LEM Products Diversity Spend

Diversity Spend

Why Use Diversity Spend

Why are Diversity Suppliers Necessary?
Government agencies and many corporations are required to set aside certain percentages of their purchasing budgets for diversity qualified vendors such as LEM Products, Inc..  These vendors need the diversity certification to be eligible for consideration for purchasing bids from the government and private corporations.

What makes a business Diversity Certified?
To qualify for Diversity Certification, a business must be at least 51% owned and operated by a minorities or women.  In the United States, this includes American Indian or Alaskan Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, Hispanic or Latino; Women; Veterans or Service Disabled veterans of U.S. Armed Forces.

What is a Diversity Certificate?
Diversity Certification Programs exist on many levels from municipal and state, to federal and third-party agencies.  These entities provide a certificate to businesses which successfully complete the application for diversity certification.  The applicants are intensely reviewed to determine that ownership and management of the company meets the diversity criteria.  The official certificate becomes the recognizable standard to purchasing agents for government entities and corporations.

What’s the difference between a Tier 1 and a Tier 2 supplier?
A Tier 1 supplier provides products and/or services directly to the corporation or agency making the purchase.  The buyer for the corporation / agency will call the Tier 1 supplier directly.  For example, an airplane manufacturer would contact a Tier 1 supplier for engines, wheels, seats, navigation components, etc.

A Tier 2 supplier provides products and/or services to the Tier 1 supplier.  In this case, the Tier 2 supplier might provide the tires for the wheel assembly, the fabric for the seats or switches for the navigation control panels.

How is Tier 1 and Tier 2 supplier diversity spending reported and utilized?
Diversity Certification Programs issue “credits” to corporations and agencies for their purchasing dollars spent on diversity certified suppliers.  These credits are applied to the diversity goals of the purchasing corporations and agencies to fulfill their pre-designated quotas.  Achieving these quotas ensures eligibility to corporations and agencies for potentially profitable business contracts.  In turn, these corporations strengthen the economic potential and success for minority owned businesses.