Automakers Help Suppliers Develop Minority Programs

June 5, 2002
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GRAND RAPIDS — The Minority Supplier Development Program (MSDP) run by the Ford Motor Co. has 283 participants this year, its 23rd. Begun in 1978, Ford calls it one of the oldest and most successful programs of its type in the nation.

“Our program started over 20 years ago and we have the largest minority buy at $3.3 billion in the country,” said Steve Larson, MSDP manager for Ford.

Larson made that comment at the automaker’s National Minority Supplier Development Conference. He also told attendees that there are four stages a company must go through to develop a successful minority program.

“These phases are: foundation, search and select, development, and corporate citizenship,” he said. “Ford has a supplier self-assessment within our second-tier reporting program that will help you rate the effectiveness of your own minority development program.”

Here is a summary of each phase:

  • Foundation: To create a solid one, Larson said that senior management has to be involved in laying it out. Both short- and-long-term objectives should be established for the program, and policies should be created that will bring new suppliers into the company. A firm’s employees must be told why the company is doing this, along with what it means for them and the firm. Rewards for reaching goals should be offered, as well as penalties for not doing that.

“The old saying, ‘What’s important gets measured’ applies here,” said Larson.

  • Search and Select: This is the phase where a company meets with minority suppliers, gets quotes and issues purchase orders.

But first a firm must learn which areas are being served by minority-owned companies in order to create a supplier base. To do that, a company is encouraged to advertise and get involved with minority organizations in the area. Another suggestion is to talk with other companies that have already developed a program in order to learn how they did theirs. And the efforts in this stage also must be reviewed.

“At a minimum, there should be quarterly meetings,” Larson said.

  • Development: A company may find that minority-owned suppliers are under-funded and under-staffed and need help to get started in the program. So for a program to succeed, a firm must help these suppliers develop. Larson said Ford did that by conducting regular progress reviews, by having an employee work closely with the minority firms, by helping companies find financial, technical and employee-training assistance, and by making a long-term commitment to doing that.

“Ford started out with a minority purchasing program and failed,” said Larson. “It wasn’t until we started to work with and help develop minority businesses that our purchases began to grow. The dollars we spend are how we keep score of how well our development program is going.”

Ford said it made $712 million worth of purchases from certified minority suppliers in 1991. That number jumped to $3.3 billion in 1999, according to the automaker.

  • Corporate Citizenship: This is the altruistic stage where companies begin to fund programs that are designed to assist minority businesses without getting anything in return. A company enters this phase after its program matures.

Of the program’s 283 participants, Concept Industries Inc. at 4950 Kraft SE is a local participant. The company serves the auto, furniture, medical and recreation industries with plastics and paper products. Concept is ISO 9002 and QS 9000 certified. The firm was established in 1984 and has about 80 employees.

The Business Journal was unable to speak with Concept Industries President Shawn Esragh about the program.

Ford is not the only automaker involved with a program that develops minority suppliers. General Motors, DaimlerChrysler and others have made similar commitments.

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