Supplier diversity: using strategic alliances (including joint ventures, partnerships, teaming, capacity building, and mentor/protege arrangements) to create competitive advantages and profits for both minority suppliers and large corporations
Supplier diversity business case
Strategic alliances: benefits to large corporations
Strategic alliances: benefits to diverse suppliers
Strategic alliances: issues to consider
Most Fortune 500 companies have supplier diversity programs and publicize how much they spend with diverse suppliers: including minority owned business enterprises (MBE), women owned business enterprises (WBE), suppliers located in Historically Underutilized Business Zones (HUB Zones), and Service Disabled Veteran Owned Small Business Concerns (SDVOSBC).
Seventeen US companies each spend over $1 billion annually with diverse suppliers.
The corporations typically have a goal to make 3% to 10%+ of their purchases from diverse suppliers.
The individual buyers often have supplier diversity objectives that are part of their performance reviews.
Companies are interested in supplier diversity for various combinations of reasons: complying with government requirements, helping to expand prosperity which will long term enable more people to buy more of their products, and demonstrating their responsiveness to consumer segments that are becoming increasingly important to them as the country's demographics change.
Often the reason for their interest in supplier diversity is simple: their large corporate, institutional and government customers care about supplier diversity, and supporting supplier diversity is a way to make those important customers
happy and thus increase sales and profits.
Leading companies in several industries have done more than "respond" to their customers by establishing supplier diversity purchasing programs.
They have formed strategic alliances with minority firms to sell more of the large companies' products (or content).
These alliances can help the large company: 1) avoid losing a customer, 2) gain share with an existing customer, or 3) break into a tough non-customer.
The large companies are proactively using supplier diversity to create a competitive advantage for their sales effort, and at the same time are helping to develop a strong minority owned firm.
A few examples of industries in which major corporations have formed such alliances: auditing, investment management, corporate food service, computers, printers, copiers, networking equipment, office supplies, office furniture, staffing, automotive components.
The major advocates for supplier diversity and major purchasers are strongly encouraging diverse suppliers to form strategic alliances with larger companies.
The large corporate customers want to increase their spending with diverse suppliers, but not one small local purchase order at a time. They want to efficiently buy in large contracts from suppliers who have broad and deep capabilities to serve them over a large footprint.
There is something of a race, and the winners will be the suppliers who can best meet those needs of the purchasers, whether independently or more often through a strategic alliance.
If you are giving some thought to a strategic alliance, please give us a call.
We think there are some great opportunities for forming strategic alliances.
We hope that our insights can be helpful to you because they reflect a fairly rare combination of three perspectives:
fifteen years of broad involvement with supplier diversity,
front line experience talking to companies and buyers in a number of industries about their needs (operational needs and supplier diversity needs),
prior experience as bankers including exposure to strategic alliances and how to think through the relevant issues such as who is bringing which parts of the puzzle, how are the risks being allocated, and how are the rewards being shared.
We might have an idea for you on a potential strategic alliance partner.
We might be very interested in selling for you strategic alliance. Please consider how Minority Sales Corporation might benefit your strategic alliance as a sales representative.