Supplier diversity managers frequently find themselves at odds with procurement when contracts involving tangible products are involved. Diversity managers need to increase their overall diverse spend but face a major obstacle: little buy-in or participation from their procurement team. To surmount this obstacle, we need to really understand the reasons why the procurement team seems to want little to do with supplier diversity management. We have to put ourselves in their shoes.
The procurement process for qualifying and onboarding a supplier providing a tangible product, for example, is arduous and very time consuming. Buyers have a laundry list of questions to ask and qualifications to run through before a supplier can begin to do business with the company. If the supplier is providing a tangible product there may be questions related to quality, on-time delivery and material lead time that will impact whether or not a company chooses to do business with it. As a result, when a contract with a tangible product supplier is up for renewal, the last thing that buyer wants is to be sent an additional list of three diverse suppliers that can provide the same product being supplied and should be considered. This request from supplier diversity requires them to run through the qualifying process all over again multiple times when in fact they may have no issues with their current supplier. Buyers are also faced with the inherent risk involved in replacing a reliable supplier with a new, unproven one that may cause issues in the future. These issues often are the reason a diverse supplier is not selected – or even considered.
To address these challenges in dealing with procurement, diversity managers can begin to build trust and cooperation by submitting two or three diverse suppliers for service related contracts or RFPs. The buyer’s process for qualifying and onboarding a service oriented company is much easier than that for a tangible product supplier. Because the process is easier, buyers will be more open to including diverse suppliers in their shortlist of vendors competing for the contract.
A good supplier diversity portal will enable diversity managers to more easily pull reports to see which service related commodities have the highest spend. By taking that overall figure and breaking it into diverse/non-diverse spend, a supplier diversity manager will have a better idea of how to proceed in working with procurement. Wherever the greatest variance in diverse/non-diverse exists would be the first place to start. If the supplier diversity manager still runs into resistance from procurement when attempting to contract with service-oriented diverse suppliers, no worries. There is another way to build a supplier diversity program without the help of procurement. Starting a Tier 2 program will enable the supplier diversity manager to reach out to their high spend non-diverse suppliers and to ask them to report the amount of money they have spent with diverse vendors. As a result, the supplier diversity manager will be able to take some of the captured spend via Tier 2 and apply it in order to meet their company’s overall diverse spend requirements.
Additionally, while involving buyers in the reporting of Tier 2 spend increases the likelihood of reporting, Tier 2 spend can be captured without any help from the procurement team.