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The supplier diversity imperative

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We are at a time and place in history where the world is looking for a deeper commitment to supplier diversity. The economic impact of the COVID-19 pandemic is increasing the sense of urgency. As an Asian American, an entrepreneur, and a civil servant, I am an avid believer in the power of diversity.

When the pandemic hit, Maryland Governor Larry Hogan, a former small business owner himself, quickly made emergency loan and grant money (totaling $190 million) available from state funds. The response was overwhelming and the money quickly ran out, indicating the severity of the current economic crisis. Maryland is home to more women and minority-owned businesses per capita than any other state. The most recent US Census Bureau data identifies nearly 600,000 small businesses, including those with no employees, statewide. COVID-19 economic recovery resources offered at both the state and federal levels were broadly directed to “small” businesses, which by definition allows for up to 500 employees. Meanwhile, Maryland’s small business community is dominated by non-employer companies of sole proprietors, independent contractors, and gig workers.

I am confident that help for our small businesses can come from supplier diversity programs, a concept born long before we ever heard of COVID-19. In the private sector, engaging diverse suppliers has proven to be a good business decision. It helps them meet their own business needs, and promotes job creation. It also is a catalyst for promoting innovation through the introduction of new products, services, and solutions. Here in Maryland, Baltimore Gas & Electric (BGE) Company has had a supplier diversity program for over 16 years. In 2013 they enhanced it by launching the Focus>Forward supplier diversity academy, a small business development initiative that educates participants on how to navigate large business process and better compete for contract opportunities.

“Supplier diversity is simply doing the right thing,” said Frank Kelly, Manager of Diverse Business Empowerment with Exelon. “We all want to thrive, and at BGE, we believe working together is how we will get there. In our industry, we do not compromise when it comes to reliability and safety, so we develop relationships with the businesses in our Focus Forward program, and they become invaluable to us. I believe the emphasis on supplier diversity is having a profound impact, and I am proud to work for a corporation that proactively strives to include talented diverse suppliers who reflect the customers we serve.”

According to Kelly, support from key leadership drives the program’s success. BGE spent $437 million with diverse businesses in 2019. This represents a 42 percent increase from the previous year.

Johns Hopkins University and its affiliates are already thinking ahead and have set a goal to increase spend with minority- and women-owned suppliers, as well as veteran-owned suppliers by $25 million by fiscal year 2022. This goal is part of a larger body of work, called HopkinsLocal, a commitment by the University and Health System to buy, hire, and build locally and with minority vendors

“Supplier diversity is vitally important to Johns Hopkins University. As an institution, we understand that there are systemic inequalities in our economy that have been persisted both in policy and practice,” said Alicia Wilson, Vice President for Economic Development, Johns Hopkins University and Johns Hopkins Health System. “While we alone cannot undo these systems, our intentional action in helping to address inequities in our supply chain can help us to have an impact in our community.”

Achieving widespread increase in diversity and inclusion is a big commitment, and the private sector cannot do it alone. The State of Maryland made $1.3 billion in payments to Minority Business Enterprise (MBE) firms in fiscal year 2019. Our program is one of the oldest and most revered inclusion procurement programs in the nation. It was launched in 1978 when the Maryland General Assembly enacted legislation to ensure that socially- and economically-disadvantaged small business owners are included in the public contracting arena. Throughout its 42-year history, legislators and stakeholders have been addressing inequities and responding to contemporary business practices. The overall statewide MBE goal stands at 29 percent, but we have yet to reach it. While the state will surely modify its spending in response to the pandemic, the existence of the MBE Program ensures that diverse businesses will have access to state-funded contracting opportunities. MBE participation goals are set on a contract-by-contract basis. Increasing the number of certified firms will result in higher MBE goals being established. If you are not already in the MBE Program and you meet the eligibility standards, I strongly encourage you to apply today.

I also ask that you think about your existing supply chain. Are you strategically and proactively choosing diverse suppliers and partners? I surmise that every entrepreneur can practice supplier diversity within his or her existing business model, even sole proprietors. It requires more than a commitment to the ideals of diversity and inclusion. It requires actions that support those ideals.

So much is still unknown. Whether the current crisis is temporary or longer term, the actions we take today will play an important role. Supplier diversity has the potential to make a positive impact on our economic recovery.

Minority Business/Expanding Opportunities 2020 cover

Expanding Opportunities

This article is featured in the 2020 edition of The Daily Record’s Expanding Opportunities Resource Guide for Small, Minority and Women Businesses. Published in conjunction with the Governor’s Office of Small, Minority & Women Business Affairs, Expanding Opportunities explores diversity, entrepreneurship and innovation in Maryland’s small business community. Read more from Expanding Opportunities on this website or read the digital edition.

To purchase a reprint of this article, contact reprints@thedailyrecord.com.

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