One of the things that has driven procurement teams’ success to this point is their ability to operationalize business objectives. They take a goal—such as lowering costs or increasing supplier service levels—and put processes, agreements, and reporting frameworks in place to drive the desired results.
The approach they have perfected on efforts such as strategic sourcing and supplier performance management can now be put into practice to ensure that supplier diversity becomes a consistent part of all spend management activities. Start by making it as easy as possible for procurement teams and stakeholders to get information about current and prospective diverse suppliers, and then create a sense of accountability and shared success.
Update templates and documents.
If your supplier diversity program is new, or if it is only considered an important part of your procurement department’s work when the project lead takes a personal interest in it, more cues may be needed to elevate awareness. All of your procurement team’s templates, such as sourcing process diagrams, approval templates, and decision-making frameworks, should have supplier diversity-specific notes in them.
By providing reminders during spend analysis, objectives definition, supplier discovery, proposal evaluation and award, and supplier performance management, they can ensure that supplier diversity remains at the forefront of all decision makers’ minds.
Integrate information and processes.
Over the last few years, many procurement teams have made a concerted effort to put information directly into the hands of distributed buyers. If diverse-owned suppliers are going to be included in sourcing projects, they need to be listed alongside all other suppliers. If the company has a database of incumbent suppliers, data enrichment makes it easy to tell which ones are minority-owned.
When an opportunity exists to contract with a new supplier, there should be an information source with search criteria and/or filtering to help narrow search results by the type of diversity certification. By integrating supplier diversity information with all procurement systems and processes, it becomes a natural part of each process.
Own the responsibility and use it.
According to the 2021 State of Supplier Diversity report, 71 percent of all supplier diversity programs are owned or run by procurement departments, and 74 percent of programs have at least one full-time person dedicated to supplier diversity. This dedicated person should be a familiar face to anyone with spend or supplier management responsibility, actively pursuing opportunities to speak to groups and answer questions about supplier diversity rather than sitting and waiting to be consulted.
The other type of responsibility that is needed to operationalize supplier diversity is at the executive level. Supplier diversity should not feel optional, and including diversity performance requirements in executive plans is key. Working to increase the presence of diversity-owned suppliers is an ongoing effort, as is developing those suppliers once they are under contract. Performance measures have to be individual as well as organizational.
Amplify results through high-visibility reporting.
You can’t manage what you don’t measure, as Peter Drucker said. But if you don’t advertise what you are managing and measuring, it isn’t happening. Procurement departments may think about supplier diversity reports as a way to meet shareholder requirements or just a source of information on one of their performance objectives, but it is just as important to share them with distributed buyers and budget owners.
Everyone in the company needs to know how the supplier diversity program is tracking against goals and expectations. This serves as a reminder that the program is ongoing and important. It may even motivate decision makers to consciously choose to partner with one or more diverse-owned suppliers the next time they award a contract—and then hopefully share the good news, kicking off a multiplier effect.
The best way to operationalize anything is to keep at it day after day. A steady commitment over time takes energy, but for companies that prioritize supplier diversity, it is necessary. Operationalized objectives are those that just happen because people, processes, and technology are configured to expect them and because they are never considered optional. The same must be true for supplier diversity if procurement is going to make the kind of progress we aspire to on behalf of underrepresented communities.
Read the full 2021 State of Supplier Diversity report.