An Extra Intelligent Rant: Are NMSDC and Supplier Diversity at a Crossroads?

As you have read in my recent articles (links are at the end of this post) on current NMSDC (National Minority Supplier Development Council) affairs, the organization is going through some radical changes, even rough times. If you decide to read this piece as well, I urge to read it in its entirety, as there are many nuances to this.

To recap – the “new” NMSDC leadership (since the summer of 2010, led by President Joset Wright) has apparently decided to consolidate and centralize the power of the organization, reduce the number of regional councils, pour their diverse supplier database into a national registry, and quite likely (although not written in stone yet) also roll up all the regional councils into a single entity nationwide.

These changes will create a leaner NMSDC – with reduced administrative overhead – but my question is how well does this support their supplier diversity mission?

My sources suggest that there now is a rift between the old guard and the new team, with different opinions on how to take the organization forward. Specifically, not all among the “old” leadership are on board with the changes.

What are the differences in opinion about? First, it’s important to remember the chapter of NMSDC – a core portion is about developing suppliers, it’s even part of their name. Some of its stated activities do fall under issue advocacy, but with the current level of support for supplier diversity programs among the Fortune 500 there really shouldn't be much need to further strengthen this area, which would seem to be the main purpose of solidifying the central functions of NMSDC.

The supplier value, in my experience, largely lies in what the local councils do (certifying and engaging local suppliers, as well as working closely with local corporate supplier diversity leaders and buying organizations). That’s how actual deals get done, and this is what the certified-member suppliers want. Weakening these “grassroots” initiatives effectively insulates the leadership from exposure to the daily business challenges at the supplier and corporate buyer level – that can’t be productive.

The new NMSDC direction will reduce the local council count to 24 from 36 once implemented, and will also close local offices – increasing the geographical separation between the leadership and local level. Some locations like Las Vegas will become fairly isolated by being organized under Northern California, which can’t be a net benefit.

In my opinion, doing away with local councils and centralizing information flow runs completely counter to what technology enables otherwise – just look at how social media and crowdsourcing tie people together. You want multiple venues. Ironically, that’s what supplier diversity is about. You want strong, autonomous groups to keep the ball rolling even when NMSDC central isn't looking. The local councils do that, why not let them keep it up? In fact, why not have more councils? It works for ISM – they have over 150 affiliate member organizations.

About the internal power struggles, at the current crossroads you have the councils who refuse to go along (e.g. San Diego, Las Vegas, St. Louis) and likely also others who don’t want to give up what they have built for themselves. If the NMSDC persists, my prediction is that we might see a break-away among renegade councils to maintain their structure. Whether the 12 councils slated for closure or merger will form (or at least threaten to do so) a competing organization remains to be seen – but why not? Competition works wonders in so many areas.

Are there any alternatives?  ISM works with supplier diversity, and you can of course look to MBDA – part of the US Dept. of Commerce – an organization that does similar things that the NMSDC does. Then there is WBENC (pronounced “wee-bank” and is focused on woman-owned businesses) which is similarly structured to NMSDC and closing in on having the same number of suppliers certified. All of these organizations are likely to benefit if the NMSDC gets lost in protracted power struggles.

And now you know the rest of the story.

Related Posts:

Dispatch From the Annual NMSDC Shindig, This Year in San Antonio

NMSDC Consolidation – Breaking News Around the True Story!

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Voices (2)

  1. Steve:

    Excellent recap and thought provoking. The customer interface which helps our MBEs and the non-MBEs in our supply chain happens at the local level. We may go back to being a local members in the three states where we have a footprint. In my opinion There should be more, not fewer. We have excellent MBEs and our local council supports my buyers to contract with MBEs even if it is bending the NMSDC rules. I hate to see that stop because of what seems to be a power grab. ISM has some great programs, the market will bring forth others .

  2. JPK:

    Good work with the recap Thomas. You’re dead on. Were you standing behind me during my rant last week? The MBEs are the losers here and deserve better.

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