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Supplier Diversity Blog by supplier.io

The Biggest Challenges When Managing Supplier Diversity

the-biggest-challenges-when-managing-supplier-diversity-018597-edited.jpgManaging supplier diversity initiatives is hardly like putting out a shingle on a storefront or placing an advertisement in a publication and having the masses come to you. In this instance, the masses you are trying to attract are diverse suppliers that can offer value to your supply chain.

Managing supplier diversity initiatives or programs means just that: managing. And as good managers know, part of winning is fighting through challenges to achieve success. Consider some of these challenges to tackle when managing supplier diversity:

Embracing Supplier Diversity

It is one thing to have an organization set up supplier diversity initiatives, but it is wholly another for the organization to embrace the function. A good starting point is ensuring that the goals and objectives of the program are well-understood throughout all levels of the organization. That means explaining the merits of bringing in minority- and women-owned suppliers and the benefits to the organization’s culture. For instance, the supplier diversity manager may communicate the merits to every level of the organization, including the board of directors, C-suite, business-unit managers, and employees, through avenues such as organizing information sessions to regularly articulating milestones and successes through written and electronic collateral. In addition, be sure to show a correlation between the supplier diversity program’s objectives and corporate internal goals.

Here are some additional ideas from the Mountain Plains Minority Supplier Development Council, an affiliate council of the National Minority Supplier Development Council.   

Achieving Buy-In from the C-Suite

If an organization’s C-suite leaders are articulating the value of supplier diversity, then the organization itself typically will follow. The No. 1 champion in this effort is the chief executive officer, followed by other leaders such as the chief financial officer, vice presidents, and other corporate officers. But the challenge confronting the supplier diversity manager is that these leaders are responsible for an array of activities that keep the business running, and competing for their time can be difficult. In seeking buy-in, be sure that the organization’s leaders receive regular reports and information on the successes of supplier diversity initiatives so that they can promote the function and discuss it authoritatively throughout the organization. Especially show the C-suite the financial benefits of having a supplier diversity program and how that helps the organization achieve its goals. Gaining support from the top will help position the supplier diversity program for success and stature.

Here is an example of how Walmart embraces supplier diversity through its organization, starting with the CEO.

Tracking and Measuring Supplier Diversity

Articulating the effectiveness of supplier diversity initiatives and programs largely is a product of tracking and measuring. That means the supplier diversity manager needs a system that sets targets for what the program is seeking to achieve. By understanding how supplier diversity spend is achieved and distributed, the supplier diversity manager can begin to hone in on the benefits. While tracking and measuring can be painstaking, the challenge is to ensure that the organization’s efforts are easily known by having systems in place to show how the organization is doing. For instance, any system needs to be able to track the flow of spend to Tier 1 and then Tier II suppliers. The system also needs to be able to classify the various suppliers via industry and spend categories and rate their value to the organization. Profiles of your diverse supply base need to be set up and updated regularly so that the organization’s business units will know the capabilities of each.

These represent just a few of the challenges at the beginning when pressing forward with supplier diversity. Addressing challenges will be a constant battle that will require diligence and good management. As you tackle each one, it means the supplier diversity program is maturing and gaining its footing.

Learn the 3 Steps You Need to Build a Successful Tier 1 Supplier Diversity  Program »

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The team has a long history in driving innovative solutions in supplier diversity. We believe that companies deserve solutions that are effective and provide measurable value and results. Started more than a decade ago, supplier.io has rapidly become a prominent provider of supplier diversity solutions to leading corporations. We currently support customers in automotive, healthcare, insurance, retail, manufacturing, education, and banking. One in five Fortune 50 company relies on supplier.io.