Manufacturing
Supplier Diversity - Minority Spend

The Federal government requires contractors to subcontract with minority businesses, a practice that has been in place for many years. It began with the Department of Defense and NASA and has expanded to all areas of the Federal government. Minority businesses have been classified in several ways and subcontract targets are established for each classification when Federal contracts are executed. In more recent years, State and Local governments, and now many major non-government companies, are also requiring minority subcontracting.

This activity, called Minority Spend, is gaining even more importance as companies discover the need to establish or significantly improve Minority Spend apportionment as a way to maintain existing business and win new contracts. In fact some companies are finding that it is sound, cost-effective business practice to integrate Minority Spend processes into their core businesses.

When a major defense contractor in Connecticut wanted to increase their Minority Spend apportionment across all of its companies, they called in Daniel Penn Associates. We worked with management to conduct an assessment of the companies' overall Minority Spend activities. The individual processes were mapped, problem areas were identified, and numerous recommendations were made across all functions.

The following Minority Spend processes were included in the study:

		Implementing formal definitions of minorities and compliance conditions;
		Establishing Minority Spend organizations;
		Sourcing, developing and certifying minority and women owned businesses;
		Subcontracting contracts containing specific terms and conditions;
		Establishing tracking and accounting systems to meet the formal definitions;
		Developing Minority Spend processes;
		Integrating research and development, strategic sourcing, and purchasing processes with new Minority Spend processes; and
		Developing accurate reporting and management systems.

In addition we performed a benchmark study with five companies to uncover Minority Spend best practices.

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