Opinion: Supplier Diversity in the Transportation Industry
This Opinion piece appears in the Sept. 19 print edition of Transport Topics. Click here to subscribe today.
By Leigh Foxall
Vice President, Trucker Path
A few weeks ago, I was on a conference call organized by a transportation industry association. Invited on the call were woman- owned trucking companies gathered to address a Small Business Administration proposed rule change. After the call, a few people contacted me to ask why some on the call were not certified women- owned businesses nor certified Women-Owned Small Business.
Good question, and my experience tells me that the transportation industry knows or understands very little about supplier diversity and the influences of minority-owned business on the transportation industry.
Minority-Owned Transportation Companies
It is no surprise to anyone who has attended a transportation-related trade show over the past few years that the number of trucking companies owned by women or minorities is pretty slim and even slimmer when you factor in the true certified-minority trucking company. A recent survey conducted by the Women In Trucking Association found that fewer than 6,000 trucks are run and operated by certified minority- owned trucking companies.
To add to the confusion of the number of minority-owned transportation firms, the Federal Motor Carrier Safety Administration does not require a company applying for DOT or freight brokerage authority to specify the owner’s gender or race. A survey by Transportation Data Source, a leading carrier-monitoring company, found in an FMCSA report of 10,000 active carriers that fewer than 200 of them reported that the company’s main contact had a female name.
What Is Supplier Diversity?
In 1953, the supplier diversity concept was introduced with the establishment of SBA, the federal agency with oversight of federal contracts. SBA ensures that small businesses owned by minorities and women are given a fair and equal opportunity to bid on, win and be awarded federal contracts with government agencies and major corporations as qualified minority small business suppliers. In the private sector, it links private businesses with minority-owned suppliers of goods and services. Since the implementation of the supplier diversity concept, other subgroups have been added to this special group of underutilized small firms — i.e., veteran and, particularly, service- disabled veteran companies. Historically Underutilized Business Zones, or HUBZones, Native American-owned companies and others.
How Do Supplier Diversity Programs Affect the Transportation Industry?
Procter & Gamble reported over a six-year period that it had spent more than $2 billion with minority- and women-owned business suppliers. This is not an uncommon number. Hundreds of major corporations employ supplier diversity managers who supervise the process of identifying and qualifying certified minority businesses. Some even employ people with the sole job of finding minority-owned transportation companies. Major companies recognize the value of utilizing the transportation industry to help meet their diversity requirement yearly spends.
The Certification Process
In the past few months, executives at five women-owned trucking companies have asked me about the Women’s Business Enterprise, or WBE, certification process and what value the certification would bring to their businesses. Most of the companies have been operating for more than five years and are in the process of researching WBE certification.
When I asked what had changed in their business that they were considering a WBE certification, one owner responded: “I have been so busy building a trucking business, and I have not had time to focus on the value of certification. We have 10 trucks, and if we are going to compete with larger carriers, I need the certification.” The most common thread was: “We have contacts with shippers that have recently asked if we are a WBE-certified trucking company.”
The Federal Diversity Certification is a process that is time-consuming and necessary to qualify to participate in a Supplier Diversity Program. The certification authenticates that the business is owned, managed and controlled by a qualifying diverse group.
“Many applicants are very upset when they are going through the process, but they always end up happy that they got certified,” said Janet Harris- Lange, president of the National Women Business Owners Corp., or NWBOC, which was the first nonprofit national certifier of women business enterprises when it formed in 1995. NWBOC certifies WBE, Veteran Business Enterprise and Veteran Woman Business Enterprise and is an approved third-party certifier for SBA’s Women-Owned Small Business/Economically Disadvantaged Woman-Owned Small Business 8(M) contracting program.
SBA also has approved three other third-party certifiers, and state and local governments offer certifications for their cities and states. Diversity certification by a governmental agency positions a supplier to do business in the public sector.
Minority Certification Qualifications include:
• The owner must be active in daily management.
• For WBE certification, the woman must be a U.S. citizen or permanent resident. For WOSB, the woman must be a U.S. citizen.
• The female or veteran must own and control at least 51.0% (no roundups).
• The majority owner must hold the highest title with the company.
And there are other “control” issues.
NWBOC’s certification is $400 a year. Companies find the unforeseen cost of time spent collecting the necessary business information and a scheduled on-site visit to confirm the ownership/control of the business can add up but is well worth the time spent. Annual renewal is $200 to $300.
Supplier diversity is important to the transportation industry. Companies with certification as woman-owned small businesses have opportunities to compete with larger carriers for major shipper freight.
Minority Carrier Exchange is a platform that allows shippers and freight brokers to connect with vetted and certified minority-owned trucking companies.
