Supplier Diversity Identification — An Inefficient System

I recently had the chance to stop by the Chicago Business Opportunity Fair hosted by the Chicago Minority Business Development Council (CMBDC). As I walked into the exhibit hall, I was shocked by the size of the event. Hundreds of companies and providers lined a conference facility significantly larger than a football field. But what struck me most was not just the size of the event, but the inefficiency of the whole thing (at least from an exhibit hall perspective). Let me explain.

In most regional markets, supplier identification is not rocket science. Any practitioner or consultant worth his salt could tell you within a few hours how to locate a qualified list of suppliers even for categories they had limited or no experience with in the past. But the same does not hold true in China or other developing markets. In China, trade directories are often incomplete or misleading (e.g., trading companies often pose as manufacturers themselves). Because of this, China is probably the world's leader in sourcing summits and networking events designed to match together buyers and suppliers in person. There, it's essential because online and offline directories and sources of information are insufficient.

You'd think that in North America there would be no need for this sort of in-person supplier identification fair. But in the case of supplier diversity, you'd be wrong. At the CMBDC event, every large Chicago organization -- and many national companies -- had booths for potential suppliers to stop by and introduce themselves. There were also dozens of booths run by diversity suppliers. Honestly, it felt like China. But that's where the similarities ended. When I questioned a number of large organizations as to why they invested in the event -- these were household names, mind you -- nearly all said it was about "perception" and that few actually identified new suppliers from it or got new business (in the case of suppliers).

As an outsider looking in, I find this type of thing grossly inefficient. Even though I've come to believe in the merits of diversity supplier development by supporting small, entrepreneurial suppliers as alternatives to incumbents who always pose the risk of getting lazy, reducing innovation or raising prices, I feel strongly that this the exhibit side of this event was little more than a "Barney: I love you, you love me, we all love DIVERSITY" sort of affair. From a sourcing perspective, that's too bad, as the infrastructure for identifying and qualifying diversity suppliers is certainly lacking. And moreover, giving the transparency of buyer/supplier relations in North America unlike developing countries, much of this can -- and should -- be done online.

- Jason Busch

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