Moving Beyond Compliance: Supplier Diversity and Community Economic Impact

Tuesday, August 23, 2016

By Darryl A. Peal, Office for Business and Community Economic Development

Across the nation, corporations, universities and municipalities have developed supplier diversity programs to deal with equity and inclusion challenges in their supply chain.  Historically, most diversity programs initially focused on human resource issues. They concentrated exclusively on the numbers of diverse people they have employed or enrolled in their organization or institution.

Those early programs represent the introduction of diversity and inclusion initiatives into corporate America and higher education. However, to truly be inclusive, organizations must include their community economic impact into the very fabric of their inclusion goals. It is my belief that numerical representation is only one part of inclusion. Inclusion also means that diversity and cultural competency is part of the very fabric of an organization’s human resource goals and business initiatives.

Supplier diversity is part of the University’s broader commitment to equity, diversity and inclusion, as reflected by the Board of Regents policy created in 1996, which states:

  • Reduction of poverty and unemployment in the urban community is of vital interest to the University and part of its outreach and public service mission.
  • The University should foster economic growth in the urban communities of which it is a part.
  • The University shall take advantage of opportunities, presented by its construction projects and its contracts for goods and services, to promote the training and employment of urban community residents in skilled trades and professions.
  • We promote and support the growth and development of minority and woman owned businesses. Our goal is to educate, help develop and provide sourcing opportunities that will enable these vendors to be successful as our suppliers and in our nation’s business world.

The University of Minnesota aspires to have a strong and impactful Supplier Diversity program. In a recent letter to the University leaders, President Eric Kaler expressed his full commitment to the Board of Regents policy regarding purchases from businesses owned and operated by people of color, indigenous people, women and persons with disabilities. In the letter, President Kaler stated, "The University must play an active role in the economic development of diverse businesses. By strengthening such businesses, we also strengthen the community in which we all live and work."

Admittedly, much remains to be done in bridging the gap between diverse suppliers and the University of Minnesota. Many believe that meeting minimum requirements is enough and fail to realize that successful supplier diversity programs improve the quality of life and economic stability for the entire organization and communities where they are located.

The University of Minnesota is keenly aware of the possible impact. Consequently, the Office for Business and Community Economic Development (OBCED) Supplier Diversity Program is Raising the Bar through Sustainable Strategies, which includes the following initiatives:

  1. The Annual Match Maker and Construction Expo is an opportunity for Women, Minority, Disabled Owned and small business owners to interact with buyers for the University and introduce their goods and services.
  2. The Business Development Institute provides Women, Minority, Disabled Owned and small business owners an opportunity to gain new skills and strategies for capacity building and business development.
  3. The MBID system provides Women, Minority, Disabled Owned and small business owners and opportunity to register with the university to receive all of the significant RFP opportunities in their particular industry.
  4. OBCED is a corporate member of North Central Minority Supplier Development Council, Association of Women Contractors, National Association of Minority Contractors and Women’s Business Development Center. Each of these organizations provide the University with databases that gives us access to certified diverse suppliers.

Supplier Diversity is not a new concept. Many corporate supplier diversity programs have celebrated more than 40 years of service. Organizations like AT&T, Comcast, General Motors, Microsoft, and Procter and Gamble have gained membership to the Billion Dollar Roundtable; the Billion Dollar Roundtable was created in 2001 to recognize and celebrate corporations that achieved spending of at least $1 billion with minority and woman-owned suppliers. These world-class corporations have proven that supplier diversity is an essential part of the business case for cost savings, innovation and market share growth.

As small, minority, women and disabled owned businesses grow, so will our local, state and nation’s economy. Since most diverse businesses are small businesses, they aid in the economic recovery and sustainability of their communities.

Supplier diversity is significantly important, because it assists the country in job creation. U.S. statistics show that nearly 50% of the U.S. workforce is employed by small business. In December 2014, the U.S. Small Business Administration (SBA) reported 57 consecutive months of new jobs added back to the U.S. workforce after the worst recession in recent U.S. history. SBA Administrator, Maria Contreras-Sweet reported “…this new trajectory is attributable to the success of America’s entrepreneurs and the resurgence of our nation’s small businesses. About 7 million of the 10.9 million jobs added back were created not by large corporation, but by startups and small enterprises.”

OBCED is committed to the growth of women, minority, small and disabled owned businesses and the outcomes driven goals of the Targeted Business Program. However, it takes the entire campus community to be married to the mission for the institution to realize success. We challenge every department to take seriously the challenge from President Kaler to work in partnership with OBCED to make a difference where we live, work and raise our families.


"Perspectives" stories are the views and opinions of their authors and do not necessarily reflect any official position of the University of Minnesota.