Evolution of supplier diversity

October 10, 2008
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Reginald Layton, director of diversity business development at Johnson Controls Inc., will be the keynote speaker for the 2008 Minority Business Celebration as well as the presenter for the half-day workshop on the 15th titled “Purchasing Today …We’re Not In Kansas Anymore.”

Johnson Controls, a global presence in automotive experience, building efficiency and power solutions, has many years of experience and research in supplier diversity. Layton defined supplier diversity as “the efforts of a corporation to engage companies that are owned, operated and controlled by minority and women management teams.”

Layton said the keynote address will focus on the past 15 years of Johnson Controls’ experience in supplier diversity. The company is one of 13 corporations in the world that has spent over a billion dollars with minority and women-owned firms. He will also provide advice to those in the audience that wish to enhance their brand, expand their markets and strengthen their supply chain by working with minority communities.

During the workshop the following day, Layton will discuss how sophisticated corporate purchasing has become over the past 10 years and how to approach major corporations in order to be included in their supply chains.

Perception is one of the larger hurdles to overcome when approaching buyers.

“It’s not enough for (a buyer) to look at a company and say, ‘Oh, you’re women-owned’. Just because the person in front of me happens to be a woman doesn’t mean that person owns, operates and controls the company. It could just be a salesperson,” said Layton. “So we deal with the whole concept of certification by a third-party organization.”

Third-party certification is one of the three key points Layton said Johnson Controls has learned about supplier diversity, along with top management support and enhancing supply chains and building revenue.

“Corporations have to have top management support for this type of initiative. It’s not about Reggie Layton or my colleagues who do this job thinking a diverse supplier would be competitive in terms of cost, quality and delivery. It’s about having the data to prove it to the purchasing community and then having top management support, so that the purchasing community doesn’t stick with a legacy supplier just because it always has.

“The second thing is, the tracking and accountability has to be there. I told you about certification and registration, but along with that tracking the use and payment of diverse suppliers is the reporting to customers and stakeholders what you’ve done. How much did you spend with diverse suppliers? What did they do? How long did they do it? Accountability and measurement and tracking systems are really important because what gets measured gets done.

“The third thing that I would say we’ve learned is this actually enhances our supply chain, but also enhances our revenue. In the last 15 years, Johnson Controls has received $6 billion in new business because we’ve offered the use of a portfolio of diverse suppliers on the projects we do for our customers. They’ve chosen us because not only does JCI have technology and project management capabilities, but we bring with us 340 diverse suppliers who will work on those projects.”

From a community aspect, a supplier creates jobs for the people in the region as well as a disposable income, which in turn, is spent and helps bolster the economy. Utilizing a diverse supply chain can benefit a region’s minority community, as minority companies hire minority workers to a far greater extent than non-minority companies, Layton said.

With more than 30 percent of the U.S. population being made up of people of color and 50 percent being women, Layton said it’s important for corporations to understand how the supply chain is evolving.

“With the demographic changing, does it require a changing in ways that corporations buy?” said Layton. “Yes, because if you don’t know that a woman-owned business is owned, operated and controlled by a woman who spent 30 years in a Fortune 500 corporation and headed a division, and maybe that Fortune 500 company did a divestiture and she bought it; then when this company approaches your corporation, you assume that, ‘Oh well, they’re small. They can’t do it.’ You didn’t realize that this used to be a major division of another corporation. You missed an opportunity to find cost savings, to diversify your supply chain, so just not knowing could make you less competitive.”

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