Inseparable: Corporate Social Responsibility and Supplier Development

The idea of operating any business enterprise void of social conscientiousness is irresponsible. The basis for all enterprise surrounds helping someone else to meet satisfactorily his or her respective need. The same holds true when investing in the adherence to regulations and societal standards as it relates to supplier development efforts. Long-term participation in such programs without tangible returns and positive outcomes in broadening the supply chain base with targeted firms is a negligent outlay.

In major organizations, these parameters are even more acute as outcomes of the enterprises activities affect many more people. Since the investment of resources to operate a concern revolves on purchasing materials, products, labor and the like, supplier development and corporate social responsibility becomes tandem projects, as the task of broad based people inclusion is ethical and moral behavior. More specifically, providing complete opportunities to emerging firms located in underutilized geographical areas with capacity to deliver the appropriate goods and services in-line with corporate standards is the preeminent measure of social responsibility.

Consider how accomplished industrialized nations are on constant outreach to help third world countries meet their economic challenges, particularly when it affects potential gains in global market production. In view of that, how is it that the land of milk and honey continually turns a blind eye to underutilized areas, permitting unemployment figures to reach levels of 20% and even as high as 40% when measured solely to young adults. Where can any firm extending multi-billion dollar purchasing contracts annually relax their domestic social responsibility through to divert investments away from its own shores?

Whole regions in a rich state like California have become camping grounds for blight and neglect. A rather disconnect in domestic spending patterns surrounding the appreciation of minority entrepreneurs. The common attacked for building communities is to increase taxes for social services, which usually shows few sustainable results. Consequently, the need to focus more corporate annual spend on generating real, sustainable economic growth shows promise according to a recent study by the Kauffman Foundation.

Minority entrepreneurs are playing an increasingly important role in the formation of cities. For example, in 2010, immigrants accounted for nearly 30% of new business owners, versus 13% in 1996. In Atlanta, where half the residents are African American, hosts of Hispanic and Asian entrepreneurs have set up shop over the last decade. Atlanta now boasts the second-highest percentage of self-employed minorities among the top 52 metropolitan areas with populations greater than 1 million. A ranking from data complied by Joel Kotkin, author of The Next Hundred Million: America in 2050 is as follows.

  • Atlanta-Sandy Springs-Marietta, GA
  • Baltimore-Towson, MD
  • Nashville-Davidson-Murfreesboro-Franklin, TN
  • Houston-Sugar Land-Baytown, TX
  • Miami-Fort Lauderdale-Pompano Beach, FL
  • Oklahoma City, OK
  • Riverside-Sand Bernardino-Ontario, CA
  • Washington-Arlington-Alexandria, DC-VA-MD-WV
  • Orlando-Kissimmee, FL
  • Phoenix-Mesa-Scottsdale, AZ
  • Memphis, TN-MS-AR
  • Dallas-Fort Worth-Arlington, TX
  • San Antonio, TX
  • Tampa-St. Petersburg-Clearwater, FL
  • Austin-Round Rock, TX
  • Charlotte-Gastonia-Concord, NC-SC
  • Indianapolis-Carmel, IN
  • Los Angeles-Long Beach-Santa Ana, CA
  • Richmond, VA
  • New Orleans-Metairie-Kenner, LA
  • Jacksonville, FL
  • Tucson, AZ
  • Portland-Vancouver-Beaverton, OR-WA
  • Raleigh-Cary, NC
  • Louisville-Jefferson County, KY-IN
  • Birmingham-Hoover, AL
  • Seattle-Tacoma-Bellevue, WA
  • Cincinnati-Middletown, OH-KY-IN
  • Sacramento-Arden-Arcade-Roseville, CA
  • Pittsburgh, PA
  • Kansas City, MO-KS
  • Columbus, OH
  • Las Vegas-Paradise, NV
  • Virginia Beach-Norfolk-Newport News, VA-NC
  • San Francisco-Oakland-Fremont, CA
  • Denver-Aurora-Broomfield, CO
  • Louis, MO-IL
  • Buffalo-Niagara Falls, NY
  • New York-Northern New Jersey-Long Island, NY-NJ-PA
  • Rochester, NY
  • Hartford-West Hartford-East Hartford, CT
  • Salt Lake City, UT
  • Providence-New Bedford-Fall River, RI-MA
  • Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
  • Boston-Cambridge-Quincy, MA-NH
  • San Jose-Sunnyvale-Santa Clara, CA
  • Detroit-Warren-Livonia, MI
  • San Diego-Carlsbad-San Marcos, CA
  • Minneapolis-St. Paul-Bloomington, MS-WI
  • Chicago-Naperville, Joliet-IL-IN-WI
  • Cleveland-Elyria-Mentor, OH
  • Milwaukee-Waukesha-West Allis, WI

From an executive leadership perspective, doing business with heretofore underutilize companies makes a considerable dollars and cents. The international pie of consumer grew only from the extension of jobs to remote countries by domestic corporations. The same can be true for doing expanded business with local firms. Stockholders will have higher opportunities for returns and community stakeholders will receive greater access to productivity.

The typical problems that preclude buyers from sourcing such firms stem from incompatible parts and components that fail to meet strict specifications for size, corrosion, rigidity, and the like. In some cases, these are presupposed challenges that newer firms are sub-standard suppliers that will disrupt production, depress quality, and generally drive increase rework costs to unacceptable levels. Notwithstanding, the socioeconomic barometer will dip to unbearable conditions unless purchasing management personnel make a concerted effort to enlarge the productive and innovation aspects of maximum sourcing.

Supplier development processes do not have to become a handholding project. Employing long-term engagement strategies align with the corporate strategic plan to compete in all areas at high quality. It can takes years before a supplier is truly par with corporate standards. Emerging firms have a huge advantaged over well-established suppliers whereas their fixed costs are usually much more flexible, potentially creating a competitive advantage.

For major buying organizations that have service territories, employing an assessment and reassessment approach involves identifying and visiting suppliers two to three times a year, evaluating process and product capabilities. The result of each visit is to encourage suppliers on the future aspects of operational needs and suggestions on how to compete for such items. This range of companies should cover a large number of motivated suppliers that are initiating project management skills to meet the future demand.

Another more intense supplier development approach is to designate a supply chain team to each supplier for a specific period, along with regular audit and follow-up. Designated Supply Teams provide hands-on support to help correct quality deficiencies, using predetermined improvement plans. Although this limits the number of suppliers that can receive such a service and the labor is costly for the buying organization, it expedites inclusion processes of targeted business groups. Other major buying groups with similar product and service requirements can easily adopt the trend. Nonetheless, Designated Supply Teams should work only with those firms that have a large share of purchasing volume, significant potential to adjust to new demands, and demonstrate a significant commitment to respond favorably to the buying organization.

AT&T recently invested $39 billion to acquire T-Mobile, which is roughly $1,000 per customer. By applying similar investment strategy acumen, major business can transform lesser desirable communities through entrepreneur support in a short period. Overall, the concept is to use the most straightforward development initiatives that will deliver the maximum community benefits. A well-focused supplier development program can deliver socioeconomic results nearly instantaneously and provide vast returns on investment.