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CVM Supplier Diversity Blog

The Importance of Supplier Diversity in the Automobile Industry


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As supplier diversity programs and initiatives started to become formal corporate programs during the 1980s, it became clear that the Detroit-based U.S. automotive industry would need to be a major contributor and catalyst for the success of minority-owned firms in creating supply-chain opportunities.

A recent article in the Michigan Chronicle Online sets forth the case that business diversity in the automotive industry actually has contributed to a much stronger and more robust industry, noting that the mass production of the automobile, pioneered by Henry Ford around the turn of the 20th century, has evolved as a magnet for business, jobs, economic empowerment, and upward mobility.

“Detroit has always been a driven city,” the article notes, creating a better life for its African  American citizens from the city’s auto factories.

“The promise of a good job and a better life attracted thousands of immigrants and African Americans, a consequence that forever altered the dynamic—and the complexion—of America’s Motor City,” the article explains.

The Development of Supplier Diversity

Detroit in the 1980s, led by the Big Three of General Motors, Ford, and Chrysler, certainly was primed to assume a key role in the development of the supplier diversity function.

In fact, diversity has been so important for the automtive industry that each year the Rainbow PUSH Coalition releases a “scorecard” to provide consumers, investors, and industry experts a snapshot of how automotive manufacturers are doing in their role to build and sustain ethnic diversity as a driver of marketplace competitiveness. Each year, the Rainbow PUSH Coalition holds an automotive summit in conjunction with the release of the scorecards.

The 2015 Scorecard

The 2015 Rainbow PUSH Automotive Diversity Scorecard results reflect the most visible indicators of a commitment to diversity by evaluating each company's performance in key areas, including supplier diversity, according to the organization.

Though commending the industry, the Rainbow PUSH scorecard advocates that additional emphasis on diversity should occur.

The scorecard says the United States has one of the largest automotive markets in the world and is home to 13 auto manufacturers, but “when it comes to diversity and inclusion, it still has a long way to go to achieve a diverse and inclusive work environment at all levels of the organizational structure, from dealerships to the C-suite, to suppliers and employees.”

The Automotive Industry Relies on Diverse Businesses

While the Detroit auto industry hit some rough patches in the 2000s, the Michigan Chronicle Online article points out that today’s automotive industry is even more reliant on diversity and minority business enterprise. As the sweeping demographic changes have occurred in the nation, where ethnic minorities have increased their buying power, the automotive industry is making important changes to reflect the ever-diversifying market for whom it is designing its products, according to the article.

The National Association of Minority Automobile Dealers noted in a recent report, for instance, that 2015 was a record year in the U.S. for new vehicle registrations, with approximately 17.5 million. The report outlined also that while the industry has a robust year-over-year volume growth rate of five percent, the growth rate of ethnic groups buying new vehicles more than doubled that in 2015 at nearly 11 percent.

Given their historical involvement in supporting supplier diversity initiatives, automakers seem to understand that shifting their priorities to meet the needs of growing numbers of ethnic customers means engaging even more robustly with diverse business owners throughout the production and marketing process.

As Michelle Sourie Robinson, president and CEO of the Michigan Minority Supplier Development Council, put it in the Michigan Chronicle Online article, leveling the corporate playing field for women and minorities in the automotive industry isn’t just a social initiative, but an economic imperative.

“Different thoughts, opinions, backgrounds, and styles make business better,” she said. “If everyone has the same background, the same pedigree, you don’t get the cutting-edge innovative decisions that take products and services to the next level.”

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For over a decade CVM's mission has remained unchanged: lead the transformation of Supplier Diversity program management and support Supplier Diversity programs. CVM helps corporate supplier diversity programs in every stage of their evolution; from those that are just getting started, to the most advanced, world-class programs. Equipped with unparalleled data intelligence, superior technology and expertise guidance, businesses can effectively establish and advance their Supplier Diversity initiatives.