Supplier Diversity: Interview with SASDC member Cummins

In late September the SAIBL business forum interviewed two senior  members of Cummins' procurement division; Gordon Fykes, Senior Director of Diversity Procurement, and Rick Bowman, Director of Corporate Indirect Purchasing. In this interview (see full transcript below) they discuss the origins of Cummins' supplier diversity initiative, the program's global expansion, and offer advice for both corporations and  suppliers involved in supplier diversity initiatives.  Interviewer Averi Thomas-Moore also questions the two experts as to which, if any, parts of the Cummins’ experience with supplier diversity can be applied to South Africa, and the formation of the South Africa Supplier Diversity Council (SASDC).

Interviewer: Averi Thomas Moore  

Guest: Gordon Fykes, Senior Director, Diversity Procurement  

Guest: Rick Bowman, Director Corporate Indirect Purchasing  

Transcript:
Interviewer: Supplier diversity is a new concept in South Africa and many large companies have yet to  buy in. What were the internal debates at Cummins at the outset of your supplier diversity initiative, and what arguments brought everyone on  board? 

Rick: I wasn’t here at the outset [of Cummins’ supplier diversity program], but Cummins started because of the government incentive, because Cummins was doing   significant business with the government. At that point we only did one to two percent of our business with diverse suppliers (At Cummins diverse suppliers include women, veterans, and LGBT-owned businesses, in addition to minority-owned businesses). Things took off for us in the late 1990s because of Chrysler. They became, and still are, a very important customer. This was a very important program for them and they were encouraging all their suppliers to put a lot of focus on it.  They wanted all their tier two suppliers to report what percentage of their spend went to diverse suppliers. From that point forward it has taken off at Cummins.  Today over 10% of our spend is with diverse suppliers. I have to give Chrysler credit for motivating us, but now it’s a part of our culture.  Supplier diversity fits very well with the Cummins culture.  I’ll let Gordon say …  

Gordon:  I’ve been in supplier diversity for over 30 years. The challenge is that you if you start off  trying to justify dealing with diverse suppliers, then it seems as if you are dealing with them because they are diverse. You heard Rick say that we have made this initiative part of our main stream objectives. You’ve got to make sure that supplier diversity is part of your company’s overall objectives, and that you’re not going to sacrifice any of those objectives for supplier diversity.  If cost reduction is one of your main initiatives, you have to accomplish cost reduction at the same time that you look for diverse suppliers.  What I always say, is that if you are looking for the best suppliers, and you’re not looking at diverse suppliers, you cannot really guarantee that you are looking at the best.  So we have made it part of our best initiative - we want the best and therefore we have to look at all suppliers.  

Interviewer:  My next question is: How did your supplier diversity program evolve into a global initiative? 

Rick:  Well, I give credit to the NMSDC for that. We have always been very active members in the NMSDC.  We want to be recognized as a national leader in supplier   diversity.  We want to be a leader, we don’t want to be a follower. So when we saw that the NMSDC was taking the initiative around the world, and we looked at some of the countries that they were looking at, it fit well with Cummins’ global footprint.  Over half of Cummins sales are now outside the United States - we are truly a global company. The countries where we have major operations are the U.K., China, India,   Brazil, and we are just now growing in Africa, especially South Africa.  And we have taken our diversity initiative global. For our chairman Mr. Tim Solso, it is one of his key legacies.  Also, we really have a global purchasing organization so it was logical that we got involved with the international NMSDC organization. I’m on the international committee, and since 2008, we have been involved with every one of those   organizations - Canada, U.K. China, Australia and South Africa.

Interviewer:  As you were expanding your supplier diversity program all over the world, what types of challenges did you face, and what advice would you give to another   U.S. company who has a supplier diversity program in the U.S. and is thinking about expanding globally? 

Rick:  I wouldn’t say that we had big challenges. The thing that made it easy for us was that we had   good purchasing support here in the U.S. People understood that if we   were doing [supplier diversity] in the U.S., we should be doing it in other countries.  So at that time, we had just formed a global indirect purchasing organization, and we wanted to make that a global reality.


In at least one country we’ve had difficulty convincing leadership.  I don’t want to mention the country, but it was not apparent to the leadership that there was a diverse, or minority population, and the government in this country was not truly behind the idea.  In the other countries this has not been a problem.


It’s the business case.  I didn’t have any trouble explaining to anyone why [supplier diversity] was a good idea in South Africa - I can be straightforward about that.  People can see that.  They know about apartheid, they can see how things have changed there, and that not everyone has had equal opportunity.  However, its not always that clear in other countries.


Interviewer:  Switching briefly to the supplier’s rather than the procurement prospective, what advice would you give to a diverse supplier, in South Africa or elsewhere, that wanted to work with you?


Rick:  I guess I would say the same thing I would tell any supplier.  Figure out exactly what it is we need, and what you can do best, what you can be the best at.  And of   course you must understand our requirements.  Back to what Gordon said earlier, we’re looking for the best suppliers.  The other thing is that the door is open.  We understand that they may need to develop, and we're willing to help with that.  But simply - what do you have that we need, and that you can be the best at.


Gordon:  One of the things that I tell diverse suppliers around the country is that they need to develop, they have to rehearse, and they have to know what their elevator speech is.  We’re only going to give them one or two minutes to tell us about themselves. They need to have a compelling reason why I should even submit their names to the buyers.  Because we have developed a rapport with our purchasing affiliates, and we do not bring people to them just because they are diverse. That is no reason to do business with anyone.  So I tell people they need to have a compelling elevator speech, a compelling reason why we have to do business with them.


Rick:  I would add that is not just being able to tell a good story, you must have the skills, and the track record… In fact, we probably do not want to be your first  customer.


Gordon: We do not want to be the first.


Rick: We’re looking for people who are really good at providing what customers need, and if you can’t be the best at that, then partner with someone who can.


Gordon:  That’s true. Often size is really an issue -  companies that do not have an adequate capital base. We encourage them to partner with somebody. One of the first   things we tell suppliers is that if they know what we do, then they should come with a good partner or good platform so that they can do a great job and save us money!


Interviewer:  Have any of your diverse suppliers from the U.S been partners for your diverse suppliers in your international operations?


Gordon:  I know of one supplier, an MBE.  He was already doing some business in India so he partnered with a firm in India to help that company supply Cummins.


Rick: One of our MBE suppliers, at their own initiative, a gentleman of Taiwanese descent, saw the Cummins presence in China as a real opportunity, so he opened an office in China and is now trying to do business with Cummins in China as well as other companies. Regarding South Africa, I know a few companies that are interested in linking up with South African companies, because their US customers, like Navistar and Cummins, are expanding in South Africa, and they see this as an opportunity to expand their global purchasing and establish a footprint internationally.


Interviewer:  Supplying a company like Cummins takes significant financial and technological capital in order to meet procurement specifications.  What type of enterprise development do you engage in to take good suppliers to the next level?


Rick:  When we started in ’94 /  ’95 we opened a new plant in India.  And any time we open operation in a new country, we realize that we need local suppliers to be successful. If you’re importing things you will not be competitive. So we had to develop local suppliers. We had local people in the plant going out and finding the best local suppliers, but even the best local suppliers did not have the technology that we needed. So what we did then was we went to current suppliers, probably about a dozen, and said “We need your help in India. We want to partner you with Indian companies to form license agreements and partnerships.” This is the only way to get quality and capacity in a developing country. And Cummins does not have a lot of the technology to help these local suppliers, because we do not make a lot of our components - fuel lines, pistons, gaskets, etc. We brought in our current suppliers to bridge the gap.  For some of them it turned out really well because they found a new source of supply.  It might be non-diverse suppliers that help you, or diverse suppliers.


Interviewer: Do you have any other insights or thoughts on supplier diversity in South Africa?


Rick: We are looking forward to the first supplier diversity event next year. We would like to see the initiative grow from there. Our purchasing leader working with the South  African Supplier Diversity Council, says that “we have approximately 50 suppliers that he thinks would qualify as quality minority suppliers.” In almost all the other countries where we have this initiative we are struggling to add diverse suppliers, so we’re really excited about this development in South Africa.


Interviewer: Thank you both so much for taking the time to speak with the SAIBL Business Forum today.  


Rich and Gordon: Thank you Averi, we look forward to reading it on your Forum.