What makes for an impactful and effective corporate supplier diversity program?
That is a question surely keeping professional supplier diversity practitioners up at night. Key to getting the right answer—one that offers insight and opportunity on your supplier diversity efforts—lies in the critical area of assessing the impact of your program.
A good first step to assessing impact is to start with program metrics. You want to know what the hard numbers are that show your supplier diversity program is meeting its goals or even approaching them. The simplest gauge is program spend. At a minimum, practitioners need to know, to the penny, the actual dollars flowing through their corporate supply chains to diverse firms.
Tracking your program
Tracking through data systems and audit processes is central to determining what a corporation spends with certified diverse businesses. Tracking systems also allow for accountability of the program while creating the opportunity to be more strategic about decision-making for the program. They also allow confident communication of a program's impact to internal and external stakeholders.
Some advanced tracking systems also will provide insight into the overall economic impact of the supplier diversity program, advancing the spend metric to show how communities served by the diverse supplier and the corporation benefit through attributes such as job creation, increased taxes, and increased adjunct business activity. The National Minority Supplier Development Council, which advances business opportunities for certified minority business enterprises and connects them to corporations, has reported extensively on the economic impact of supplier diversity.
Tracking tools are available in abundance through supplier diversity advocacy organizations as well as third-party vendors. This earlier blog post from CVM Solutions highlights the value of tracking systems.
Supplier development programs
A second area where impact can be shown is through your diverse supplier development programs. While supplier development is less tangible than charting spend metrics, its impact can be just as important. Often, diverse suppliers you bring to the table may have great ideas, superior initiative, and obvious work ethic. Yet in the progression of their companies, they may not be up to the task yet of fully contributing to your supply chain.
Supplier development can take many forms, including creating pathways for diverse suppliers to receive such building blocks as executive education, corporate training, strategic planning assistance, and certification assistance. For example, many organizations create internal training opportunities specifically for the employees of their diverse suppliers, aiming to get their suppliers caught up to speed that much more quickly.
Other areas for assessing supplier diversity impact may come through internal initiatives to ensure organizational buy-in of the program, the development of smaller Tier 2 suppliers, and the success of communications programs that articulate how supporting diverse business has helped the corporation’s image.
Each of these areas is vital to assessing impact.
Organizational buy-in, for instance, starts with acceptance and support of the program, from the C-suite to operating units within the corporation. If key leaders and managers in the corporation understand that the premise of advancing supplier diversity is that it is good for business, then the program has a better chance at success. Tier 2 programs simply create an opportunity to enhance the impact of the program by bringing many more suppliers into the supply chain. In the communications area, it always is a media and marketing boon for companies to show they truly are partners with their customers through supplier diversity.
Supplier diversity practitioners can understand and articulate the success of their programs by assessing the impact of initiative through some of these tried-and-true best practices.