ABC’s of Supplier Diversity

If you’re a newbie to the SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) certification world, your head is likely swimming with the terms and acronyms the rest of the community uses as shorthand.  We thought we’d take a moment to introduce you to the definitions of some important ones.

What is Supplier Diversity? It is proactive business programs to encourage the use of disable owned, LGBT owned, minority owned, women owned, veteran or service disabled veteran owned, historically underutilized business, and Small Business Administration (SBA)-defined small business concerns as suppliers. These programs exist at most large businesses and all of your local, county, state and federal government agencies in the US. There are strong supplier diversity programs being developed in many countries around the world – the UK, the EU, Canada, South America, India, etc. so the issues of diversity and inclusion are actually international.

Relevant Supplier Diversity Terms

• Diverse/Diversity: An easy way to refer to all minorities and women with a single word. Often the term “minority” is used to describe a group that represents a smaller percentage of the total population than another group or groups. In the United States a minority is a person who is an African American; Asian Pacific; Hispanic; Native Americans (of all tribes including Native Hawaiians/Pacific Islander); and Subcontinent Asian. Women are considered among the minority group because historically, they have had limited access to educational and professional opportunities. Veterans and Service Disabled Veterans of the U.S. Armed Forces (Air Force, Army, Coast Guard, Marines and Navy), Persons with Disability and LGBTs can also be included in the disadvantaged category for diversity spend and certification.
• Spend: The amount that a corporation or government entity purchases from diverse suppliers; this amount is typically tracked both by individual vendor and in aggregate.
• Strategic Sourcing: A systematic approach to minimize costs, streamline processes, and improve quality; results in the clustering of like purchases from fewer vendors.
• Tier 1: Direct supplier to a customer; prime contractor.
• Tier 2: Second-level contractor; subcontractor; also referred to as Tier 2 supplier.
• NAICS (North American Industry Classification System) code: US-based coding system that groups establishments into industry sectors based on what the business does. NAICS is a comprehensive system covering the entire field of economic activities, producing and non-producing. It is used by Corporate America, as well as local, state, and federal government entities.
• SIC Codes: Standard Industrial Classification, a way to classify your business (products and services sold). Not often used anymore, as the NAICS codes have become the code of choice.
• UNSPSC Codes: United Nations Standard Products and Services Code, an international way to classify your business (products and services sold), this systems is much more detailed than NAICS codes. We include our SIC and NAICS codes on our web page, and offer file of UN Codes because there are so many related to computer system design and programming.

Certification Types

• 8(a): Federal Small Business development program
• DBE: Disadvantaged Business Enterprise (must be socially and economically disadvantaged to qualify). ACDBE, are airport concessionaire businesses with DBE certification status.
• HUBZone: Federal designation for historically underutilized business in designated urban or rural areas or designated census tracts, the business must be located in a designated area and 35% of its employees must live in designated HUB areas to qualify.
• LGBT: Lesbian, Gay, Bisexual or Transgendered
• MBE: Minority Business Enterprise (minorities recognized for certification in in the United States are: African American; Asian Pacific; Hispanic; Native Americans (of all tribes including Native Hawaiians/Pacific Islander); and Subcontinent Asian. Some states will breakdown these categories further.
• PWD: Person with Disability or Disabled
• SBE: Small Business Enterprise
• Section 3: Housing and Urban Development agency specific certification, criteria is different county-by-county across the country.
• VBE or SDVBE: Veteran or Service-Disabled Veteran Business Enterprise
• WBE: Woman Business Enterprise
• WOSB/EDWOSB: Federal designation for Woman Owned Small or Economically Disadvantaged Woman Owned Small Business

Related Terms: Next time we’ll look at acronyms often thrown around in the diverse supplier community.