MBEs. “The days of saying ‘this is our core competency and that is all we do’ are over,” he says. “You have to be open, and opportunities may arise that you are not accustomed to. You may have to look outside your own infrastructure and consider partnering with firms that specialize in whatever it is that your client needs. You must be willing to figure out how to get things done and not be afraid of the unknown.”
Microsoft Corporation: strategic advantage in supplier diversity
With customers throughout the world, Microsoft (Redmond, WA) values its diverse supplier pool. The company reached a significant milestone in June 2018 when it exceeded $2 billion in annual spend with its diverse suppliers. It’s a mark the company is particularly proud of.
Fernando J. Hernandez is the director of supplier diversity at Microsoft and a board member of the NMSDC and Billion Dollar Roundtable. He’s been responsible for driving many supplier diversity activities since he started in 2006. The program has been in place since 2001.
Microsoft purchases a wide array of products and services. “Of course our focus is technology,” says Hernandez. “I’m very interested in finding companies that can provide world-class technology.” For Hernandez, showcasing MBEs that specialize in technology also demonstrates how diversity can lead advances rather than follow them.
Hernandez is proud of what he has accomplished at Microsoft but believes it is “just the beginning. I want to see every corner of the company engaged in supplier diversity.”
He’s excited by the idea that Microsoft’s diverse suppliers may launch the next wave of technology. “In the near future, there will be a significant amount of business done through these suppliers.”
For MBEs looking to connect with Microsoft, Hernandez suggests paying attention to the company’s strategy of “mobile first, cloud first.” “That’s really transformative,” he says. “They need to understand the impact they can have on consumers and business, and then look at their own core competencies and ask themselves, ‘What do I have to offer that is going to align with where Microsoft wants to go?’ Companies that align their core businesses with Microsoft’s goals will be best positioned to have fruitful conversations.”
COMPANIES WITH ACTIVE SUPPLIER DIVERSITY PROGRAMS
Check websites for current listings.
|Company and location
|Baker Hughes (Houston, TX)
|BNY Mellon (New York, NY)
|Banking and financial services
|Ford Motor Company (Dearborn, MI)
|International Paper (Memphis, TN)
|Paper, packaging and forest products
including building materials
|Microsoft (Redmond, WA)
|Computer software and selected hardware
|Toyota Engineering and Manufacturing
North America (Erlanger, KY)
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