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Introduction
Diversity is becoming very important in business strategy throughout the world. Diversitys scope and levels of implementation differs by geographical territory, and therefore often influenced by differing local legislative regimes. Diversitys importance cannot be underestimated. Supplier diversity has now become the main area of diversity that involves procurement in linking suppliers as part of the supply chain.
Definitions
In its Supplier Diversity paper (2006), the Centre for Research in Ethnic Minority Entrepreneurship (CRME) quotes a definition of supplier diversity put forward by the UK Environment Agency. It states that: supplier diversity is a process through which equal opportunities are provided to all businesses to compete. Already a well-established concept in the U.S. public sector, supplier diversity has become an important part of supply chain management in corporate America. Supplier diversity involves the purchasing of goods and services from businesses owned and operated by visible minority groups. Three categories of diverse supplier bases currentlyexist: Minority Business Enterprises (MBEs), WomenBusiness Enterprises (WBEs), and Disabled Veteran Business Enterprises (DVBEs). Whereby,MBEs seems to constitute the largest percentage of supplier diversity focus; for instance, AT&T's supplier diversity goal is to have 15% MBE, 5% WBE, and 1.5% DVBE participation in its supply chain.
(3) The critical role of supplier diversity champions: a diversity program will benefit from thekey role of an individual whose informal leadershipcan be instrumental in building support for the idea.This sort of person has been labeled a champion.A diversity champion is an individual or groupof individuals that provides critical informal leadershipfor the initiative.Champions can be instrumental in the implementationof supplier diversity because they oftenpossess leadership qualities. Two of these qualitiesare especially relevant: ability to engage in influenceactivities and transformational leadershipbehavior.
(4) The necessity of building a supportive organizational culture: Culture, the sum of shared values, norms, andbeliefs of an organization, expresses a firm'sorientation not only to internal stakeholders butto outsiders, including suppliers.a corporation shouldcreate a supportive culture in which the program can thrive. For such a culture to be developed, topmanagement needs to clearly articulate the vision ithas for the initiative. The business case must be laidout and explained so that employees realize it is inthe interest of the firm, and that diversity is not justsome social program. Expectations should also be set regarding what is expected of individuals anddepartments that are charged with implementingthe supplier diversity program.
Page 4 TolaniInstitute of Management Studies
(5) The significance of relationship building: Being a larger buyer does not automatically make a corporation more powerful than a supplier. Even small suppliers can be powerful when there arefew substitutes for their product, their goods and services are critical to the buyer's marketplacesuccess, it costs buyers too much to switch from onesupplier to another due to inbuilt costs associatedwith making the change, or the industry is dominated by a few large companies. Therefore, corporations need to be careful about how theytreat their suppliers. Exchange partners who see the relationship as beneficial, fair, and equitable will continueto contribute input over the long term. The exchange ceases to exist when rewards are no longerforthcoming or inequities are perceived. Large corporations can grow relational assets such as trust and commitment by going out of their way to help develop the operational capabilities of suppliers.
Example of 3M
Were committed to proactively identifying small, minority-owned and woman-owned sources for the goods and services 3M needs. Were working to solicit capable firms, and execute orders and contracts with these firms as required to support 3M business needs. Heres why 3M pursues relationships with small, minority-owned and woman-owned businesses:
Diversity is a business strategy for growth. The minority population is the fastest growing segment in the United States and will account for a significant share of future consumer growth. Diverse suppliers are one way to access emerging diversity market segments.
Diverse suppliers reenergize our business. Diversity in our supplier base helps keep 3M open to innovative ideas and new ways of doing business, including offering unique strategies for reaching diverse markets.
Our suppliers become our customers. Diverse suppliers not only help us market more effectively to diverse consumers they are our customers.
Lower costs and faster response help the bottom line. Minority-owned and woman-owned businesses often are smaller and more cost-efficient due to lower operating costs. They also tend to be nimble, which allows them to quickly respond to business needs.
Conclusion
Supplier diversity is being implemented globally as evidenced by the legislation. Its scope varies greatly. The development of supplier diversity ,set against a background of increasing globalisation,the acceleration of legislation and stakeholder pressure,suggests that it will be essential for businesses and public sector organisations. Barriers to competitiveness, similar to those currently experienced by small and medium sized enterprises,will remain. In the UK,ethnic minority businesses are still developing their capacity to enable them to take full advantage of procurement contracts. These businesses are obliged to compete in the global marketplace,where other suppliers may be better placed to meet cost, quality and delivery targets.However,the capacity will be developed to enable organisations to meet supplier diversity objectives in line with their organisational objectives.