Business Trends & Issues: What MBEs can expect

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Senior business executives attending the National Minority Supplier Development Council’s 2004 Conference and Business Opportunity Fair see a “challenging” environment ahead for minority business enterprises, with pressures from the global economy exacerbated by the absence of a clear MBE policy in the Bush administration. In presentations at the event, chief executives and purchasing officers of major corporations stressed that the future of minority business development must be considered in the context of the evolving business environment. How corporations do business will be impacted by trends and issues ranging from rising costs for fuel, raw materials, labor and health care to globalization, terrorism, business consolidations and shifting pools of talent.

“It’s a very challenging environment. We’ve had examples of the [Bush] administration’s negative attitude toward affirmative action. This administration doesn’t have a clear policy for MBEs,” says NMSDC president Harriet Michel. “In the private sector, the challenge continues as the global economy continues to impact the U.S. economy. There’s pressure on MBEs to grow their companies. We have been working with MBEs to get them to understand what they have to do to grow within the new business paradigm. Corporations aren’t going to undo the way they do procurement,” she adds.

Corporations, too, are challenged, says Michael F. Johnston, president and CEO of Visteon Corp., a $17.7 billion automotive supplier. Facing an increasingly diverse customer base, corporations must determine “what we can do to impact the speed and degree” of partnerships with MBEs. Many more minorities will become members of the boards of directors of Fortune 500 companies, he predicts. “Many companies are stuck in neutral because they see [diversity] as a purchasing department responsibility. Companies that will be the most successful in minority business development are those that embrace diversity as part of their corporate culture. It has to be part of a company’s DNA,” he says.

John M. Barth, chairman, president and CEO of Johnson Controls Inc., a Fortune 500 manufacturer of automotive systems, adds, “We should continue to set ambitious [diversity] goals for ourselves and when [we] reach them, set them even higher.” Both Visteon and Johnson Controls say their goal is to spend 10 percent of their total purchases with MBEs.

How corporations do business also will be shaped in part by the “millennial generation,” that 23 percent of the U.S. population born between 1979 and 1994, Johnston contends. “They are the most diverse U.S. generation yet. Diversity is such a fact of life for them, they don’t even think about it. They are a generation with a conscience. They want to see products that are clean, efficient, safe and sustainable, corporate governance, environmental responsibility. They start with a negative bias toward global business. They don’t trust us,” he says. “A large, young, democratic group, they are our future consumers and our future work force,” he adds.

With the millennial generation connected 24/7, technology is the biggest area of opportunity for MBEs, he says.

To get a company’s attention, says Leslie Campbell, vice president of general procurement at Dell Inc., MBEs must know as much as possible about the company, know where their own value-added is and be able to articulate it, be Web-enabled and have figured out creative ways to bring their product to the company. At Dell, “we’re going to do a financial check on all our suppliers. We want to know you’ll be here tomorrow, that you’re strong,” she warns.

Adaptability is another plus, says Timothy Wholey, vice president of enterprise supply chain management at Raytheon Co., the defense contractor, particularly in an industry such as defense, which is plagued by uncertainty.