Supplier Diversity at Cummins – highlights from the CPO Event

The recent CPO event was successful based on the three quarters of a day I spent there – about half the total time.  There were about 65 delegates, who seemed to be a pretty uniform level of genuine seniority (CPOs or close to that level).

The format – free places (including accommodation) in return for delegates agreeing to a number of sponsor one-to-one meetings – works well, although as one sponsor said “some of the people we’ve seen are clearly just talking to us because they have to.” But they acknowledged that they also had some good meetings, and if you can get two or three serious leads from the event, then it is probably worth it.

We’ll feature some of the sessions here this week, starting today with Denis Ford, a very senior procurement executive with Cummins, a Fortune 500 company, that designs and manufactures power generation equipment, power systems, and the like. He presented on supplier diversity – interesting given we’ve featured the subject a few times here over the past months.

Cummins uses the full Ariba suite of sourcing products in a consistent manner globally to drive standard processes. It utilises what it calls ’RapidSource’ for low-risk procurement, where pricing and basic Ts and Cs are the key factors, and then MegaSource (I like that!) for higher-value and risk cases, with a full RFX process.

It sees supplier diversity as achieving two goals. As its website says, it “increases economic opportunity in all of the communities where Cummins employees live and work and is consistent with the Company’s Corporate Responsibility value to ‘serve and improve the communities in which we live.’”

But it also believes this is the way to increase effective competition for its business, capture innovation, and develop new approaches though its supply base. That fits with our proposition – that supplier diversity is worth pursuing for hard-headed business reasons, primarily competitive advantage, not simply to be seen as ‘nice people!’

So Cummins includes questions about how suppliers themselves are approaching diversity in their own supply chains as an evaluation criterion when they are choosing suppliers. It is encouraging more diverse suppliers to bid for its contracts, including working with organisations such as MSDUK*(which promotes minority-owned suppliers) and WEConnect (female-owned businesses).  Cummins has also coached suppliers prior to sourcing events, to help them compete better with more experienced firms; it has a suppler referral scheme and has participated in ‘meet the buyer’ events.

I asked Ford how it measures success. “We are tracking spend with SMEs now, although that isn’t always easy. We’re still in the single-figure percentages, but it is growing and we have exceeded our initial goal.” Perhaps more interestingly, the qualitative evidence is building, with cases where diverse suppliers have brought genuine innovation and different approaches into the business.

A good session, thanks to Ford for his openness, and we wish Cummins well in its efforts.

* A quick plug for the MSDUK event on April 29th in central London - Meet the Buyer: Facilities Management, Office Build, Design & Furniture  I’m hoping to attend to see for myself what goes on at these events and you can get more details here as a buyer or a seller.

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