Supplier Diversity Practices in the New Normal — The Impact of COVID-19 and Race on America

During the final session of Fair360, formerly DiversityInc’s Oct. 15 event, “Supplier Diversity: New Trends, Innovative Solutions,” keynote speaker Adrienne Trimble, president and CEO of the National Minority Supplier Development Council (NMSDC) delivered a TED-style talk on supplier diversity practices in the new normal, with COVID-19 and social unrest running rampant in America. Here’s a look back at her talk: 

“It’s such an honor for me to be here as part of the 2020 Fair360, formerly DiversityInc’s fall event, to represent NMSDC and to talk about the new trends and innovative solutions that we’re seeing as a result of everything that’s happened this year with COVID-19 and social injustice. These topics have greatly impacted the space of supplier diversity and economic inclusion. So thank you for the invitation today — the respect and the feeling is mutual. 

There were some dynamic speakers earlier today that are a part of the NMSDC network, and they are definitely on the cutting edge and leading the way in terms of ensuring economic inclusion continues. So thank you so much for the opportunity to speak with you all today.

What most people don’t realize is that NMSDC was chartered in 1972, and when we were initially established, it was from an executive order that was issued by Richard Nixon. And what he did was actually establishing a way for the corporate environment to have a way of reaching out to minority businesses in the same way that the government was. When NMSDC was founded, it was actually established by chief procurement officers who wanted to ensure that there was more economic inclusion within their supply chains.

Today, we have a network of 23 affiliate councils that are responsible for delivering services on behalf of our corporate members and our minority businesses across our network. Many of you may be familiar with the work that NMSDC does in terms of working on the ground to support the development and inclusion of minority businesses in the supply chain. We are headquartered in New York and our mission is simple: we exist to connect minority business enterprises that we certify with our corporate members who are intentional and deliberate about including minority businesses in their supply chain.

We also work with those minority businesses to improve their capacity and capability through development programs and educational initiatives. We partner with those institutions, as well, to ensure that our minority businesses have access to those resources that can help them with their scale, with their competitiveness, so that they are positioned to work with corporate America.

We also encourage minority business enterprises to work with each other and have those strong partnerships where it makes sense — where they need to have scale and augment their services to people to meet the needs of our corporate members. We have over 13,000 certified minority businesses in the database within our network, and we have over 1,500 corporate members that are continuously looking to work with them. Many of them are included in the Fortune 500 with global footprints, and they include hospitals, health care organizations, colleges and universities.
Over the last 40 plus years of success and growth of NMSDC, our mission has never changed: connecting minority business people with the corporations that need their services to ensure that there is an impact of economic inclusion and development within our country.

As we start looking at the real impact of the work of supplier diversity, it really comes down to the buying power. And many of you have seen this information but let’s talk about what the projected growth is as we look at 2018 through 2023. When you look at the buying power of Black Americans, it’s projected to rise from $1.3 trillion to $1.5 trillion. For Asian Americans, the projected growth goes from $1 trillion to over $1.3 trillion. Native American growth is likely to expand from $114 million to $136 million. Hispanic American growth will expand as well, topping out at $1.9 trillion.

That’s a serious amount of buying power within the minority community. And when you talk about the need to create discretionary and disposable income within those communities, it comes as a direct result of working with diverse suppliers and creating jobs and creating skills, of creating that extra economic capacity within those communities so that they’re self-sufficient and sustainable.

When we talk about those companies that are really working hard to ensure that there is economic inclusion — when we look at the 2020 Fortune 500 list — a number of them are NMSDC corporate members. And of course, among the top 10, we have Walmart that is number one with spend that exceeds over $523 million. And you have Exxon Mobil, CVS Health, AT&T. The collective revenue of these corporate 500 entities combined is over $14.2 trillion. So we know that that’s a lot of economic impact, and spending and buying of goods and services supports those corporations and their global supply chains. 

So how do we ensure that diverse businesses, particularly minority businesses, are positioned to receive a portion of those spending opportunities — because that’s what’s really going to drive our U.S. economy. It’s so critical that we have these conversations now because as we look at what’s happened with the U.S. economy, and we see the challenge that a lot of our diverse businesses are facing, the only way that our country is going to recover is through the support and the advancement of diverse businesses and minority businesses who’ve been hit the hardest because of the COVID-19 pandemic.

Let’s talk about what that economic impact looked like pre-COVID-19 so that we can understand why it’s so important to invest and sustain these businesses so that they can return back to the levels of success that they had prior to 2020. In 2019, NMSDC published an economic impact study. We reported that our corporate members and our minority-owned businesses together create numerous jobs to support minority communities. The economic impact is very clear. When we looked at our NMSDC-certified minority businesses, we found that collectively, their revenue was over $215 billion — this is money that they were actually generating and putting into the economy. 

Over 528,000 new jobs were created as a result of those certified minority entities. And then when you look at the wages that were earned by U.S. employees at those certified minority companies, it totaled over $32 billion in wages. Of the individuals employed by those companies, 70% are minorities. So we can see that there is definitely a business case in terms of how having strong minority companies can impact the job creation within certain communities, and the self-sufficiency and self-sustainability it creates within those communities.

That’s why this work is so important. When you look at the overall revenue from these businesses, there’s been a 42% increase over the last five years. So that was the type of trajectory that we were looking at pre-COVID-19 as we were looking at the sustainability of our minority business enterprises.

When we start looking at the actual economic impact and what that does to the overall U.S. economy, the economic production is over $401 billion that’s actually put into the U.S. economy as a direct result of having strong minority businesses within the communities. And then we also look at the total jobs — not just those tied directly to our minority business enterprises, but those that have an indirect impact and downstream effect of having those companies operational. And that total goes to over $1.6 million.

Now, looking at the total wages earned, again not just at those certified companies, but those that have a direct impact and downstream effects, and that’s over $96 billion in wages earned. So when you look at the total picture of the economic impact and the economic inclusion of these businesses, it’s clear that’s a significant change. It has never been about doing the right thing, which we know it is, but it truly is a business enabler for our U.S. economy.

The jobs being created at our minority business enterprise (MBE) firms have been broken down by ethnicity, and I think this is something that has become even more important and critical for us to understand exactly where there are opportunities for continued focus for our businesses in underserved and underrepresented communities, as well as those those communities that have been doing well. Our Asian American firms have been at the forefront of the job creation, followed by Hispanic-owned firms, and then you have Black firms and Native American firms that are still kind of lagging behind.

What we found during the whole COVID-19 situation when we started really digging into the impact on minority businesses is that Black businesses were hit the hardest by COVID-19. And then when you start thinking about the impact of social injustice and the calls for how do we address the racial barriers that we know still impact these businesses, it’s clear that in all leading indicators, Black businesses continue to lag behind — whether it’s in job creation, revenue growth, all of those indications of success factors for businesses. And those have a direct impact on communities of color that are represented within those communities.

Looking at the areas that minority businesses tend to represent — and this again ties right back to the U.S. economic indicators — the top two industries are based in manufacturing with over $62.9 billion in revenues and 93,000 jobs that have been created. Moving to wholesale trade, those areas have revenues of $49.3 billion and almost 47,000 jobs created. So when we start thinking about where we need to focus for recovery issues, this is where this data becomes so important. And we’re happy to share it! So if anyone is looking to understand how this information impacts your specific industry, NMSDC can be a resource for you. We want to make sure that you have full access to this type of data because we know it’s so important as we start thinking of ways that we can continue to have economic inclusion and economic recovery.

Again, as I mentioned, we need to really understand what those vulnerable businesses are and which have been hit the hardest — 41% of African American businesses were hit and are not expected to survive or return back into operation because of COVID-19. That’s why it’s so important that we have a strategy around how we can help those businesses recover. We want to make sure that they get the resources, support and the information they need. And most importantly, we want to make sure they get contracts! That’s what is really going to help these companies get through these challenging times.

When we started down this path in understanding how COVID-19 was impacting our business community, we took a survey to try and figure out where they needed the most help. What we found is that a number of them were able to pivot their business into areas that had growth opportunities or immediate needs related to COVID-19. And we were glad to be a part of that process, to help them get connected to those corporations that were looking out and asking for information in terms of how they could work more directly, collaboratively and collectively with our minority business community.

We also created what’s called our “In This Together” campaign. This is a campaign that has been developed to really focus efforts for minority businesses to be able to get the resources, information and support needed for them to remain sustainable, to manage the risk and to get positioned for recovery efforts as we try to get through this financial challenge we’re having right now.

There are four main areas that we felt were necessary. First, we came up with the “Rebuilding” fund. We wanted to help those minority businesses that were impacted by either COVID-19 or by some of the social unrest that took place this summer. What we see is that many minority business owners intentionally place their businesses in their communities, but as we had the protests that were taking place this summer in those communities, some of those businesses were seriously impacted. We wanted to make sure that we had resources to help them rebuild. So we put in place a Rebuilding Fund, which is a grant process that can help get funds directly to those communities.

Next, we established the Minority Business Advocacy Initiative. When we started hearing about what was happening with COVID-19, a number of our MBEs raised their hands to say, “Hey, we need to understand how we navigate all the bureaucracy that we’re hearing about from the federal government.” And that takes resources. We had to have established communications with the highest levels at the White House, and talk with senior officials about what their policies were, how they were rolling out potential strategies and resources that would impact small businesses. Our message to them was that there are specific nuances with diverse businesses that they needed to understand.

So we actually held roundtable discussions, again, with the highest levels within the White House. We had members of Congress come on and talk with us over a 10-week period as they were developing stimulus packaging to make sure that they could get the information to our minority businesses as quickly and expeditiously as possible. Those changes would happen in real time. That takes resources, for us to be able to have the ability to make those connections, so that’s what the Minority Business Advocacy Initiative is designed to do.

The next area we focused on is our Business Consortium Fund. NMSDC is the only advocacy group that has its own funding arm for our businesses. And it’s not just for our minority businesses but it’s also for any diverse entity that’s looking for ways to get access to capital in a low-interest rate process. We wanted to make sure that we had the ability to provide funding and continue to provide resources to minority businesses through our Business Consortium Fund. So that was another key area that a number of corporations stepped up to say, “I want to be a part of this and how can we help get these funds available for minority businesses.”

And the last area we created was our NMSDC Academy. Our Academy was designed to really be the repository for information, best practice sharing and educational resources for corporations, as well as for our minority businesses. This is the material and information that’s going to help businesses grow, as well as to help corporations improve their supplier diversity processes within their organizations.

The Academy is a growing area for NMSDC, and it really is serving as that think tank — that best practice sharing — so that as you need information from a corporate perspective, it’s available to you. And we’ve pushed out programming that’s going to be helpful and beneficial to help those supplier diversity processes within the corporate structure. We want to help them to be able to connect more effectively and efficiently with minority businesses, and as well as helping our MBEs get the scale, capacity and capability that’s necessary to meet those larger contracts.

Within the Academy, we’ve also established programs such as Emerging Young Entrepreneurs, which is centered on developing the next generation of diverse businesses. We’re trying to address how we can make sure we’re tapping into new innovations and new emerging trends, and [fostering] the talented individuals who are looking to become entrepreneurs in some of those emerging spaces.

We also put in place a Minority Business Leadership Academy, which again, you heard about from some of the speakers earlier today. Those are educational resources that really help strengthen the capacity and capability of our MBEs and get them information around business solvency and financial acumen, things of that nature that can help them on their internal operations so they can be more competitive, more innovative, more nimble, to be able to meet the needs and demands of corporate America.

Our Centers of Excellence certificate program is another part of the campaign. It’s a management program where we have corporations that work very directly with minority businesses in a module-type setting, where they can get information on how to prepare for bids, how to understand the bidding process within certain industries and really getting that one-to-one mentoring that’s so critically important for minority businesses particularly, to be positioned for success once they get the opportunity to bid.

And then we have a major focus around women of color. We know that when we look at the data, when you look at the small business sector, that growth is really coming from women of color who are starting businesses at the fastest rate of any other demographic group. And we want to make sure we have resources to help them be sustainable, be sufficient and be positioned again for those corporate contracts.

So those are all the ways that the In This Together campaign is working very specifically with corporate America to help get resources, information and any type of self-sufficiency plan that’s going to help our MBEs be sufficient and sustainable through these challenging times.

Finally, in developing the campaign, we wanted to make sure we acknowledged that the corporations that have made the pledge and given their resources to our initiative did so proudly. It’s a direct response to the social injustice activity that took place this summer. It’s affirming to look at the number of corporations that stood up and said, “Hey, we want to be a part of the solution.” There was over $1.8 billion pledged by corporate America to help diverse businesses in response to racial injustice. But there’s also still a gap there, and we are really trying to get CEOs to understand the need to really put resources around support for minority businesses again. We have to make sure that we get back to where we were pre-COVID-19 so that we can begin to build from that platform to help our businesses be sustainable, sufficient and, operational again as we try to position the U.S. for recovery.

Considering all this, it also begs the question: how do we keep supplier diversity relevant in the wake of COVID-19 and the impact of social injustice? In order for our U.S. economy to be as strong as it can be, we need all members to be able to fully participate. We want to make sure that we understand the value of our economic power. That’s why supplier diversity and economic inclusion is more important than it ever has been before. We want to make sure that the message is getting out there. 

So how do we continue? We don’t want to think about this as the new norm but that really is where we are today. How do we make sure that we are positioning minority businesses to be successful, sustainable and actually positioned to get through this crisis that we’re experiencing right now? We’re operating in this virtual environment, and how do they go about maximizing their relationships remotely?

It’s really been inspiring to see those companies that have continued to make sure that they are working with diverse businesses even in the virtual environment. We know that relationship building is so critically important to understanding the capability, the capacity and the ability for diverse businesses to be able to bring the right business solutions to the table at the right time for corporate America. We know that personal connection is so important, and what we’re telling our diverse businesses is to make sure that they are nurturing those relationships, again, even in the virtual world. There are matchmakers and matchmaking events that are taking place. There are still conferences that are happening online. Small businesses need to make sure they are staying visible so those connections can stay fresh, real and tangible because we don’t want to lose the momentum of being able to do business with each other.

We don’t know how long this virtual environment is going to last so we have to make sure that we are prepared to be able to work through this together and continue having the ability to share best practice information, data transparency and corporate accountability, especially as it relates to supplier diversity and minority spend.

In closing, I want to say thank you to Carolynn Johnson and the Fair360, formerly DiversityInc staff for allowing me to come and spend just a few moments with you to talk about what I’m seeing in terms of some of the innovative trends, what companies are doing, and what NMSDC is doing to be a part of the solution in helping diverse businesses be self-sufficient, self-sustainable and be able to get through these recovery issues.

I’m so glad that I was able to participate in the event and I thank you for the continued partnership. In the months ahead, we’ll continue to look at other ways that we can work together so that we can help all of you with your economic inclusion efforts as well. And we’ll also continue to look at how we can have a broader discussion about diverse and inclusive objectives for your corporations. So thank you again for the opportunity to spend a few moments with you today.