Our blog series on supplier diversity programs first introduced the concept of engaging with diverse-owned suppliers in business contracts and other opportunities. In the subsequent blogs, we explored why it’s important for companies to include these programs in their business plans, and how to undertake supplier diversity. In this final installment, we’re featuring a success story from Koyo/JTEKT North America, illustrating how a properly implemented supplier diversity program has helped this Tier 1 supplier meet both its internal supplier diversity goals, while helping its key OEM customers support their supplier diversity initiatives up the supply chain.
Koyo/JTEKT North America, a partner of IBC, is a major supplier of bearings to both OEM and aftermarket customers across a wide variety of industries including: agri-con, automotive, electric motor repair, machine tool, power sports, steel, and wind. John Carlos, Purchasing Administration, at Koyo/JTEKT is the company’s Supplier Diversity Champion. Located at Koyo’s Columbia, South Carolina plant, Carlo heads up the team whose task it is to grow Koyo/JTEKT’s diversity spend.
When Carlos was asked what prompted Koyo/JTEKT to establish a supplier diversity program, he had this to say: “We feel that our supply base should mirror our customer base, and more and more of our customer base is comprised of minority-owned businesses,” said Carlos. “In addition, our customers are asking us to diversify our supply base so that they can, in turn, infuse more diversity into their own supply bases.”
Unfortunately, that goal isn’t always easy to achieve when procuring commodities that aren’t necessarily offered up by diverse suppliers. IBC’s Minority Contract Program helps to fill that gap by allowing Koyo to make indirect buys through Koyo/JTEKT. With customers like Toyota, GM, and Ford – which, collectively have over $1 billion in annual diversity spend – Koyo is able to effectively address both its internal goal for diversity spend and share those credits further up the supply chain. “IBC’s Minority Contract Program provides us with the potential to gain more business with key customers that value the diversity of our supplier programs,” said Carlos. “Percentage-wise, minorities buy more new cars than the majority of the population traditionally has,” said Carlos. “Having a supply base that reflects that customer base just makes good business sense.”
“IBC’s Minority Contract Program provides us with the potential to gain more business with key customers that value the diversity of our supplier programs”
Carlos, who attended the Toyota Opportunity Exchange – a forum to build relationships and encourage productive conversations about real opportunities for business growth – said the automobile industry has come a long way in terms of diversity over the last two decades. “If the current minority is going to be the majority in the future, then those companies are going to be owned by those populations,” said Carlos. “Automakers are getting onboard with it now; it’s the future.”
Going forward, Carlos sees opportunity ahead for more IBC distributors to get involved with Koyo’s diversity program. “Right now we’re well over 5 percent with an MBE spend in the plants where we’re working with IBC,” he said. “If I could expand that model across all of our plants, then we can well exceed our goals both current and future.”
With Koyo’s fiscal year just ending, the numbers are in. Their annual spend for 2015 was 5.1%, just surpassing their goal of 5%. Not letting the company settle for the status quo, they are now projecting to spend 5.6% in 2016! Success stories like this reinforce the concept of supplier diversity programs working for the benefit of all involved, and that they can be implemented and managed effectively.
IBC’s minority certification can be a valuable asset for its Tier One, Tier Two and OEM partners. All MROP purchases (such as cutting tools, hand tools, material handling, power transmission, etc.) made through an IBC contract qualify for 100 percent minority credit. By partnering with IBC, Tier One and Tier Two suppliers are in a better position to use these credits to keep the business they have with OEMs and/or increase the breadth and depth of engagement with OEM customers. Suppliers also benefit from meeting diversity spend requirements through a credible source without sacrificing access to quality product and services. This partnership allows Tier One and Tier Two suppliers to quickly roll out and market their diversity program capabilities to OEM customers and prospects, with minimal interruption to business or additions to staff.