Supplier diversity programs aid minority-owned firms in Chattanooga

Supplier diversity programs aid minority-owned firms in Chattanooga

November 4th, 2012 by Shelly Bradbury in Business Around the Region

Black-owned firms

The share of black-owned businesses in Chattanooga more than tripled in the 1990s but still comprise only half of their share of the population in the six-county Chattanooga metro area.

Metro // area Black-owned // // Black // population

Memphis 38 // percent 45.5 // percent

Atlanta 23 // percent 32.4 // percent

Jackson 12 // percent 30.5 // percent

Nashville 11 // percent 15.5 // percent

Clarksville 7 // percent 18.8 // percent

Chattanooga 7 // percent 14.1 // percent

Knoxville // // 3.5 // percent 6.7 // percent

Source: U.S. Economic Census, the Bureau of Census

Minority-owned supply businesses often face an uphill battle to secure contracts and orders from large, majority-owned firms, said Warren Logan, Urban League of Greater Chattanooga president and CEO.

To help bridge the gap, many large local firms have set up supplier diversity programs that aim to give minority-owned businesses a foot in the door.

"A challenge is access to the larger markets, especially with business people that don't necessarily look like them," Logan said. "There's cross-cultural communication and networking that needs to take place for minority firms to really reach their potential."

BlueCross BlueShield of Tennessee, Volkswagen, Erlanger and Unum are among the local companies that are tracking their use and support of supplier diversity programs.

At Volkswagen, 10.6 percent of non-production purchasing is from minority-owned businesses, said Keith Eakins, Volks- wagen Chattanooga manager of supplier diversity.

"It is important to make sure our supplier base reflects our customer base, and that means making sure we are giving minority businesses every opportunity to do business with us," he said.

Unum doesn't aim to meet specific benchmarks, said Mary Clarke Guenther, director of corporate communications. But so far this year, the company has spent $5.6 million with diverse suppliers.

Edward Bentley, owner of Bentco Office Solutions, said he hasn't received much extra business from these diversity supplier programs, except from one company, EPB of Chattanooga.

"They might not have a multimillion-dollar contract for you, but they'll give you every little purchase that they can," he said.

In addition to private companies, many U.S. cities have added provisions to their purchasing procedures aimed at increasing purchases from minority-owned businesses.

In 2006, Chattanooga agreed to use the Governor's Office of Diversity Business Enterprise's database of minority-owned businesses to find firms to work on city projects. Sixty Hamilton County businesses are registered in the database, Simpson said.

Since then, the city has encouraged minority-owned businesses to bid on projects, purchasing agent Artie Prichard said. But the city does not keep records on how many contracts have been awarded to minority-business owners.

Unlike some cities in Tennessee, Chattanooga doesn't require that each city contract include a minority supplier or vendor. The city is only required to give minority businesses bidding opportunities, according to Chattanooga's purchasing manual.

"They always go back to saying all they have to do is give an effort," Bobby Adamson, owner of construction company Adamson Developers, said.

In Nashville, firms are given a higher consideration during the bidding process if they include minorities or local laborers. "In Nashville, they make it happen," Bentley said. "And in Chattanooga, no one makes it happen."

Nashville requires bid winners to give regular reports of actual small or minority business participation as the work progresses. If the actual participation is less than the bidder promised, the city can terminate the contract or penalize the company, according to Nashville's procurement regulations.

In Memphis, all construction bids over $100,000 require at least 5 percent of the work to be performed by women or minorities.

Shelia Simpson, program director at the Governor's Office of Diversity Business Enterprise, said she thinks supplier diversity programs and policies have a positive impact on the business community.

"It's just good business practice to reach back and reach out to these groups who probably feel a little left out at the end of the day when all the numbers are pulled together," she said.