By M.V. Greene
As the BDR name implies, 20 years ago at the organization’s founding, corporations would freely obligate themselves to supply-chain diversity spend of $1 billion or more annually with diverse suppliers on a first-tier basis.
At its recent annual summit, the BDR recognized its charter member companies: AT&T, Ford, General Motors, IBM, Stellantis (then Daimler Chrysler Corp.), Verizon and Walmart. The inaugural BDR class also agreed to share best practices — even among competitors — and cooperate on initiatives to benefit the overall supplier diversity universe, moving the practice forward.
Resilient and transformative
The 2021 BDR summit, titled “Celebrating Two Decades of Resiliency & Transformation,” was designed to do what BDR summits have done since their founding — engage thought leaders, corporate executives, chief procurement officers, supplier-y diversity practitioners, advocates, policymakers, diverse business owners and other stakeholders in frank discussions about how to grow and sustain diverse businesses. Through supply-chain engagement, the prevailing thinking is that major corporations can lead in driving economic empowerment by creating jobs and wealth in minority communities.
“We get to bring innovative suppliers into [Bristol Myers Squibb Co.] and help diverse suppliers bring economic empowerment to their communities because we know that diverse suppliers overwhelmingly hire from their communities,” said summit panelist Farryn Melton, senior vice president and chief procurement officer at the global pharmaceutical company Bristol Myers Squibb.
Held virtually due to the COVID-19 pandemic, summit panels included discussions on the growth and development of diverse businesses, the introduction of a BDR-launched health care collaborative chartered to identify and expand the utilization of Black-owned businesses in the sector, and an examination of how diverse firms can expand into global markets.
The summit also heard from Ying McGuire, the new CEO and president of the National Minority Supplier Development Council Inc., who praised BDR member companies for being “the best of the best” in helping to drive opportunities for diverse suppliers.
In his welcome to summit attendees, BDR Chairman Shelley Stewart Jr. noted that access to capital — along with expanded capacity and capability — among diverse firms has the attention of CPOs and executives at major corporations.
“Diverse suppliers have a lot to add as it relates to efficiencies. They are nimble, and they bring value to the supply chains,” he said.
Through the unrest that erupted in the United States and globally in 2020, the role of corporate supplier diversity takes on even greater urgency, BDR co-founder, president and CEO Sharon Patterson told attendees. She noted that many more corporations have joined in what long has been the work of the BDR by committing to address racial and societal inequities in a meaningful way.
“This is a fantastic moment in history,” she said. “The focus on supplier diversity is unprecedented. Today, we offer opportunity, hope and passion around the supplier diversity arena.”
In addition to celebrating the 20th year of BDR’s founding, Patterson added that the objective of the 2021 summit was to continue the momentum surrounding the support of diverse businesses “to ensure that the value of supplier diversity remains resilient, as it transforms the supply chains of major corporations.”
One of the summit’s key events was the fireside chat featuring Mellody Hobson, co-CEO and president at Ariel Investments LLC, in a discussion with former Silicon Valley technology executive and investor Stacy Brown-Philpot about Ariel’s Project Black initiative. Project Black’s mission seeks to “minoritize” about 8-10 businesses and scale them for high-margin vertical sectors.
“This scale challenge is real,” she said. “Ninety-five percent of minority businesses today have less than $5 million in revenue. That is our challenge.”
Hobson launched Project Black in February through the creation of Ariel Alternatives — her firm’s first private equity initiative to invest in middle-market companies — that currently may or may not be minority-owned — with the intention of transforming these companies into certified minority-owned business enterprises of scale. The objective, she told the summit, is to forge a new class of Black and Latinx entrepreneurs who can provide differentiated, high-quality products and services to Fortune 500 customers in some of the largest areas of corporate spend.
Project Black is approaching business diversity by directly addressing not only the issue of capital formation, but also how to drive customers to minority-owned companies, Hobson said.
“We need Black and Brown businesses in this country that can handle those $100 million purchase orders,” Hobson said. “No one wants to write 50 $2 million purchase orders when you can write one $100 million purchase order.”
She explained that Ariel launched the initiative when, during the height of the Black Lives Matter protests in 2020, she received a call from Jamie Dimon, chairman and CEO of JPMorgan Chase & Co., a BDR member company and where she serves as a director on the company’s board. He shared with Hobson how corporations wanted to step up and provide greater support to Black-owned businesses.
Hobson said she immediately went to work, sketching out a memo for Dimon that served as the genesis of Project Black. She also began recruiting key business leaders like Brown-Philpot — former CEO of TaskRabbit Inc. and a board member of Noom, HP and Nordstrom. — to join the initiative.
It was John W. Rogers Jr., Ariel’s founder, chairman, co-CEO and chief investment officer, who honed in on the notion that as important as the capital piece was for diverse businesses, there also should there be an emphasis on obtaining customers for Project Black companies, Hobson said.
“John said, ‘I’m not saying access to capital is not important; it is. But I think access to customers may be more important,’” she said.
In researching corporate spend, Hobson said Project Black determined that Fortune 500 companies spend about 2% of procurement with diverse businesses — despite a stated goal to spend 10% to 15%.
“There is a trillion-dollar opportunity, but we don’t have a lot of businesses that can meet the scale challenge,” she said.
Hobson identified the eight vertical sectors targeted by Project Black:
• Financial and professional
• Health care
• Media and marketing
• Non-core business process outsourcing
• Primary manufacturing and packaging
• Transportation and logistics
“Our dream is that in a decade, [Project Black] we will have created over 100,000 Black and Latinx jobs — and not just jobs, but careers. We want people to have the opportunity to advance and grow,” Hobson said. “We believe that in a decade we would have created a number of billion-dollar Black and Latinx businesses. At the end of the day, the big goal is to narrow the wealth gap in this country to create opportunities for capitalism to work for everyone and not just a select few.”
BDR celebrates 20-year commitment of charter members
Charter members AT&T, Ford, General Motors, IBM, Stellantis (then Daimler Chrysler) Verizon and Walmart helped launch the Billion Dollar Roundtable Inc. 20 years ago with co-founders Sharon Patterson, Don McKneely and Shirley Harris, putting an imprint on the concept that corporate procurement through supply chains could be an effective mechanism to grow diverse businesses.
During its annual summit, attendees received glimpses via video presentation of the achievements in supplier diversity of charter members, some of whose efforts predate them joining BDR. Examples include:
- AT&T Inc.’s
spending nearly $200 billion with diverse suppliers going back to 1968.
- IBM Corp. currently operating supplier diversity programs in 170 countries where it does business.
- General Motors Co. working with more than 300 diverse suppliers and small businesses currently within its supply chain.
Since BDR’s founding, 21 other major U.S.-based corporations have gained membership in BDR. Membership is not a given, as spend is audited annually to ensure the $1 billion threshold with Tier I diverse suppliers is achieved.
In addition to charter members, BDR member companies include Adient, Apple, Avis Budget Group, Bank of America, Boeing, CDW, Comcast/NBCUniversal Media, Cummins, CVS Health, Dell, Exelon, Honda North America, Johnson & Johnson, JPMorgan Chase, Kaiser-Permanente, Kroger, Merck, Microsoft, Pacific Gas and Electric, Procter & Gamble and Toyota Motor North America.
Based on preliminary 2020 data, the average spend with diverse suppliers of BDR member companies was $2.8 billion.
To learn more about the BDR, visit billiondollarroundtable.org.
To learn more about Ariel Alternatives: https://mbnusa.biz/detail/ariel-alternatives-aims-to-close-racial-wealth-divide.