Raising the Bar for Corporations
Doing Business with Women

BY SUSAN PHILLIPS BARI

mong the environmental changes facing corporations over the next decade and beyond is the increasing influence of women as consumers, employees and suppliers. Building upon trends to increase diversity within their corporations and to reach out to an increasingly diverse market, companies that connect with a diverse supply base that is attuned to gender, as well as ethnicity, will be the business success stories of the next 50 years.

There is an elite cadre of corporations that consistently demonstrates this understanding by reaching beyond the boundaries of "business as usual" to hire women's business enterprises as suppliers and vendors.

Called the "Top Corporations" by the Women's Business Enterprise National Council (WBENC), they champion "Best in Class" programs for women's business enterprises: AT&T; Avis Rent A Car Systems, Inc.; Bank of America; JP Morgan Chase and Co.; Office Depot; PepsiCo Inc.; SBC Communications; TXU; and United Parcel Service.

These companies are visionary leaders. They have recognized the growing importance that women will have on the buying power of America - and how their pool of suppliers and vendors must reflect that. But, unfortunately, they are strikingly atypical in America's corporate landscape and the landscape itself is changing, with global and economic forces presenting new difficulties for women's business enterprises (WBEs).

Challenging times require a new level of guidance. That is why we at WBENC are encouraging corporations to pursue excellence in supplier diversity through the next generation of Best Practices. In fact, we have named them "Next Practices" in our new report, entitled "NEXT PRACTICES: Excellence in Corporate Purchasing from Women's Business Enterprises."

Our original 1998 report on Best Corporate Practices served as an unprecedented roadmap for companies seeking to support women's business enterprises by creating a level playing field for the billions of corporate contracts awarded annually by Fortune 1,000 companies.

Now our Next Practices - proven to work by the WBENC Top Corporations - present a powerful opportunity for other corporations to significantly increase their profitability and productivity by doing more business with women-owned and women-led suppliers and vendors.

After all, WBEs represent a most promising segment of our economy.

In fact, research conducted by the Center for Women's Business Research shows that WBEs have outpaced other U.S. businesses, in terms of both growth and economic contribution, during the last five years.

During the past five years, the number of privately held, women-owned businesses (i.e., with 51 percent or more woman ownership) grew to 6.2 million, an increase of 14 percent - twice the rate of all U.S. firms. These firms have generated sales nationwide of nearly $1.15 trillion, a 40 percent increase. They employed nearly 9.2 million workers in 2002, up 30 percent from 1997, which reflects a growth rate that is one-and one-half times the national average for firms.

But, there are obstacles to fueling that growth: The pressures of cost-cutting, vendor consolidation, and bundled contracts have narrowed opportunities to attain new business. At the same time, most major corporations have taken steps to migrate purchasing functions to technology-based systems, making it more difficult - and frequently more expensive - for WBEs to compete.

Nonetheless, Next Practices shows that companies can successfully tap into this dynamic WBE pool of vendors if they have CEO commitment, accountability for WBE goals throughout the company, and active corporate outreach to WBEs. Here are some highlights of the Next Practices:

• CEO commitment, support and accountability. This Next Practice expects CEOs to:
  • Provide more than a policy statement. They need to outline processes, programs and accountability that bring this commitment to life.
  • Build a chain of accountability. The CEO must extend accountability to various management layers and tie compensation and/or bonuses to results.
  • Incorporate women's business enterprises as an integral part of their strategic plan.

  
  Example:

  • PepsiCo, Inc.: Jim Kozlowski, SVP of Global Development at PepsiCo, believes that helping to create wealth in women business communities is integral to the company's growth strategy. To that end, he places supplier diversity as one of his three top procurement priorities, and he holds his staff accountable.
    
    
• Accountability for WBE goals and progress at all levels of the CEO's accountability chain.
  • Measurability is essential to the success of a supplier diversity program, and this means the ability to monitor, measure and track programs.
  • Scrutiny of supplier diversity results at the senior level sends a strong message to all employees that supplier diversity is a vital business strategy. Externally, positive results can attract business from women's business enterprises that are themselves a significant consumer market.

  
  Example:

  • Office Depot: Every six weeks, Office Depot President and CEO Bruce Nelson reviews balanced scorecards that provide critical metrics on all aspects of diversity for each functional area.
    
    
• The structure of a company's supplier diversity program provides maximum access to, and support of, WBEs, combining internal awareness and commitment with external commitment.
  • Establish the seniority of the supplier diversity executive. By elevating this person to a peer level of executives with whom s/he interacts, a company enhances the supplier diversity executive's effectiveness in reaching key internal audiences within senior management, including purchasing personnel.
  • Emphasize third-party certification. Essential to success is knowing and tracking the progress of WBE activity with a company. Impartial, third-party certification ensures the integrity of data.
    
    
• Active WBE outreach and inclusion to achieve business goals. Here, the "Best in Class" corporations have developed and implemented innovative ways to build strategic partnerships with WBEs. These include:
  • Rule of one. This requires buyers to consider at least one qualified woman business enterprise in every bid, assuming one is available.
  • Focused and active WBE outreach, including in-house trade shows and buyer-supplier networking events that bring together qualified WBEs with business decision makers within a company. WBENC itself participates in creating MatchMaker meetings, and national and regional women business conferences and business fairs.
  • Electronic WBE sourcing and referral networks. WBENCLink is a benefit available to national WBENC members, offering a sophisticated, easily accessed database of certified WBEs. WEBuy@wbenc.org posts contract opportunities throughout the WBENC network.
    
    

  Examples:

  • UPS: To implement the company's Rule of One, UPS Corporate Supplier Diversity Manager Lenny Clark attends the front-end portion of all bid discussions to recommend qualified WBEs.
  • Office Depot: Office Depot's Director of Vendor Diversity Robert McCormes-Ballou worked with WBENC to implement a successful MatchMaker meeting, selecting 19 WBEs from a pool of 75, based upon the company's needs. Three of those firms have received contracts, and several others are on track for longer-term opportunities.
    
    
• Managing the supply chain for maximum ROI while increasing WBE participation. Understanding a company's supply chain - and how women's business enterprises can add value to it - is key to this Next Practice. While the practice of "bundling" contracts to cut costs has reduced contract opportunities for WBEs, corporations can use other strategies to ensure that they remain a vital part of the supply chain. These include:
  • Requiring and monitoring second-tier goals. With close monitoring of contractual goals, corporations can hold their prime suppliers accountable while continuing to provide opportunities for WBEs as second-tier vendors.
  • Prioritizing supplier diversity during change. Companies can create special task forces and manuals to maintain focus during down-turned economies and throughout mergers and acquisitions.
    
    

  Examples:

  • AT&T: AT&T Supplier Diversity Manager Jackie LaJoie created a comprehensive Supplier Diversity Transition manual that is an A-to-Z guide regarding AT&T's policies, procedures and programs.
  • UPS: When a tier-one supplier failed to meet its diversity spend goal, UPS unbundled the contract and opened a portion to women and minority business enterprise competition.
    

SUSAN PHILLIPS BARI is president and founding architect of WBENC (www.wbenc.org), the leading third-party certifier of businesses owned and operated by women. She can be contacted at 202-872-5515, ext. 15 (e-mail: sbari@wbenc.org).

(This article is reprinted from the Winter 2003 edition of Enterprising Women magazine. Copyright 2002 Enterprising Women Inc. Reproduction in whole or part is prohibited, except by permission of the publisher.)

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