Ahead of next week’s National Minority Supplier Development Council 2020 conference, Protecdiv Chief Executive Officer Kael Coleman says it is vitally important that companies recognise the business benefits of having a diverse supply chain. He also urges companies to consider their insurance broker as an alternative opportunity to meet their supplier diversity goals.
Next week’s annual National Minority Supplier Development Council virtual conference will be a timely opportunity for businesses in the United States to look at the positive results – going far beyond the bottom line – that effective procurement programs can deliver.
Heightened racial tensions arising from the Black Lives Matters movement have prompted many corporations to publicly examine the way they do business and to try to be part of a solution to these deep-seated problems. Creating a more diverse supply chain can be an important step in the right direction. It’s very easy to look at these types of initiatives as cynical PR exercises – or that they are being undertaken in a feel-good way because it is the ‘right thing’ for businesses to do.
However, the evidence is overwhelming that those companies which engage more with minorities can reap some substantial economic benefits. The Harvard Business Review noted that Coca Cola has a goal of increasing its annual spend on diverse suppliers from $800 million to $1 billion by the end of this year. Hootology found that consumers who were aware of Coca Cola’s diversity initiatives were 45% more likely to think that it valued diversity; 25% more likely to think favorably about the brand; and 49% more likely to buy its products. That translates potentially into a massive 670,000 consumers buying Coca Cola more frequently. Many companies now look to hit targets for procurement from minority suppliers, but most focus their efforts on buying ‘things’ such as desks, chairs, pencils, nuts and bolts. Few, to date, however, have looked at their insurance needs as a way of achieving these goals.
Protecdiv; a diverse supplier prototype in insurance
Protecdiv is a tier 1 minority-owned insurance reinsurance and mortgage broker, nationally certified by the Eastern Minority Supplier Development Council as a minority business enterprise (MBE). We think there are great opportunities for businesses to increase the diversity of their supply chains by looking at services such as insurance. For that to happen, however, there is a pressing need to raise awareness that procurement diversity can be more easily achieved if businesses bring their insurance needs into the equation.
One of the obstacles in the way of buyers focussing more on the insurance industry is the way that this spend is measured. For example, if a business buys $1 million of chairs from a minority supplier, 100% of that will be classified as being part of the diversity target. However, if a client was to place $1 million of insurance premium through an insurance broker such as Protecdiv, only 10% of that figure – our brokerage fee – would be counted. I would argue that the $1 million dollar figure is the more accurate one.
The conference theme this year of ‘in this together’ is very apt. Smarter businesses are coming to realise that partnering with diverse suppliers can go a significant way towards ensuring their success – let’s hope they increasingly see the vital role that insurance can play in this journey.