Supplier Diversity Gets Minorities’ Foot in the Door

Milligan & Company is one of the largest minority-owned CPA firms in the U.S., providing tax services for more than 30 years. Principal and director of government consulting Denise Bailey wants to help other minority business owners find similar success.

Through supplier diversity programs, Bailey champions women-owned and minority-owned businesses. Below are edited excerpts from Bailey’s interview with Diversity Executive.

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Denise Bailey, Milligan & Company

What are the benefits of supplier diversity programs?

Supplier diversity programs benefit a broad spectrum of organizations. As a customer, using a diverse supply chain often means using local firms, which strengthens the business community and can have positive residual impacts on local job creation and stability. Often, the pool of diverse firms are also small businesses, which are more customer-focused and have a greater ability to be flexible in their approach and delivery, as well as being more cost effective.

As a diverse business, supplier diversity programs are an excellent tool for providing a foot in the door. It is then up to that business to excel in performance, but the ability to compete on a more level playing field through a supplier diversity program provides an entry point that may not otherwise be available. Our world is becoming more diverse, and having suppliers that reflect the changing landscape of our customers can never be a negative.

What are the biggest barriers to companies contracting diverse suppliers?

One of the biggest barriers is identifying diverse suppliers and vetting them. Small, diverse firms do not typically have large (or even existing) marketing functions, so the typical ways that a large organization would find and vet suppliers may not be available. Many supplier diversity programs rely, necessarily, on a listing of diverse suppliers that may not provide adequate information for buyers to make choices. Oftentimes, the internal requirements of and procedures for setting up accounts with new suppliers do not accommodate the realities of small businesses.

How can those obstacles be overcome

Reviewing internal requirements for bringing on new suppliers and reducing redundant or unnecessary requirements, at least for small purchases, may enable companies to contract more easily with small, diverse businesses. It is also important that internal buyers make it a point to identify or vet new, potential suppliers in person, rather than rely on lists of vendors and how they are represented on paper. Many organizations hold events where these introductions can be made, but the ability for brief, one-on-one introduction sessions is often the best way for buyer and seller to fully explore opportunities and abilities.

What will it take to get more minority-owned and women-owned businesses?

The first step is to identify ways to ensure that the current minority and women-owned businesses stay in business and are more than one-generational. Having seasoned businesses that succeed for many years is one of the best ways to encourage more of these businesses to form. Our firm has been in business for nearly 30 years — making us not only a good mentor for other firms just starting out but also proving that hard work pays off. Like any other business, efforts that reduce financial impacts to conducting business locally can help individuals make the decision to start a business.

How can organizations ensure an ongoing commitment to supplier diversity?

As with many initiatives, it takes leadership from the top of organizations. Making diversity an internal mission and setting performance goals, while also demonstrating internally the benefits of doing business with a diverse supplier network, are good ways to ensure ongoing commitment. Surveying vendors on the benefits and challenges of working with your organization can also help a company self-assess internal practices that could be preventing more diverse participation and potentially driving up costs.