As your supplier diversity program matures, you will likely begin looking at how to expand and be more aggressive toward meeting your organization’s goals around diverse spend. The most powerful way to do that is through multi-tier diverse spend reporting, or the practice of tracking and reporting money spent with diverse suppliers further down your supply chain.

This blog was originally published on 12/6/2018 and updated 1/7/2020

After 50 years of supplier diversity initiatives, we know that building inclusive supply chains enable underrepresented populations to compete and thrive in business. In addition to empowering diverse-owned businesses, supplier diversity initiatives also have significant payoffs for the companies that enact them. 

This blog was originally published on 2/8/2018 and updated on 12/22/21.

What is the difference between Tier 1 and Tier 2 supplier diversity spend?

Every company is part of a larger supply chain that includes third party product and service providers. Some of those suppliers, known as prime suppliers, work directly with the company and others are one or more steps – or tiers – away in the supply chain. Although prime suppliers are the top priority for supplier diversity programs, you will quickly find that the potential for impact scales quickly when you consider tier 2 and beyond.

Forging Tighter Communications Links

A Fortune 500 company’s supplier diversity team recently was challenged to expedite the process of locating and qualifying suppliers that could meet specific purchasing requirements. The critical need was to cut time and costs by forging a more effective communications link with its prospective suppliers to ensure they had the scope and scale to do business with a Fortune 500 company.

There are two broad ways to identify opportunities for proven diverse suppliers in your Tier 1 supplier base:

Option 1: Align to Upcoming Sourcing Initiatives

The first approach is fairly straightforward – work with your procurement team to get visibility into when sourcing opportunities are arising. Here it is helpful to be thoughtful about selecting categories that may benefit from the unique benefits that small and diverse companies can bring to the table. Your next step is to identify qualified suppliers to meet those category needs in advance of upcoming sourcing events.