Minority Supplier Supply: A Window of Opportunity
30 Apr, 2007By: David J. Burton
Two forces shape minority manufacturing in America – demographic dynamic shifts in the consumer driven supply chain and strategic sourcing business mandates to reduce number of suppliers in the supply base, reduce transaction cost, increase profit and customer service, and increase the percentage of suppliers aligned around common Key Performance Indicators (KPIs) and management practices. In this environment where the competition is between supply chains and the value of a supplier is measured by its alignment with the practices of other suppliers in supply chain as well as product quality, cost and delivery, the Minority Small Manufacturing Enterprises (MSMEs) can just maybe the only growth stock.
This encapsulates the perspective and mission of the National Minority Manufacturing Institute (NMMI), a Washington D.C. based non-profit organization to develop, create, and foster the sustainability of value-added MSMEs in supply chains. The NMMI Corporate Mentoring Program (CMP) process of addressing MSME capability and capacity development is centered on five levels ofbusiness practices: Manufacturing Information Systems (MIS); Modeling and Simulation (M&S); Manufacturing Processes and Equipment (MP&E), and Legal and Regulatory as measured by different Industry Group Areas for different Manufacturing Types and Order-to-Build Modes. NMMI’s program entails a systematic process to:
Develop a Nationally Benchmarked Survey of MSMEs in America
Conduct MSME Operational and Supply Chain Alignment In-Plant Assessments
Develop and Implement MSME Improvement Plans
Provide MSME Performance Reporting and Searches via Digital Dashboards
Developed with its member corporation, NMMI’s Industry Sourcing Advisory Panels (ISAPs), guide its integration of KPIs and other requirements into its benchmarking, assessment, and supplier development tools. According to Burton, “Our Corporate Members engage in the development process; we need to know where they are in their supply chain maturation stage as measured by the Supply-Chain Council’s SCOR (Supply Chain Operations Reference) model and where its strategic sourcing practices are heading. Burton says that “Not understanding this can be tantamount to assisting a supplier for obsolescence; while a supplier maybe succeeding –even profitably- in a stage 1 (department focused and slow) supply chain today, the ability for it to function in a stage 4 (fully collaborated, synchronized, and visible) supply chain can be a formidable leap unless they understand and prepare – often in advance of need. The fact is that when the corporation gets to stage 4, they won’t wait for suppliers that aren’t already their. This is why NMMI’s total focus is to move MSMEs to Stage 4 readiness”.
NMMI’s model also embraces specific strategies for capacity expansion. One such model is the development of MSMEs in Foreign Trade Zones/ Sub-Zones with support of member corporations. This model entails an OEM or large systems integrator such as those in the automotive, aerospace and other sectors, working through NMMI to identify product demand and supporting an MSME’s management of the spend by undertaking production in a FTZ/Sub-zone with the usual tariff and tax benefits, fulfilling production through off-shore manufactures, and having manufactured parts shipped back to the MSME for assembly and other value-added processes in FTZ/Sub-Zone. This could give corporations the cost advantages of off-shore pricing and the business value of diversity spend. Burton says that this practice is already underway and that NMMI will lead a group of MSMEs to China in June ’07 and November ’07 to learn more about bringing the bacon home”
NMMI’s Founding Corporate Members (Proctor & Gamble; International Truck & Engine, Grainger, McCormick & Co., Microsoft, Toyota, Cummins, Honda, Merck, Wachovia, and Johnson & Johnson) to date represent corporations that are undergoing major changes in how they manages their supply chains and, consequently, the process of identifying, qualifying, and selecting suppliers for sustained procurement involvement. With the support of NMMI, their effort to identify value-added MSMEs will become a thing of the past as NMMI focuses on developing value-added suppliers - that just happen to be minority.