Ford Motor Company has a message for diverse-owned businesses: We want to do business with you in 2021.
“We’ve set very aggressive goals to increase our spending with diverse suppliers,” says Travis Spencer, Head of Supplier Diversity & Inclusion at Ford Motor Company. “My team is working every day to advocate and develop opportunities for diverse-owned businesses.”
Spencer and his counterparts at other Fortune 500 companies are eager to tout the increasingly pivotal role of diverse suppliers in the corporate supply chain.
“JPMorgan Chase, Ford and many other Fortune 500 companies are doubling down on our investments in procuring products and services from diverse businesses,” says Fred Royall, Managing Director and National Head of Diverse Businesses at JPMorgan Chase. “Also, we’re here to provide resources that put you in a better position to succeed.”
Diverse-Supplier Pie Keeps Growing
Year after year, enterprises with the largest procurement budgets are dedicating even more of that money to diverse-owned businesses. Leaders in this trend include the Billion Dollar Roundtable (BDR), composed of 28 Fortune 500 companies. Each of the BDR companies spends at least $1 billion annually with minority- and woman-owned suppliers. And their total diverse-supplier spending grew by more than 150% over the past decade.
JPMorgan Chase, which is part of the BDR, spent $2.5 billion with diverse-owned businesses in 2019. The company has pledged an additional $750 million to Black- and Latinx-owned businesses over the next five years. It’s part of an overall $30 billion JPMorgan Chase commitment to advance racial equity.
At Ford, which also belongs to the BDR, Spencer’s group aspires to raise the diverse-supplier share of total procurement from roughly 14% to at least 20% within 10 years—an increase of nearly $1 billion annually.
The JPMorgan Chase Global Supplier Diversity program, like many others in the private sector, also invests in a range of education and business development initiatives to support diverse-owned suppliers.
“That emphasis helps us to grow businesses and drive community impact,” says Jill Davis, Vice President and Marketing Manager of Global Supplier Diversity at JPMorgan Chase. “Diverse companies tend to hire in the local communities where they operate. Their success creates wealth in communities and helps to support the overall economy, which is a good thing for everyone.”
Along with identifying potential opportunities at Fortune 500 companies, diverse business owners must find ways to stand out.
“We meet with many suppliers, and they all have the best mousetrap in the world. The real question is: What will that mousetrap do for us?” says Davis. “When companies can articulate what problem they’re solving and what their value proposition is, that helps us figure out where they can fit in.”
Certification is available to U.S. businesses that are at least 51% owned and managed by one or more individuals in historically underrepresented groups, including:
- Members of racial and ethnic minorities
- Military veterans
- LGBTQ+ individuals
- People with disabilities
The certification process typically involves:
- An application and nominal fee
- Screening by the third-party agency
- An in-person or virtual site visit
Businesses can expect the process to take an average of 60 to 90 days. Once certified, suppliers should then register with the diversity program at each company where they’re interested in doing business. Many companies, including Ford and JPMorgan Chase, provide a simple path to get started online.
Why go through the effort? “Opportunity, opportunity, opportunity,” says Spencer. “I cannot count you as one of my diverse suppliers unless you’re certified.” Once that happens, he adds, “You have access to a whole network of support.”
Stand out by Getting Disruptive
It’s a competitive market. Diverse-owned suppliers still need to differentiate their businesses to win a Fortune 500-level supply chain contract.
For example, Spencer wants to know upfront how a business can solve one of Ford’s challenges. “I’m looking for you to articulate how your product or service adds value to our manufacturing process and enhances the experience of our customers,” he says. “We love the terms ‘efficiency’ and ‘savings.’”
He also counsels diverse suppliers to target cutting-edge areas—such as electric-powered and driverless vehicle technologies—where demand for products and services is greatest.
“Right now,” he says, “we don’t have many diverse suppliers participating in those disruptive areas. If you’re able to pivot and provide that, I’m interested.”
For suppliers approaching JPMorgan Chase and other financial institutions, Davis notes that risk is arguably the biggest consideration. She says, “You really need to have tight systems, particularly if you’re in an industry that involves technology.”
Train for a Marathon, Not a Sprint
Despite the exceptionally strong momentum behind supplier diversity, Davis and Spencer caution business owners not to expect instant results.
“A lot of people who get their certification think the sky will open up and contracts will come tumbling down. It really doesn’t happen that way,” Davis says. “With the private sector, you’re really shooting for a relationship that can lead to an opportunity.”
Ultimately, there’s no downside to becoming certified.
“I’ve always thought of supplier diversity as another way into a corporation,” says Davis. “All your competitors are banging on the front door, but you’ve got a friend at the side entrance.”
To learn more about the opportunities available through JPMorgan Chase’s Global Supplier Diversity program, contact your banker or the Global Supplier Diversity Team.