SECRETS (LESSON FROM) OF THE BILLION DOLLAR ROUNDTABLE--FROM COMPANIES RUNNING THE LARGEST SUPPLIER DIVERSITY PROGRAMS
In a world of minority purchasing, The Billion Dollar Roundtable (Roundtable) stands out. It is an organization with a clear mission--and clear bottom line for membership. It is made up of public companies that spend over $1 billion each with minority and women-owned enterprises (MWBEs)--and also serves as models for others trying to achieve that kind of spending.
"It is very attractive for companies to be associated with the Roundtable," notes Harriett Hichel, President of the National Minority Supplier Development Corporation (NMSDC). "It recognizes excellence in supplier diversity and gives other companies a target to shoot for."
ORIGINS OF THE ROUNDTABLE
The Roundtable is a relatively new organization. It was founded in 2001 by a triad--Don NcKneely, CEO of Minority Business News, Shirley Harris, formerly V.P. of Diversity for the Altria Group and Sharon Patterson with the aim of "sharing best practices and thinking on how to reach the billion dollar level of diversity spend." The way Patterson puts it today, the Roundtable serves as a "think tank" today on the best supplier diversity practices and future of the field.
As of April 2005, the Roundtable consisted of 12 companies ranging from Altria to Wal-Mart. (See box on page 2). Three more companies were expected to be inaugurated in Hay of this year--Toyota, Hewlett-Packard and Procter & Gamble. That will bring the total of companies with one billion in diversity spend to 15. Those corporations may represent the entire constellation of U.S. companies with a $1 billion diversity spend.
"We were astounded that so few U.S. companies had a billion dollar spend," admits Sharon Patterson, retired diversity executive from Kraft Foods who is now CEO of the Roundtable. She says there may be a few more out there (after this year's members are inducted), but she is hesitant to guess who they are.
The organization fulfills its mandate through its awards ceremonies and roundtables, held every two years, as well as the publication of white papers based on diversity purchasing.
A look at the list of the Roundtable members reveals a strong concentration on telecommunications and automotive--both industries with huge purchasing needs, frequently in areas of new technology. Since there is so much constant change in these industries, legacy providers can't always keep up, and it makes the industries prime candidates for minority businesses trying to get a foot in the door.
TELECOMMUNICATIONS AND HIGH TECH
The telecommunications and/or high tech companies in the Roundtable include AT&T, IBM, Lucent Technologies, SBC Communications Inc., Verizon (and perhaps, in a certain sense, defense contractor Lockheed Martin). The automotive manufacturing group is comprised of DaimlerChrysler, Ford, General Motors, and Johnson Controls, Inc.
How have these companies achieved their $1 billion diversity supplier spend? Each seems to have its own distinctive approach, but at the same time there are commonalties. Here are some of the best practices which executives at Johnson Controls, Inc., IBN, and Verizon say have contributed to their success.
* Incorporate diversity suppliers into all Requests for Proposal (RFPs). Both IBM and Verizon do this. Sam Delgado, Director of Supplier Diversity at Verizon, says this is the most important secret of a successful supplier diversity program.
* Give non-minority suppliers goals for subcontracting with MWBEs. Verizon requests majority suppliers to subcontract 18 percent of their purchasing with MWBEs, although Delgado says that a more common goal for this is 10 percent.
* Create simple reporting structures for non-minority prime suppliers. Verizon requires its non-minority prime contractors to provide quarterly reports on MWBE spending through an Internet portal in order to track whether or not the supplier is meeting its goals. "If they are not maintaining these goals, we have a discussion," says Delgado.
* Use cross-functional teams at the back end of RFPs. Verizon uses a cross-functional team approach when evaluating RFP applications. The teams include sourcing processing leaders and diversity purchasing representatives. "This keeps all the cards out on the table," says Delgado, "And also the voice of the diversity company can be heard."
* Create an awareness program. When Johnson Controls, Inc. launched its minority purchasing initiative 12 years ago, it embarked on a major internal communications program. That effort included brochures, presentations, town halls meetings, newsletter articles, web site information--and more. "We wanted to change the paradigm," explains Reginald Layton, Johnson Control's Director of Diversity Business Development. "We wanted to break the myth that minority suppliers were hard to find and expensive and that customers didn't care about them."
* Take advantage or "benchmarking" resources. When setting up its program, Johnson Controls relied on many of the best practices outlined in NMSDC's instruction manual, found on its web site. "If they said develop advanced program tracking, we did it. After all, we were new to this," notes Layton. By doing this, Johnson Controls ensured that it was using practices that had worked before and which were being recommended by one of the most established organizations in the field.
* Build enhanced accountability tools, metrics and processes. Johnson Controls tracks its supplier diversity spending very closely, quarter by quarter. It does this through a dual level of accountability. Diversity purchasing executives participate in two quarterly reviews with purchasing executives: The buyer's Purchasing Plan Review, as well as an Executive Purchasing Council meeting. By doing this, the diversity executives not only can monitor what is being spent, they also see what is coming for the future. "It helps us prioritize our work," explains Layton." We can be more effective with our minority vendors, since we know what the company plans to purchase."
* Create mentoring programs for your MWBE suppliers. IBM periodically holds 2-day retreat seminars for selected suppliers. Senior executives attend these to listen to top notch speakers who provide information on different aspects of business development and growth. "We want to help them grow their businesses, so they can support us globally, and also expand their reach," explains Michael Robinson, IBM's Program Director, Global Supplier Diversity. "You never want a supplier to be totally dependent on one big client. These seminars help them avoid that."
* Reach out to new MWBE suppliers. Johnson Controls hosts monthly meetings called Straight Talk around the country. In these meetings, company executives lay out the purchasing needs for the next 12 to 18 months...