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Supplier Diversity Blog by supplier.io

Procurement Benchmarking: 3 Tips for Your Supplier Diversity Program

Procurement teams love to benchmark. We start every sourcing project and budget review cycle with a benchmarking exercise. And when we’re done, we benchmark projects against each other over time as a way of measuring the various forms of value and impact procurement has brought.

Benchmarking supplier diversity spend shouldn’t be any different—with one exception. Companies want to be certain that their numbers and/or progress will be deemed “good enough.” According to the 2021 State of Diverse Suppliers report, 79 percent of companies track their spend with certified diverse suppliers even if they do not have a formal supplier diversity program. This presents a whole new opportunity for impact measurement. 

Not only do companies want their effort and investments in supplier diversity to measure up to that of their peers and competitors, but they also want to improve their brand value. Misgauging how the specific impact of a supplier diversity program will be received publicly carries with it a reasonable enough level of concern that many executive teams opt to emphasize their commitment to supplier diversity without sharing the details. 

And yet, consumers and traditionally underrepresented/marginalized communities may not see a publicly shared vision as enough without supporting results. In addition, without a starting benchmark and goals to lead the way from one maturity phase to the next, internal actions are unlikely to drive desired change.

Without a clear answer to the question, “How much diversity spend is enough?” corporations need to use benchmarks and carefully sought-out input to drive the impact they desire. Here are three tips for how to get started:

1. Benchmark for internal action.

Procurement benchmarking is typically internally focused. Although the numbers don’t always represent happy news, they are accepted as the best available source of truth and mark the start of an effort. 

Supplier diversity will benefit from this process and mindset as well. Figuring out what can be measured and connecting that information to specific processes, teams, and performance metrics is the best way to ensure the benchmark becomes a platform to stand on moving forward. Better still, companies should set goals that make sense in the context of an accepted benchmark, taking achievable steps forward and building momentum over time.

2. Share improvements rather than numbers.

There is a reason procurement teams typically communicate savings results as a percentage rather than a hard number. Fixed figures can be deceiving. The same holds true for supplier diversity spend. The diversity movement is based on the premise that more is needed. Every corporation can be spending more with business owners from specially designated communities. 

Under those circumstances, demonstrating more through a percentage increase—either in terms of spend, contracts, or spend categories with an inclusive award—has the double effect of concealing actual spend numbers (in the same way that a company shields conventional contract value) and ensuring that outward-facing commitments can be upheld.

3. Partner with an objective third party for progress validation.

As much as internal benchmarking is good for driving progress, at some point, companies should want to get external validation of their status and progress. Such input is critical and can help keep a supplier diversity program grounded and on track.

Whether it is a review of measurement processes, a discussion of benchmarks and goals, or a professionally calculated economic impact, having a third party offer a broader perspective and also sign off on the benefits being realized from the supplier diversity program is a critical step toward delivering results in return for expectations that have been set.

Supplier diversity program leaders should consider benchmarking and measurement a must for the sake of data-driven motivation and accountability, and if they are looking for a partner, they should look no further than the procurement team.

Tracking, metrics, and reporting give you the best insight into your supplier diversity program’s performance. Read our blog post to learn what you need to know.

 

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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.