"Make the World Safe for Diversity" John F. Kennedy

They may not be the biggest among their competitors, or have the deepest funding, but minority- and women-owned businesses are a substantial part of US automakers' supply bases. In an effort to support businesses that tend to locate in the heart of America and often employ an otherwise disadvantaged population, the auto industry is setting the bar for doing business with this particular supply group.

Ford has a goal of directing 10% of their annual supplier spend to socially or economically disadvantaged suppliers. Such suppliers represent 404 of their 6,800 suppliers. In 2009 they spent $2.7 billion with minority- and women-owned businesses and they will exceed that goal in 2010.

About half of that or 5% of GM's total spend is with minority- and women-owned businesses which make up over 10% of their supply base.

Chrysler leads them all with over 13% of their spend being directed to businesses owned by minorities and women.

All of this does not happen magically by running a spend report at the end of each year. These automakers have personnel and programs dedicated to nurturing and growing this unique supply group. However, when it comes to awarding contracts, there is no favoritism. These suppliers must compete and win the bids on their own.

For more information see: http://www.detnews.com/article/20100930/AUTO01/9300368/1148/Suppliers-owned-by-minorities--women-persevere

Sample Test Question: Task 1-F-3

Possible reasons to develop and implement a supplier diversity program include all of the following EXCEPT:

A) To be eligible to do business with the government
B) To enhance your company's competitive advantage
C) To offer charity in giving business to suppliers that would not otherwise qualify for a contract
D) To support local and global initiatives

The Cool Factor is Critical

Photo: Chevrolet Volt Plug-in

As supply management professionals consider environmental issues, obviously a knowledge of environmental laws and regulations is a must. Such professionals would be wise to mitigate risk by legally transferring the responsibility for environmental compliance to their suppliers where it makes sense to do so. (1)

It is in the area of Ethical Issues where responsibility becomes more of a voluntary process, but in many regards, no less of an important one. Best practice organizations make investments in renewable resources and employ recycling programs. In addition, selecting suppliers that use environmentally friendly technologies as well as recycle is another way supply management professionals can improve their company's ethical awareness. Any time companies can successfully re-use product within the organization rather than leave it as waste is a sign of ethical prudence. (1)

Consider a recent 3-day conference in Detroit where plug-in hybrid vehicles were all the rage. In this forum, business leaders from multiple automobile companies certainly realize the ethics behind environmentally friendly products. But they recognize that making such products fun to use, fun to drive, and in general fun to have is the real obstacle. With noticeably higher sticker prices than similar gas-engine cars, many recognize that the fun factor better be huge.

Maybe someday, buyers and consumers will opt for a more ethical purchase, without regard to price. But until that happens, in order for consumers to be green, per Tony Posawatz, vehicle line director for General Motors' Chevrolet Volt, the "cool factor is critical."

(1) CPSM Study Guide 1: 1-D-2 Establish and monitor environmentally responsible and compliant programs throughout the supply chain and life cycle.