Resilient Supply Chains May Well Be Driven by “Minority” Enterprises in the Future

In our ongoing search for positive supply chain management news to relate, we found a story that is certain to resonate with our readers.

Minority suppliers are in a healthier financial position and are more resilient than their non-minority supplier counterparts, according to a new predictive analytic modeling study conducted by Rebirth Analytics and the Northwest Mountain Minority Supplier Development Council (NWMMSDC).

An analysis of over 300 privately held minority suppliers across seven states representing over $8.1 billion in gross revenue revealed that minority suppliers are outperforming both their publicly-traded and privately-held counterparts.

The study, which compared private companies to their industry peers leveraging financial information from corporate balance sheets and financial statements, focused on 12 industries, including manufacturing, technology, mining, professional and scientific services, among others. NWMMSDC defines minority suppliers as companies owned, operated, and controlled by at least 51% Asian, Black, Hispanic, or Native Americans.

“Financial Health metrics are the best indicators of how a supplier will perform through disruptive market events, like the COVID-19 pandemic, and our study reveals that minority-owned businesses are displaying extremely high levels of resiliency through the crisis, and should emerge in a stable position post-crisis,” said Chonchol Gupta, CEO of Rebirth Analytics.

The context of the study’s findings is also relevant to government agencies, which have reported an under-representation of minority companies accessing the Small Business Administration’s Paycheck Protection Program (PPP) loans.

“Minority suppliers account for $14.6 billion in economic output, 90,352 jobs, and over 47,000 ethnic minority jobs, but 4.9 out of 10 minority suppliers who applied for PPP loans were denied,” said Fernando Martinez, president and CEO of NWMMSDC.

Despite the perception that minority suppliers are unstable through changing economic conditions, the findings offer a stark reminder that minority businesses are operating with resiliency and can continue to be relied upon by the large enterprises they service.

“In terms of revenue growth, minority suppliers in 10 out of the 12 industries we analyzed outperformed their non-minority privately-held peers, as well as their publicly-traded peers in three sectors - manufacturing, construction, and technology,” said Gupta.

“Increasing year-over-year revenue growth indicates that the minority suppliers are picking up more contracts and playing a more significant role in the companies they service, which in the Northwest include corporations such as Boeing, Costco, Microsoft, Nike, Starbucks, and T-Mobile,” said Martinez.

In conclusion, we were heartened to learn that Rebirth Analytics and NWMMSDC are enthusiastic about the initial findings and have commissioned additional analysis to layer other elements such as credit scoring, access to capital, and large enterprise employment of minority suppliers into the study.

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