Minority-owned businesses are growing fast, and companies that recognize the value of purchasing products and services from diverse suppliers are seeing positive results both for the bottom line and for overall business objectives. Yet barriers to economic equality persist. The National Minority Supplier Development Council (NMSDC) has been working to connect corporate America with minority business enterprises (MBEs) for nearly 45 years, advocating equal opportunities and access to resources for diverse suppliers.
Recently Black Enterprise magazine sat down with NMSDC President Joset Wright-Lacy in order to discuss some of the challenges facing MBEs and why she is “bullish” on the economic outlook for our nation's diverse suppliers.
1. Barriers to MBE Success
Although the necessity for supplier diversity appears obvious to those advocating for minority-owned businesses, the barriers for diverse suppliers are often deeply entrenched in how companies do business.
“In order to leverage the capabilities and talents of MBEs, it is critical that we address some of the persistent challenges to their growth and development: access to capital, access to markets, and access to business networks,” Wright-Lacy said.
NMSDC seeks to address these barriers through advocacy, supplier development, and networking opportunities. As the number of diverse suppliers entering the marketplace increases, it is important for corporate America to look beyond traditional supply-chain opportunities in order to ensure equal opportunities for all diverse suppliers.
2. Bullish MBE Outlook
Wright-Lacy is “bullish” on the future of MBEs in the nation's economy. A demographic shift will see the population of the United States comprising at least 50 percent minorities by 2045, if not sooner. Minority-owned businesses are growing at three times the rate of other businesses and have become an engine for job creation. In a study prepared by NMSDC, the economic impact of certified minority-owned businesses was astounding.
“MBEs generate more than one billion dollars in economic output every day,” Wright-Lacy said. “Think about one billion dollars in daily economic output; that represents money in the hands of workers and their households. It represents the ability to buy cars, clothes, travel, and education. Most importantly, it represents an opportunity to increase the sustainability of communities of color.”
As more and more minorities establish and grow businesses, enter the workforce, and become consumers, the success of MBEs becomes more important to our country's overall economic health.
3. Supplier Diversity Is Good for Business
While many companies are recognizing the benefits of integrating diverse suppliers into the supply chain, misconceptions about the value that MBEs provide still serves as an obstacle to embracing supplier diversity. Some companies still think that supplier diversity is an affirmative action plan, rather than a method for identifying new suppliers that provide innovative, cost-efficient solutions that add value to the bottom line. It is the job of the supplier diversity team to illustrate how diverse suppliers can help meet, and exceed, business objectives.
Obviously the bottom line is an important factor when partnering with a new supplier, but a clear picture of the broader economic impact can reveal the long-term benefits of supplier diversity. Wright-Lacy noted that many MBEs provide jobs and job training in at-risk communities, as well as supporting schools and social institutions that provide a safety net for lower-income communities.
“Corporations [that] understand that their future customers are likely to be employed by an MBE are more likely to act in their own economic self-interest,” she said.
With minority-owned businesses becoming an increasingly significant driver of economic growth, smart companies must find ways to develop and partner with diverse suppliers as part of their business objectives. An effective, measurable supplier diversity program just makes good business sense.