Supplier Diversity

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Prior to joining AARP as director of supplier diversity, Kimberly Marcus was appointed by President Barack Obama to the No. 3 position at the Minority Business Development Agency, a federal agency charged with helping minority businesses grow to size and scale. For Marcus, supplier diversity is more important now than ever. “It’s my understanding the MBDA is on the chopping block. We need to make sure minority businesses grow and size to scale. If you don’t have supplier diversity programs, how can we ensure growth for small and minority businesses that hire in their communities?” she said.

I spoke with Marcus in July at the National Black Chamber of Commerce’s Silver Anniversary Conference and Expo in Washington, D.C.

TNJ: One of the latest trends in supplier diversity is the outsourcing of supplier diversity programs. Your thoughts?
Marcus: Usually, companies have their supplier diversity program housed within the corporation, either in their HR department, sometimes in their marketing department, but most likely it’s in their procurement department. Now they’re finding it more cost effective to outsource it to businesses that run supplier diversity programs. I believe it’s important to keep it inside the company so that the company understands the magnitude of supplier diversity, the importance of supplier diversity and of working with small and diverse businesses. If you use an outsource company to run it, it really won’t be a top-down approach where the CEO can definitely be hands-on with the program and make sure not only that you’re meeting your diversity goals, but also that you’re working with the best and most qualified companies.

Having the program in-house promotes internal buy-in. When it’s outsourced, you have an external person coming in and the influence isn’t as great and the focus won’t be a day-to-day focus. It would be: “Okay, are we meeting our quarterly goals?” It’s harder to meet your goals and to understand the day-to-day plight of small and diverse businesses when the program is outsourced. I’m not saying that the outsourced companies don’t understand it, but they don’t necessarily understand your work model, your needs or know the needs before they come about. With the supplier diversity program in-house you’re meeting with your different business units on a constant basis. That’s very important and you can’t really do that if you outsource it. If corporations are not connected to diverse businesses, they keep going back to the same companies over and over again.

TNJ: What other supplier diversity trends have you observed?
Marcus: Another trend that I’ve seen is the attempt to merge supplier diversity with workplace diversity. Diversity within a company and diversity in your supply chain are totally different things. Trying to collapse both into one job function is way too much for one person or department. The diversity of your employees is a human resources initiative. It’s making sure they have the proper tools to be successful within your company. That takes a certain type of specialty. With supplier diversity you have to have associates who are very familiar with the growth and the plight of small and diverse businesses. Unless you have someone who has worked in both spaces — in the HR as well as in the small and diverse business space — it’s very hard to collapse the two. Something is going to take second fiddle. It also means fewer resources allocated to each side.

TNJ: What’s different about AARP’s supplier diversity program?
Marcus: We’ve had a supplier diversity program for many years, but I was brought on two years ago to revamp it. What makes it so special is the fact that we really do have a top-down approach. Our CEO is very familiar with the program, she supports the program and she supports finding the best vendors. We meet quarterly with all of our business units; we know what’s coming down the pike early. One of the greatest things that we do is, if you are a certified small or diverse business you’re Net 15. That means you get paid within 15 days of the invoice clearing. That’s very important. In order for some small and diverse businesses to continue to operate they need to be paid at Net 15 and a lot of companies pay 30, 60, even 90 days net.

Also, corporations and government have mandated diversity goals. We do not. If we don’t hire one diversity business nothing would happen. We’re doing this because it makes business sense. We’re passionate about this.

TNJ: What does AARP purchase from diverse businesses?
Marcus: Whether it’s marketing, professional services, construction, IT – we’re just like any other company. We don’t produce a product, but we still have, for example, janitorial needs. We’re going through this big renovation of our building, so we have anything from general contractor to an architect, to painters to furniture people. We have our catering service and our television studio. We do many different events. We do one every September around 9/11 where we package two million meals, so we have to have a third-party company to put together that event. It’s on the National Mall so it’s a huge event. Our largest spend will be in print because we have a number-one magazine. Whether it’s print, paper, postage—we mail out a lot so we need freight services. Those are some of our categories.

TNJ: How much does AARP spend with small and diverse businesses?
Marcus: In 2016 it was 17.8 percent of our total spend. Most companies are struggling to get to 10 percent. We are nonprofit and we’re not going to be part of the Billion Dollar Roundtable where companies aspire to spend a billion dollars or more with small and diverse businesses. We’ll never match that because our total spend is just a little less that a billion dollars a year, so we would have to do all of our spend with small and diverse businesses to even make it to the Billion Dollar Roundtable. That’s not something we aspire to do. What we aspire to do is stay at the 17.8 percent or get it better. When I started there two years ago we were at 15 percent so we’ve gone up to over 17 in two years. We definitely care about helping small and diverse businesses grow. We have our challenges just like any other company or organization in finding qualified diverse businesses in different categories. There are some categories that are saturated with African- American-owned businesses; there are some that are saturated with Asian-American-owned businesses. We definitely look to partner with other organizations like the NBCC, to make sure that we find qualified minority, women, LGBT, veteran and disabled-owned companies. Anyone who has a company that falls into one of those categories should definitely go to our supplier diversity portal at AARP.org and put in your information because the very first place that we go to find a business is to our portal. We look at it religiously, we update it, we contact people through that portal. Ours is not a black hole. We don’t have millions of people in our portal.

TNJ: What do you look for in your M/BWE vendors?
Marcus: We’re not looking for the best bid but the most creative, the most innovative company to do the job. If you’re not the best, we’ll help you to become the best. At AARP it is our goal to do an RFP/RFQ (request for proposal/request for quotation) for anything that’s over $250,000. That is one way we make sure we are putting small and diverse businesses in the circle. Anything over $250,000 comes across our procurement desk and we make sure that our procurement people at least try to identify a small and diverse business. If they have one on their list to receive the RFP, then we assist in finding one. For anything below $250,000 we can do a direct sole source, which means it doesn’t have to be a competitive bid. That is one of the best ways to get through into the AARP pipeline. If it is less than $250,000 and we know this is a wonderful woman-owned business that can do the work we can actually just assign the work to them.

As it pertains to businesses that aren’t quite ready to do business with AARP either because of their size or they because haven’t been in business long enough, or they don’t have the capital, to do the type of work that we need done, we will partner them with a more established company through our mentorship program. So if we see small and diverse businesses that could potentially do work with us, we have the opportunity to send them the RFP. And if the RFP came back with some things missing, we have no problem partnering them with another company to see if they are willing to come in together to bid, or we actually mentor them, help them, so that maybe three years down the line when the opportunity becomes available again they’ll be better prepared to bid for it.