Black Business Month: The Power of Supplier Diversity
According to the Census Bureau’s Annual Business Survey, Black Americans represent 14.4% of the U.S. population. Yet, only 2.7% of employer businesses are Black-owned. Even with the largest annual increase (14.3%) of Black businesses in 2021, there is a large discrepancy between this number of businesses and how it compares to the representative size of the U.S. Black American population. In addition to being underrepresented in our nation, numerous studies and articles have been published showing that Black businesses, particularly women-owned Black businesses, face significant hurdles in accessing assistance in terms of business education and financing. A 2023 Intuit QuickBooks study reported that 57% of Black business owners were denied a bank loan at least once when they started their businesses, compared to 37% of non-Black business owners. That same study states that 79% of Black business owners have experienced racism from a customer.
One way in which corporate entities can support Black-owned businesses is through supplier diversity programs. Supplier diversity programs place a focus on recruiting minority businesses to submit proposals in an RFP process. Natalie McGrady, Sr. Director, Global Sustainability and Supplier Diversity, at Cargill believes that supplier diversity programs are beneficial to both a company’s bottom line and its culture. “Supplier diversity is part of inclusion,” she says. “We believe it’s the right thing to do in creating an inclusive company culture and everything we do to increase inclusion points to a better bottom line.”
Natalie is quick to dispel a myth about supplier diversity programs that they create an unfair advantage for a select number of suppliers. “There is no special treatment for suppliers that are part of supplier diversity programs,” she emphasizes. “These suppliers compete; we are not giving away any business.” With these programs, all suppliers go through the same selection rigor Natalie explains. The supplier diversity programs are about being inclusive in the bidding practice. “I equate supplier diversity to college recruiting,” says Natalie. “You want to be casting your net wider and make sure you’re finding diverse, qualified suppliers to participate in the RFP process.”
Finding diverse suppliers can be a challenge, but there are resources to help make the bidding process more robust. A number of non-profit organizations exist to help companies find diverse suppliers. For companies either looking to expand their supplier diversity or begin a program, Natalie advises to lean on the NGOs and any local organization specific to your area. There are a number of outreach programs and virtual meet ups designed to match buyer and supplier. Some of these groups also have an international focus in supporting minority and women-owned businesses.
The success of a supplier diversity program not only depends on recruiting qualified suppliers to bid, but it also depends on creating partnerships with those suppliers. “You want to look at your current suppliers that are diverse and evaluate how you grow with them,” advises Natalie. “There’s a certain aspect of mentoring your suppliers and helping them grow. Give them an opportunity to meet with leaders within your company so they get to learn who you are. Give them feedback on how they are managing your account. Supporting the organic growth of current suppliers that you have and trust is a great way to grow your program.”
As a Black business owner there are things you can do as well to make yourself more visible. “I always tell people to start with a company’s small business or diversity program and speak with that leader,” Natalie states. “Take a look at a company website to understand their current program. Find out what type of supplier events they go to and approach them at an event. Always be ready to show how you believe your business or product will solve X, Y and Z. And, most importantly, be persistent, but not a pest,” she says with a smile.
Ultimately, successful supplier diversity programs are rooted in a company’s culture and commitment to inclusion. From the top management to the individuals that manage the program, embracing the concept of purposefully widening the supplier net is key. A program needs to be aligned with company values and not just a function of purchasing or supply chain operations. Natalie is passionate about living her values. While she didn’t start out leading supplier diversity programs, she has found a place where she feels very fulfilled. Her degree is in Accounting from Hampton University and she has held varying positions in procurement and operations. At Cargill, she was asked to step into a stretch role managing supplier diversity. “It was a stretch role and honestly, I wasn’t sure I wanted it,” she says. “I wasn’t sure if this was a role for me because of my abilities or because it was seen as a role for a minority or woman. But, it’s been the most fun I have at work. This space reminds be of being back at Hampton (University), being part of a community. There is no competition here; we’re all in the movement together. I am one of many women in the room and I am one of many people of color. And, the cherry on the top is that the suppliers are fabulous.”
To learn more about Black businesses in the U.S. and supplier diversity, visit these websites:
Closing the Black employer gap: Insights from the latest data on Black-owned businesses
Building business ecosystems that support Black entrepreneurs
A look at Black-owned businesses in the US by sector, state and more | Pew Research Center