Tracking supplier diversity metrics is crucial to ensure your initial supplier diversity objectives are being met and progressing forward. Making that information available to leaders within your organization is also essential to maintaining support and engagement for your program.
Conducting an annual or quarterly assessment allows you to summarize your supplier diversity successes and illustrate how the company’s investment in the program performed during that period. This process also adds credibility by establishing transparency and accountability.
Track these supplier diversity metrics and keep your company’s leadership engaged.
The amount your company spends with diverse suppliers is the most common and basic supplier diversity metric. Your total diverse spend—Tier 1 and Tier 2—provides a snapshot of your program’s health and effectiveness.
But the story doesn’t end with that dollar amount.
Put that metric into context for leadership by also reporting what percentage of the company’s overall spend it represents. For example, $10 million spent with diverse suppliers is worth celebrating. But if your company’s annual overall spend is $1 billion, then a diverse spend of 1 percent shows room for improvement.
If your supplier diversity program tracks the number of diverse suppliers the company does business with in each category, then the spend metric can also reveal areas of risk and opportunity. Talk to leadership about inviting qualified diverse suppliers to bid on requests for proposals (RFPs) for categories with low or no diverse spend.
Over time, your supplier diversity metrics will reveal a bigger, more detailed picture of your supplier diversity program. When preparing a report for leadership, look for the trends you can pull out of the data.
How have metrics changed year over year? Quarter over quarter? Are the numbers going in the right direction? How did specific initiatives, marketing campaigns (internal and external), or the implementation of new tools impact your program?
Spotting trends allows you to determine where to double down on your efforts or how to tweak your approach to see improvement to a specific key performance indicator (KPI). For example, if you’re seeing an increase in diverse spend but the number of diverse suppliers in your supply chain remains flat or decreases, then you might want to invest resources in finding new qualified suppliers for upcoming RFPs.
It’s easier to know which action to take and to gain buy-in from decision makers when you have metrics lighting the way.
Risk & Opportunity
Diverse spend is the supplier diversity metric that gets the most attention, but the number of diverse suppliers within the supply chain is becoming increasingly important to determine the health and effectiveness of a program.
The mission of a supplier diversity program is to provide opportunities to many diverse suppliers, not just a few.
We also know that overreliance on suppliers is risky—something the supply chain issues of the past two years have demonstrated globally. In the case of a supplier diversity program, overreliance on a supplier can impact your KPIs in addition to the supply chain.
Suppose you have a diverse supplier that makes up 20 percent of your diverse spend, then they are purchased by a larger, majority-owned company. (This is a fairly common occurrence because diverse-owned companies often demonstrate the innovation and agility larger companies covet.) That supplier no longer qualifies for diversity certification, and your spend just dropped 20 percent.
This scenario might cause a minor panic attack, but this is exactly why tracking diverse supplier metrics is important. Are your buyers experiencing challenges when it comes to selecting diverse suppliers? Do you need additional resources such as training for buyers to source qualified diverse suppliers or a Supplier Explorer tool? Now is the time to talk to leadership about investing in your program’s sustainability.
As consumers, employees, and other stakeholders increasingly call for diversity, equity, and inclusion from businesses, this metric answers the question, what are you doing to advance DEI in the real world?
An economic impact report humanizes your supplier diversity program through both qualitative and quantitative metrics. The data you include here—jobs created, tax revenue generated, and wages earned—demonstrates the real impact your supplier diversity program has on the communities where you operate.
A data-driven approach to supplier diversity through tracking, reporting, drawing insight, and adjusting your strategy will help you grow and evolve your program effectively and sustainably. But that data needs to go beyond your supplier diversity team. Sharing supplier diversity metrics with company leadership increases visibility for your program, keeping supplier diversity in the hearts and minds of management.