Supplier Diversity programs are more than socially responsible -- they're also good for business. They help improve the way a company serves its markets, and they represent significant revenue opportunities for buyers and sellers alike.
The U.S. Small Business Administration recently spotlighted the economic impact of small, diverse businesses, citing that women- and minority-owned businesses account for 10.6 million businesses worldwide. Minority-owned business is among the fastest growing segments of the U.S. economy -- and large enterprises understand that offering products with appeal to a diverse customer base can boost their competitive advantage.
With our markets in robust maturity, IT product manufacturers and resellers are learning that we can put a keen, new edge on business with greater emphasis on diversity. For example, many companies are launching Supplier Diversity Programs to provide their customers procurement opportunities with more small and historically underutilized businesses. The Supplier Diversity Program enables customers to leverage partnerships with minority-, women-, veteran-owned, and small businesses, which reflect the diversity of the technology marketplace. This enables each customer to address their unique needs and buying requirements. Partnering with qualified businesses helps companies provide a better customer experience, while contributing towards economic growth in diverse communities throughout the United States.
Direct Tier 2 Spend
For example, one of our largest customers at CDW has aggressive direct Tier 2 spend goals in their diversity objectives. "Direct Tier 2 spending" is the process by which a contracted majority vendor subcontracts to a qualified minority-owned business for goods or services that directly support the fulfillment of a contract.
Seeking a way to achieve this goal, our customer contacted their account manager. The account manager and his team reviewed the customer's purchases over the previous 12 months to see if any of those products could be procured through CDW from qualifying diversity vendors. They found that the customer was buying substantial amounts of memory and recommended Kingston Technology Co., Inc., which is one of the world's leading manufacturers of memory products and is qualified as a minority-owned business under our Supplier Diversity Program. The customer made the switch almost immediately, assisting them to achieve their direct Tier 2 spending goal.
Kingston Technology Co. is just one of many qualifying partners that have met such success in a Supplier Diversity Program. Our Supplier Diversity Program was launched in May 2007 and currently includes partnerships with 65 minority-owned businesses, 101 women-owned businesses, and 39 veteran-owned businesses, as well as additional classifications such as small, disadvantaged, and disabled. Supplier Diversity Program partners work with us to fulfill our own functional requirements, and with our customers to provide specific product or service offerings. Supplier Diversity alternatives are available directly through customers' existing relationships, via their account managers, and through supplier diversity managers.
Becoming a Supplier Diversity Partner
The ways that manufacturers can become Supplier Diversity partners vary across organizations, but CDW has found success with a website application process. Once an organization has applied, CDW evaluates potential members on a long list of criteria, with input from many departments and reviewers. It is important to consider the organization's business history, annual revenue, and how many partners the company already has in the category applied for. Reviewers should carefully assess each applicant's diversity qualifications and ability to capture revenue opportunities. Although the process can be time consuming, it allows companies to choose high-quality partners in each category. Once accepted, partners contribute offerings to meet the needs of your customer base.
Supplier Diversity Programs should be ever-evolving to meet the needs of organizations, customers, and manufactures alike. For example, at CDW we are adding icons to products listed on our website that are provided by participants in the Supplier Diversity Program, so customers can choose many products from qualifying vendors without having to consult their account managers.
We believe that the U.S. IT marketplace is stronger and more vibrant because it values creation of opportunity for minority-, women-, and veteran-owned businesses. The principle is easy to endorse, but harder than one may think to put into practice. Organizations should set the goal of practicing diverse business for the sake of their business, their partners and their customers alike.
Matthew A. Troka is vice president, Product and Partner Management at CDW Corp. CDW is a provider of technology solutions for business, government and education. DW is a National Corporate Member of the National Minority Supplier Development Council, Inc. To learn more about CDW, visit cdw.com. For more information about CDW's Supplier Diversity Program, visit www.diversityatcdw.com.