Increase Spend by Encouraging and Supporting Vendor Certification

During the third session of Fair360, formerly DiversityInc’s 2020 virtual event, “Supplier Diversity: New Trends, Innovative Solutions,” panelists discussed how to increase company spend by encouraging and supporting vendor certification. Panelists for the session included Denise Naguib, vice president of sustainability and supplier diversity global operations for Marriott International (No. 1 on The  Fair360, formerly DiversityInc Top 50 Companies for Diversity list in 2020); Monette Knapik, senior director of enterprise procurement operations for CVS Health (No. 24 in 2020); and Nancy Rosado, business initiative consultant for Wells Fargo (No. 11 in 2020). The session was moderated by Anita Ricketts, chief of staff for Fair360, formerly DiversityInc. Here’s a look back at their conversation:

Anita Ricketts: Every successful and competitive supplier diversity programs always has one thing in common: they are constantly on the lookout to find qualified, certified, diverse suppliers who can partner with their organizations. The organizations joining us today are often on the frontlines as diverse suppliers leverage them for information, technical assistance and help with certification. Welcome to you all. I’m so happy to see you all here today. Denise, I want to start today’s conversation with you. What exactly is vendor certification and why is it important?

Denise Naguib: Thanks, Anita. To really start off, you need to understand that companies have a lot going on, and it’s really important for us to have seals of approval or certifying bodies like in supplier diversity to help us ensure that who we think we’re doing business with is who we’re doing business with. Think of it as a way for organizations like NGLCC, Disability:IN, WBENC, NMSDC, WEConnect and others to really help us, as corporates, understand if the companies really are 51% or more owned, managed and operated by a diverse entity — a woman or minorities or LGBT, disabled, or other diverse individuals. The premise of the certifying agencies is to do the due diligence, so to speak; to go through the rigor so that we, as corporates, can really have that seal of approval and that confidence in knowing that the suppliers we’re working with have everything in place and really are who they are telling us that they are in terms of their minority or diverse status.

Ricketts: Nancy, I want to ask you the same question. Why is certification so important?

Nancy Rosado: Hi. Good morning, everyone. For us at Wells Fargo, we’re really committed to making sure that we’re providing certified businesses opportunities to participate in our sourcing and our contract process. And like Denise said, it’s really important for us that we make sure that when we’re setting our goals for spending with certified businesses, if we say we want to spend X percent with minority businesses, we want to make sure that these businesses are truly minority owned, operated and controlled. Unfortunately, there have been cases in the past where there are organizations who may start a company and it may be what we call a “front company” where they will put a woman or a minority at the front. But that person, that individual, that minority really isn’t the one making the decisions. And that is not the intent of these programs or certifications.

When we say we want to do business with minority women, veterans, disabled, small businesses, LGBTQ individuals, we want to make sure that those are legitimately the people we are truly doing business with. That is extremely important to us. Certification is also important because we want to make sure that we are meeting our goals. In 2019, we spent about $1.3 billion with certified businesses. The certification helps us in our reporting process to make sure that we’re doing our due diligence. 

The one thing I will also add is that in our program and in our process, we don’t allow self-certifications. I know there are some organizations that may allow that, but for us at Wells Fargo, that is not something that’s not acceptable. Any business can do business with us at Wells Fargo — certification is not a mandate to submit a proposal. However, when you do get that opportunity and you are a minority-owned business, we may ask you to go through the certification process because we want to be able to count that spend. That’s how we handle it over at Wells Fargo.

Ricketts: Excellent. Thank you so much. Moving on to Monette, I want to ask you about your annual recertification process. What is that like for a vendor?

Monette Knapik: Thank you, Anita. For us at CVS, where the certification process is actually quite rigorous, the actual annual certification process is actually much more scaled down. The process, at a minimum, generally requires a newly executed affidavit along with the vendor’s most recent tax returns and any updates to ownership or management that have taken place. Other companies may also want to see current meeting minutes, financials and any amendments to previously submitted documents. This annual certification is important because we, as corporate members, want to ensure we can continue to count these suppliers as they are certified diverse minority-owned companies.

Ricketts: Excellent. Thank you. Let’s talk now about some of the challenges that vendors face in becoming certified. Nancy, can you speak to that a bit from your perspective?

Rosado: Sure. These are kind of anecdotal examples — things I’ve heard from our vendors and our suppliers concerning the certification process. And I think the most obvious challenge, or the most frequently discussed challenge I hear about is the perceived difficulty in going through the certification process. It can take a lot of time to complete the required documentation and paperwork. There may be screening involved. There may be site visits involved. Suppliers need to know it’s a process and it takes time. I think our certification partners do a fabulous job of really explaining that as the process begins, but it’s still a challenge to keep in mind.

And I think the other challenge I hear most often is concern over sharing personal information — personal tax information, for example. And again, I think that comes down to education. The certification partners really help suppliers to understand the value that the process brings. You can’t say that you’re a small business and then not show or prove it in any way, shape or form. It can be quite a bit of information to navigate through if you aren’t familiar with having done it before.

Ricketts: Denise, same question for you. What are some of the challenges that you see vendors typically facing?

Naguib: Knowing where to start can be confusing for many. How do you find the right organization to certify with? How do they know where to go and where to start? And then just fully understanding the process: I get certified, and now what? I think understanding these challenges and helping suppliers to understand the value that that certification brings can be a definite struggle in the beginning.

Ricketts: Denise, you said that people should really consider certification a business decision and a business need. And that certification is essentially an investment in your business. If you are a business owner and you’re thinking about where your business is going to go, you also have to understand what advantages certification will bring about, right? What the return on that investment is potentially going to be. Can you speak to that a little bit and talk about the business advantages and the potential return on investment from being certified?

Naguib: Absolutely. It’s definitely an investment. It’s not a small amount of money or time or effort to get to the certification. But the advantages and benefits of getting certified are so numerous — there’s the connection between the suppliers and the organizations and the networking that offers. I mean, just connecting with other similar businesses, either from a diversity or an industry perspective can be a huge advantage to a company that’s just starting out. And being able to leverage and connect with those other companies and that network. I mean, when we used to have in-person events, it was just amazing to see women-owned businesses or LGBTQ-owned businesses really having those interactions with each other and leveraging each other’s strengths to really build and expand on their own company. I think that network is so critical — the relationships and the connections that they provide.

Supplier diversity teams also show up and are part of the “activations” at these events. And that too is a phenomenal opportunity that those suppliers would not have if they were not part of those organizations. If they were not certified, they would not be able to connect and participate in matchmaking sessions or connect and have the opportunity to pitch their business to those who can help make the right connections or make decisions on the purchasing side. Certifying organizations also provide mentorship. As companies are starting or wanting to grow into different levels, that can be an invaluable benefit also.

Ricketts: Excellent. Thank you so much. Nancy, same question for you.

Rosado: I agree with so much of what Denise said. But I’d like to add that the visibility certification brings can also be a huge asset for suppliers. Businesses should look at certification as a tool; as a business owner, it’s just another one of the tools you use to increase visibility and expand your exposure. And that can reap huge rewards. It can be what takes you to the next level. Certification gives you exposure and improves the ability for us to find you. We can go to our certifying partners and say, “Hey, I’m looking for XYZ. Who do you have?” Certification gets you on those lists and gives you those opportunities. 

Knapik: The power of networking can’t be underestimated. Within our companies and within our industries, we are constantly sharing and exchanging information, and if somebody mentions something they need or a type of supply they are trying to find, that could be all a business needs to break through. You can’t underestimate the power of networking and certification.

Ricketts: Exactly. Certification is basically a way of establishing that you are part of the talent pool and the talent within that talent pool can end up being shared amongst many different corporations. That’s a wonderful way to look at things. 

Switching gears here a bit, we’ve discussed the importance of certification, the business advantages of certification and some of the challenges that vendors face in becoming certified. But there are also a number of different certifications out there that suppliers can pick from. How do they know which ones are the best? How do your companies decide which certifications you work most closely with and try to recruit using?

Rosado: That’s a great question. I think it’s a business decision as far as what diverse segments are going to be important to each business. And some businesses may make different decisions. I know for us, at Wells Fargo, we have made a decision that minority women, small businesses, LGBTQ, veteran and disabled suppliers are really important to us as a company. And we want to make sure that we are really intentional about doing business with these diverse-owned businesses. We look at who are the certifying entities within those areas that are trustworthy and credible. Who is doing the best job vetting the companies they certify? Who have we had the best luck with in the past? That’s the way we typically select our certifying partners.

I will add that for us at Wells Fargo, in addition to all of the certifying entities that have been mentioned thus far, we also will accept state, local and federal certifications as well. I don’t want to forget that because I think that those are some really great certifications that may be worthwhile for a business to also look into and consider.

Ricketts: Excellent. Thank you. That’s about all the time we have today so I just want to wrap up and thank you for your time and thoughtfulness. This has really been amazing.

*Note: quotes have been edited lightly for length, clarity and readability


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