Supplier diversity is an area that is quickly growing in popularity.
The premise of supplier diversity is around selecting supplies from historically underrepresented groups. This could be choosing suppliers owned or operated by women, minorities, LGBTQ+, veterans or disabled communities. In order to qualify, the supplier must have at least 51% ownership from the unrepresented communities. It has become vital for companies seeking to expand their diversity, equity and inclusion (DEI) efforts.
With this in mind, CPOstrategy compiled five of the best practices to deliver supplier diversity in procurement.
Drive collaboration with internal and external stakeholders
Pushing a supplier diversity strategy is much easier with internal and external stakeholders on board. To do this, training procurement teams on the value and importance of supplier diversity is key. The same is also true of obtaining buy-in and acceptance from executives on the positives of introducing supplier diversity initiatives. By working in tandem with several different stakeholders, procurement teams can explore new opportunities for diverse suppliers while also uncovering insights to unleash the overall impact of supplier diversity initiatives. Without people pulling together in one direction, long-lasting change is impossible to achieve. Equipping staff with the correct knowledge and skills to effectively engage diverse suppliers is important in order to harness a culture of inclusiveness within the procurement function and encourage an understanding of diversity’s importance.
Utilise technology to identify suppliers
Technology is an enabler. As new technology matures, its reach extends beyond the imaginable. In the case of supplier diversity, advanced procurement technology platforms can facilitate the identification and management of diverse suppliers. These tools allow efficiency, better visibility and more effective tracking of diversity spend which enhances data-driven decision-making in supplier diversity efforts. In addition, advanced technology tools can also be leveraged to analyse spend data to work out areas where diverse suppliers can be integrated, in addition to automating reporting to ensure transparency and accountability.
Set clear diversity goals and metrics
In order to ensure alignment, procurement teams must set clear and measurable goals to achieve supplier diversity. Keeping track of progress will allow clear visibility over the journey and showcase the scale of impact across a company’s diversity effort. Organisations can also align their goals with company-wide values and broader corporate social responsibility initiatives to ensure key performance indicators are hit. Having clear diversity goals and metrics in place can measure where improvements could be made and also demonstrate the ongoing journey.
Embed diversity into the overall procurement strategy
Companies that embrace diversity into their supplier line-ups are at a real advantage. Supplier diversity is critical for driving innovation, expanding into new markets and fostering a more equitable business environment. In addition, it is an important tool for economic growth and job creation, in particular in often-overlooked communities. The requirements should be included in all procurement policies and Request for Proposals. A tiered approach should also be established to encourage prime contractors to leverage diverse suppliers within their supply chains.
Build relationships with diverse suppliers
None of this is impossible to achieve without actually building and developing relationships with diverse suppliers. In order to foster these relationships, companies can partner with organisations such as the National Minority Supplier Development Council (NMSDC) or Women’s Business Enterprise National Council (WBENC) to identify and certify diverse suppliers. In addition, supplier diversity events can be organised such as a supplier fair to connect with diverse vendors or training and mentorship are other ways of developing relationships.
