Supplier Diversity Blog by supplier.io

How to Overcome Supplier Diversity Challenges

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Championing diverse suppliers yields many rewards for your company, the suppliers it engages, and the communities it serves. However, starting a supplier diversity program can be overwhelming. For one, you suddenly need to learn a new vocabulary: diverse spend, Tier 1 Spend Reporting versus Tier 2 Unitier suppliers, Supplier Diversity Economic Impact Analysis, minority-owned business enterprise (MBE), and woman-owned business enterprise (WBE), to name a few terms. And how do you track your progress, anyway? 

Let’s address some common supplier diversity challenges so you can start strong:

Gain Insight

One supplier diversity challenge many new programs face is a lack of clarity about complementary activities already taking place within the organization. Instead of reinventing the wheel, take the time to examine the wheels that already exist.

Start with data about what your organization is already doing to support supplier diversity. How many diverse suppliers are you currently working with? Which categories do they represent? How much are you spending with diverse suppliers? Does your organization already have policies or programs related to supplier diversity, such as mentorships, supplier development, or diverse spend goals?

This information is your starting point as you build a strong foundation for a sustainable program.

Define the Program

Next, it’s time to define your program. A clear vision and purpose will guide you in making decisions both now and in the future. 

Determine the “why.”

Understanding the why of your program provides motivation and clarity. The most common reasons an organization implements a supplier diversity program are because it aligns with its core values or to answer stakeholder demand. 

Review your company’s core values; how does supplier diversity exemplify them? This could be related to social responsibility or values like innovation and agility.

Are stakeholders (i.e., consumers, employees, leadership, clients) asking you to include more diverse suppliers in your supply chain? This could be through direct requests—such as a client requiring diverse spend—or indirectly—such as research showing that millennial and Gen Z consumers are increasingly concerned with inclusion and equality.

Define program goals.

A quick note about goals: they are meant to change over time. Yes, you need to set SMART goals to know what you’re working toward, but don’t get bogged down in figuring out the “right” goal. 

Your goals should include the amount spent with diverse suppliers, the number of diverse suppliers in your network, the percentage of overall spend attributed to those suppliers, and the percentage of sourcing activities that include diverse candidates.

Choose one metric.

Once you have defined goals, choose one metric to focus on. Many programs start with diverse spend, but it is up to you. Perhaps you want to make increasing the number of diverse suppliers in your network a priority, then incorporate them into the supply chain. Or maybe you want to focus on the diverse suppliers you already work with and award them larger contracts. Whatever metric you choose, set a SMART goal and plan your strategy accordingly.

Your strategy should include establishing reporting processes and intervals. Another common supplier diversity challenge is a lack of accountability, so collecting and reporting on data motivates you to stay focused and shows you which activities are working and which need to be tweaked.

Focusing on a single metric also serves as a gateway to gaining buy-in from leadership and other stakeholders. When you can demonstrate how the resources invested in the supplier diversity program yield results, it’s much easier for others to support and engage with the endeavor.

Build the Framework

Armed with information about what supplier diversity activities your organization already has in place, an understanding of why supplier diversity is critical to your organization, and clear goals with a metric to focus on, it’s time to build out your program. A strong infrastructure is the best way to create a lasting, sustainable program.

Invest in the program.

Often, we see companies combine supplier diversity program management with another managerial position. This is an issue because supplier diversity programs require significant attention and are difficult to manage part-time. At minimum, you need one full-time person who is proactive and invested. 

Your supplier diversity team also needs the appropriate tools to maximize the results of their efforts. Invest in tools that are commensurate with your goals and program maturity. For example, economic impact is usually a metric added to the program after a few years, so you can wait to purchase that tool.

It’s good to leverage existing tools where possible. However, serious programs should consider a “best-of-breed” solution focused on supplier diversity targets. Your company’s procurement management solution is probably not equipped to measure and report supplier diversity metrics. For example, supplier.io identifies and vets suppliers, tracks spend, and generates reports, all backed by the largest database in the industry and world-class supplier diversity professionals.

Build your network.

An effective supplier diversity program is by nature a communal endeavor. After all, you are working to make business more equitable for everyone. Gaining buy-in from stakeholders is key, as is engaging with external entities. 

Supplier diversity councils offer a wealth of resources. It’s worth joining national organizations that have affiliates in your area, such as: 

Other supplier diversity professionals are also a tremendous resource. Engage with your peers who are further along with their programs. Ask questions, seek advice, attend their presentations and panels, and gain insights from their knowledge and experience. Again, you don’t need to reinvent the wheel. Instead, adapt it to move your vehicle.

Stay the Course

Remember, change takes time. As much as we would like to see immediate success, building an effective, sustainable supplier diversity program takes time. Target your goals for 18 months to three years in the future—a realistic timeframe to see progress. Don’t be discouraged if the numbers aren’t improving as quickly as you hoped or if it takes longer than expected for stakeholders to buy in.

Supplier diversity is a worthwhile endeavor, and you can overcome common challenges with planning and persistence. Start strong, have a clear purpose, set reasonable goals, invest in the program, and make a difference.

Take the proven path to growth. Speak with a trusted advisor about your 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.