Building and maintaining a successful supplier diversity program is not easy work. Supplier diversity managers and procurement teams work hard to make their supply chains more inclusive. While they may not have the formal authority required to force change, they have more than enough passion to lead the diverse supplier progress they want to see.
Certified diverse business owners look to supplier diversity managers for advice, support, and opportunity. And while those opportunities are not always the managers’ to give, their input can make a measurable difference in the trajectory of a growing business.
If a supplier diversity program is going to serve the diverse supplier community in deed as well as in word, supplier diversity managers have to be in touch with the supplier perspective. All of the good intentions in the world won’t increase the opportunities for diverse-owned businesses if they can’t form the necessary level of relationship with corporations. This is a daily challenge faced by corporations as well as suppliers.
As former supplier.io CEO Neeraj Shah wrote in the 2021 State of Diverse Suppliers report, “While their goals are aligned, challenges remain in how they should connect.”
Both of this year’s State of Supplier Diversity reports—the buy side and the supplier side—contain evidence of challenges as well as opportunities for diverse supplier progress. It is in the combined learnings that we can identify a constructive path forward for the movement as a whole.
Leveraging the Experience of Diverse-Owned Businesses
More than half (55.2 percent) of the diverse suppliers that responded to this year’s report have been in business for over 11 years. More than 75 percent of them have been in business for over four years. When we compare that to the 40 percent of corporate supplier diversity programs that are less than three years old, an immediate opportunity comes to light.
While corporations with supplier diversity programs may be mature in terms of the primary product or service they offer, they likely have far less experience with supplier diversity itself. Managers should learn from their certified diverse suppliers, actively seeking to understand how and where their diversity status fits into their outreach and business development efforts and how it complements their stand-alone value proposition.
Learning about this process from the supplier perspective offers corporations an opportunity to improve how they find and identify new diverse-owned businesses to partner with.
Defining What an Opportunity Means to Different Organizations
According to this year’s report, 70 percent of diverse-owned businesses are self-financed, and 85 percent measure the ROI of their diversity certification(s) in terms of the increased sales opportunities it offers them. They don’t get certified to broadcast their identity to the world; they do it because it makes good business sense for them to do so.
Those findings are somewhat—but not completely—aligned with the commonly held belief on the corporate side that all these suppliers want is a chance. Many procurement teams measure the success of their supplier diversity program in terms of how many request for proposal invitations include diverse suppliers while suppliers want contracts and revenue.
Understanding the supplier perspective may motivate procurement to put new diverse suppliers through a thorough internal vetting process before inviting them to bid. Doing so would allow the company to hit its inclusion targets, driving diverse supplier progress without setting unrealistic expectations with prospective supply partners.
Accommodating Small Diverse-Owned Businesses
Certified diverse suppliers are not always small, but this year’s report indicates that in more than half (57 percent) of cases, they are also small businesses. Bringing these organizations into the corporate fold requires procurement to be aware of policies and processes that may be problematic for suppliers in practice, undoing the exact goodwill that the supplier diversity program was started to foster.
In addition, working with small businesses creates rewarding opportunities for supplier development that may not exist elsewhere. One of this year’s supplier survey respondents offered this thought, “Working with and connecting with corporate supplier diversity teams is very informative. This contact helps me to envision the full scope of my company’s services and the industries that need our services.”
That is an invaluable perspective that every corporate point of contact has the opportunity to share with the small, diverse-owned businesses they partner with.
Supplier diversity programs are not easy to run well—even with the improved ease of making a business case to senior leaders for their foundation. Being able to effectively operationalize the purpose and priorities of supplier diversity is a challenge, but when done in full communication and collaboration with diverse suppliers, it is rewarding for program leaders as well as for the corporation as a whole.
To learn more about the perspectives, challenges, successes and expectations of diverse suppliers, read our 2021 State of Diverse Suppliers report.