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Cheryl Watkins Snead, president and CEO of Banneker Industries in Lincoln, Rhode Island, provides supply chain management services (assembly, packaging, distribution) to companies such as Raytheon Company and Texas Instruments. Prior to starting her $1 million company, Watkins Snead, who has a degree in mechanical engineering, worked for General Electric in management and later ran a small machine shop, Peerless Precision in Lincoln.
Despite her background in manufacturing and technology, Watkins Snead says she is often approached with skepticism because she is a woman in a male-dominated industry. Nevertheless, she has parlayed her skills and experience into a lucrative enterprise: the Raytheon contract is worth $200,000 per year, while she’ll net $50,000 annually from the Texas Instruments’ deal.
Watkins is one of several thousand African American business owners who has found success in corporate procurement. The National Minority Supplier Development Council (NMSDC), a New York-based organization that matches certified minority suppliers with more than 250 corporations, reports that Fortune 500 companies purchased more than $35 billion from minority suppliers in 1998, compared with $86 million when the organization was founded in 1972. Still, minorities represent only a small fraction-about 3%-4%-of the amount corporations spend overall on procurement.
“There are more opportunities for African Americans because more corporations have programs to diversify their supplier base,” says Harriet Michel, president of NMSDC. “However, corporations are downsizing their supplier base, so the smallest companies have been cut out. In addition, corporations have drafted longer-term and bundled contracts.” Many firms are putting pressure on their prime suppliers to inaugurate diversity supplier programs and making an effort to see that minority firms remain in the supplier base by enhancing subcontracting opportunities through second tier programs, says Michel.
Defense, retail, telecommunications, information technology, environmental and construction will be growth industries for the future, says Harry C. Alford, president and CEO of the National Black Chamber of Commerce in Washington, D.C. And while there’s more than enough business to go around, small companies have to realize that it doesn’t happen overnight.
“There are many good companies that have strong diversity supplier programs, but African Americans are underutilized because these companies don’t have the marketing apparatus,” says Alford. “The major obstacle is trying to find a good flow of communication between small businesses and perspective customers in getting these entrepreneurs in the door and growing them so they can do more.”
NMSDC has identified corporate members with “world class” programs in minority supplier development, including AT&T, Ford Motor Co., IBM, J.C. Penney, Lucent Technologies and others. These companies rated exceptional in program measurement and tracking, strategic planning, supplier sourcing and development, education and training among other criteria.
Ford (NMSDC’s 1998 Corporation of the Year) has 300 prime minority suppliers and purchased $2.4 billion from minority suppliers last year, says Renaldo M. Jensen, Ford’s director of minority supplier development in Dearborn, Michigan.
“We provide technical assistance by pairing retired auto experts with minority suppliers to solve specific problems,” says Jensen. “We have assisted over 50 minority suppliers to date. We also provide financial assistance to help