The time has come for those of us in the minority business certification community to realize that Corporate America is looking for more than just certification. Corporate America is looking for business qualification in addition to minority certification. And the reality is, Corporate America will buy both certification and qualification from organizations like the National Minority Supplier Development Council (NMSDC) and Women’s Business Enterprise National Council (WBENC). Right now, they buy certification from the NMSDC and, either use internal resources to qualify suppliers, or pay private sourcing services to do the qualification for them. But make no mistake; the preferred way to purchase these services is from one seller not multiple sellers. I think we cannot stick our heads in the sand and wish that Corporate America would be only satisfied with what we have traditionally offered. In a customer friendly world, those who satisfy the needs of customers thrive, while those who don’t, simply go away. The Greater New England Minority Supplier Development Council is on the verge of a revolution in the approach we are taking for MBEs of all sizes. I am calling it Certification 2.0.
But first let’s look at Certification 1.0. In the early days of the NMSDC and MBE certification, our corporate members were looking for an independent cost effective organization like the GNEMSDC to verify the legitimacy of the business as a MBE. The benefit of certification was that these MBEs would be provided access to corporate opportunities and programs designed to assist in their development. This approach worked well for the first 30 or so years until corporations discovered and embraced the concepts of strategic sourcing and global sourcing.
Combined, these two approaches viewed procurement as a profit center as opposed to just an administrative function of the organization. Strategic and global sourcing forced buying organizations to rationalize their supply chain by looking carefully at every supplier to make sure that they were getting the maximum value from that supplier. Suppliers that could be replaced by higher value suppliers were eliminated from the supply chain and new suppliers were heavily scrutinized. Senior procurement managers were on the path of reducing the number of suppliers and looking in every corner of the world for world class competitive suppliers. This approach had the unintended consequence of putting strategic and global sourcing in direct competition with the mission of increasing the numbers of MBEs in the supply chain. Corporations realized there were substantial resource costs associated with adding and vetting new suppliers. In this environment, which shows no signs of abating, MBEs have to demonstrate far more than their minority business status. Corporate buyers are looking for MBEs who can deliver high quality, cost competitive goods and services with little or no risk to the corporation. It has been my experience that this is the source of frustration for MBEs who want to enter corporate supply chains and the supplier diversity professionals who are there to assist them. Certification 1.0 is simply not good enough in this new reality.
This brings me to Certification 2.0. Instead of wishing for a return to an earlier time, I am convinced that, in order for the GNEMSDC to remain relevant, we must not only certify that a business has certain racial and ethnic characteristics, but that this business also possesses an ability to deliver at very specific levels of contracts. What we are offering all certified MBEs and all MBEs who enter into the Boston MBDA Business Center is a rigorous assessment that will demonstrate to potential corporate buyers that the MBE has strengths and weaknesses, but can deliver at a certain level based on verifiable contracting experiences. The assessment looks at many things:
• the largest and most recent contracts the MBE has performed along with feedback from customers. the financial health and performance of the MBE.
• the actual contracts to show where the MBE has performed work so that corporate buyers can easily determine if the MBE has the capacity for local, regional, national or global work.
• the information technology strengths and weaknesses of the MBE.
• the quality systems in place within the MBE firm to demonstrate that buyers are only buying what is of value.
• the quality and depth of management of the MBE firm.
These and other factors are what corporations are insisting on before access to their supply chains is granted.
I realize that no firm welcomes this type of invasive approach unless there is a clear benefit. The benefit of Certification 2.0 is that MBEs and the GNEMSDC will be able to vouch for MBEs based on their qualifications to perform. The assessment will, without question, show that every company could use help in some area. The GNEMSDC will offer direction and support for MBEs that need help. We will do this by identifying corporate mentors, paying for tuition to programs that address gaps, and providing face-to-face strategic consulting.
We cannot force any MBE firm to provide information about their company. I also know from experience that MBEs are particularly secretive when it comes to their financial performance. This is understandable, and the GNEMSDC must maintain the highest level of confidentiality with MBE data. However, MBEs must also understand that what they want to protect is often required by corporate members. There really are no secrets anymore in business.
At the end of the day, organizations like the GNEMSDC either become ever more relevant to our corporate members, or they simply go away. I have no intention of letting us simply fade away. And even Certification 2.0 may not be enough. Certification 3.0 will use technology to take the next logical step, which is transactional. Certification 3.0 would use all of the information to allow corporate members to buy directly and efficiently from a single source. Whether we get there sooner or later, I believe we will get there and MBEs and Corporate America will be the beneficiaries.