This is the third post in a series looking at the key findings of the 2022 State of Supplier Diversity Report. If you are just joining us, here is what we have already covered:
- Key finding #1: Company culture and workforce inclusiveness have become strong drivers for committed investment in supplier diversity.
- Key finding #2: Executive level engagement is high, but operational engagement is down— - as is the rigor associated with tracking and reporting.
The third key finding reveals some of the changes and investments that must be made in order to empower supplier diversity programs to continue gaining traction into the future.
Key Finding #3: Companies Must Invest in Empowerment
The common challenges facing supplier diversity programs are very common. Not only are they shared by a majority of the survey respondents, but they are also essentially unchanged year over year.
The following are somewhat to extremely challenging for a minimum of 59 percent of companies:
- Finding diverse suppliers
- Adequately staffing supplier diversity initiatives
- Enacting processes for including diverse suppliers
- Obtaining enough budget to perform supplier diversity program duties
If support for supplier diversity was a groundswell, these challenges might be expected. However, given the high degree of board and C-level engagement, why supplier diversity programs are not sufficiently staffed and budgeted remains an unanswered question.
Time for Leadership to Step Up
One of the survey respondents, a procurement director at a global manufacturing organization, captured the conflict between support and funding with their response to a question about what they hoped to see looking forward: “Results are at the extra effort of our team. This is important to the employees that we should be doing something in this space, and I hope that execs will come to support this more.”
Because we know that executive leadership teams support supplier diversity, the disconnect may be in the tangibility of that support. Advocacy, funding, and creating visibility opportunities for the company’s supplier diversity program are all powerful examples of active support.
Staffing Challenges Must Be Addressed
Seventy-eight percent of supplier diversity programs have at least one person dedicated to the effort, a small increase over 2021 (74 percent). Procurement remains responsible for supplier discovery in 69 percent of companies, but supplier diversity teams are catching up, with 59 percent (multiple answers were allowed).
The trend around environmental, social, and governance (ESG) programs is one that will certainly have an impact on supplier diversity execution in the years to come. Resources and responsibilities may shift with time. As long as ownership remains strong and clear to everyone involved, ESG programs are likely to provide at least some of the formality and reporting rigor that standalone supplier diversity programs lack.
Manual Efforts as a Barrier to Scale
One of the greatest resource challenges for supplier diversity programs may be keeping information on supplier certifications up to date. Sixty-four percent of companies collect this information during supplier onboarding, and half manage the information manually.
In fact, there is reason to believe that manual tracking and reporting are at the core of the challenges faced by supplier diversity managers. The bottlenecks created by manual processes can easily overwhelm the team and prevent them from building meaningful relationships with suppliers. They may even interfere with efforts to help the supplier diversity program scale.
A Cause for Celebration and a Call to Improve Supplier Diversity Programs
Overall, the findings of the 2022 State of Supplier Diversity Report provide cause for celebration, but there are also clear opportunities to improve. Supplier diversity managers and teams are consistently vocal about what they need to deliver on company vision and executive commitments, but they cannot do it alone.
A company’s determination to advance supplier diversity should be matched by budgetary commitments to staff and supplier training, sufficient resources, and digital enablement. We will have to wait until next year’s report to find out if companies took action to meet these recommendations, but the work to advance the cause of inclusive supply chains is already underway—well funded or not.
Download the 2022 State of Supplier Diversity Report