“We should be investing in diverse businesses because it supports the strategy of the organization, not as the responsibility to ‘do the right thing.’”
—Senior Commodity Manager, a participant in the 2021 State of Supplier Diversity Report
Procurement teams have often been accused of pursuing savings at all costs—above value, supplier relationships, and stakeholder preferences. And while this dynamic is usually driven by the key performance metrics assigned to them by the corporate leadership team, there have been enough years of pushback and emphasis on value creation to turn the page. Any new initiative—whether it is supplier diversity, sustainability, or risk management—presents a new opportunity for procurement to demonstrate the alignment between their capabilities and the corporate leadership team. They can act upon that alignment by delivering measurable results to advance overall corporate objectives.
The greatest alignment challenge procurement faces is translating vision and mission statements around supplier diversity into action plans suited for execution across a broad range of spend categories. Ironically, this too offers an opportunity to demonstrate alignment. When procurement has truly internalized the priorities of the company, they are able to infer specific objectives and then articulate them for the sake of approval. In fact, in many cases, procurement plays an essential role in converting their vision into concrete results, determining specifics where there would otherwise only be general encouragement of diversity.
So, where should procurement look and listen for direction before working to demonstrate alignment?
Look for public statements by company executives.
Since 2020, many leading executives have made public statements (either in speeches or through annual reports) about their vision for supplier diversity. Those statements contain valuable information about what the highest priority is, why the company is undertaking an inclusive mission, and the changes they seek to drive.
The details of these statements can be good news or bad news for procurement. The more specific they are, the easier it is for procurement to know what goals to pursue. At the same time, however, that usually heightens the level of the challenge—not to mention it increases the time required to lead change and raises the expectations of the people who heard those statements.
Listen to internal discussions about shortcomings.
With or without external statements by the leadership team, procurement is often part of conversations with distributed buyers and internal stakeholders. They may not speak for the company, but their combined points of view do represent a set of corporate objectives. Many leaders below the C-level are dedicated to the supplier diversity movement, and procurement should want to demonstrate alignment with them as well.
Once procurement understands the opportunities that internal stakeholders see to bring more diverse-owned businesses into their spend categories, putting together a supportive action plan is much easier. Whether they have specific companies they want to partner with or simply recognize an opportunity to tap into a traditionally underleveraged community to acquire a product or service, procurement can act on those preferences just as they would accommodate traditional specifications and requirements.
Listen to external expressions of passion by customers.
Not all supplier diversity programs are driven by the vision and mission of the leadership team. In many cases, it is the company’s customers that express their desire for an increased amount of spend with diverse-owned businesses. This is a trend that applies to both B2B and B2C businesses, and it is highly motivating for anyone that wants to capture this demand.
In the case of B2C companies, general societal and social media trends can lead the way. Which consumer brands are successfully satisfying diversity requirements? Procurement can learn from their approach even if they are in a different industry. With B2B companies, a firm may be approached about providing information that serves as Tier 2 diversity spend. Procurement should read their communications carefully and request clarification whenever possible. They may be looking for proof that diversity spend is being tracked or suggest quotas, and procurement can lead the way toward both.
As we read in the quote shared at the beginning of this article, it is possible for supplier diversity to support the strategy of the business—and for procurement to demonstrate how aligned their results are with the company’s objectives. It is easy to speak in support of supplier diversity, but it’s much harder to affect change. By working to bring desired change within reach, procurement shows just how aligned their interests and efforts are with those of the company as a whole.
The most mature supplier diversity programs capture their results in the form of economic impact reports. This data—especially when validated by a trusted third party—supports the external statements made by executives, rewards tough internal decisions, and is by far the most convincing evidence of commitment that can be presented to consumers.
Learn more about economic impact reports.