Many companies have already begun to develop their Supplier Diversity programs, with the board tasking procurement teams with leading the way as part of their Environment, Social, and Governance (ESG) and Corporate Social Responsibility (CSR) initiatives. In addition to clients looking to work with forward-thinking and socially-conscious businesses, you’ll also find that potential new employees are doing the same.
For many organizations, supplier diversity has evolved from a compliance exercise into a strategic diversity initiative that supports long-term supply chain resilience and competitive advantage.
To be successful, your Supplier Diversity program must be more than just a checkbox on the list of items your board requests. It’s no longer enough – for your employees or prospective clients – to pay lip service to diversity. According to supplier.io’s 2021 State of Supplier Diversity report, 40% of Supplier Diversity programs are less than three years old [1], meaning many companies are still defining and building out what it looks like to have a successful Supplier Diversity program.
Successful programs focus on building a diverse supplier base, strengthening supplier relationships, and using accurate supplier diversity data to support reporting and decision-making across the organization.
Here are a few examples of what you can expect a successful supplier diversity program to do:
1. Ensure your supplier pipeline is sustainable
Working with certified diverse businesses and certified suppliers is excellent for driving the numbers for your ESG and CSR goals, but that’s not the only benefit you get from your supplier diversity program. By expanding your portfolio of preferred suppliers to others that are veteran, women, or minority-owned, you’re ensuring your supplier pipeline is more sustainable and creates a more diverse supply chain.
As we have all seen from the past couple of years, working with a smaller, select (and assumably elite) set of suppliers can hinder your procurement. Supply chain shortages, manufacturing delays, and more can send one supplier from your list of top sources to the top of your list of bottlenecks. Additionally, you should work with diverse suppliers in your area. Not just to invest in your own backyard but to also capitalize on little to no shipping or waiting times for services.
2. Prove the ROI of procurement to the board
We’ve heard it time and again. It’s no easy task to prove the ROI of what procurement is doing. Obviously, you see an impact on the bottom line… But how are you proving 1) that procurement is driving that impact and 2) your value beyond just cost savings? Procurement isn’t the spend police. You deserve a seat at the table where decisions are made. Supplier diversity reporting gives procurement leaders a way to quantify impact beyond savings by tracking diversity spend and supplier diversity metrics.
Your Supplier Diversity Program should help you do that. First, you need visibility into:
- How many certified diverse suppliers you’re currently working with
- How much diverse supplier spend and diversity spend you have with those diverse suppliers
- Whether your certified diverse suppliers still meet the requirements to be considered diverse
- The overall composition of your supplier base
With those numbers, you can go to the board with the evidence they’re looking for to show the drive and progress behind your Supplier Diversity program. Supplier diversity data and diversity metrics help demonstrate procurement opportunities tied to inclusion, resilience, and long-term value creation.
For a successful Supplier Diversity program, you should track:
- Annual increases in diverse supplier spend
- Percentage of certified diverse businesses within your preferred suppliers
- Progress against defined supplier diversity goals
3. Have a single source of truth for supplier diversity reporting
Logging into two (or more) separate systems and aggregating data into a spreadsheet or Tableau to track the progress of your Supplier Diversity program takes up even more of your most valuable asset as a procurement professional – your time. That’s time that you could spend on more strategic activities.
Supplier diversity leaders rely on a centralized system for supplier diversity reporting, supplier data accuracy, and certification tracking. A successful Supplier Diversity program has a single source of truth that gives you all the answers to those exact questions we already mentioned:
- How many diverse suppliers are in your supplier base
- How much spend is tied to certified diverse businesses
- Whether supplier diversity certifications are valid and up to date
- How supplier diversity efforts compare to internal diversity goals
Without that single view into your supplier diversity data, supplier relationships, and spend, your Supplier Diversity program falls behind those of your competitors and the industry at large.
Start with Tracking Your Diverse Supplier Spend
As a recent survey from supplier.io reports, about 5.9% of spend goes to diverse suppliers on average. To show leadership that you’re on track, you must have a view into the percentage of your own spend that belongs to diverse suppliers. To do that, you need clean, consolidated, and normalized supplier data, and you need it all in one place. Your spend data can (and should) answer:
- How much diverse supplier spend you have, by supplier and in total
- Where diversity spend is increasing or declining
- How many new certified suppliers and diverse businesses have been added
- How supplier diversity efforts support overall supply chain stability
Tracking diverse supplier spend enables better reporting, strengthens supplier diversity metrics, and supports more informed procurement decisions across the organization.
These are the key indicators you can watch to evaluate the health of your Supplier Diversity program.
Need the foundation for better supplier diversity reporting and spend visibility? We can help. Built by procurement experts for procurement experts, SpendHQ is the spend analytics SaaS solution that provides rapid, accurate, and detailed visibility into spend data, including supplier diversity data, diverse supplier spend, and supplier relationships—helping organizations turn supplier diversity into a measurable competitive advantage.
[1] supplier.io, 2021. 2021 State of Supplier Diversity: Supplier Diversity Programs.
Frequently Asked Questions About Supplier Diversity Programs
A supplier diversity program is a procurement initiative that ensures an organization includes certified diverse businesses in its supplier base. These programs focus on working with certified diverse suppliers, tracking diverse supplier spend, and aligning diversity initiatives with broader organizational and supply chain goals.
Supplier diversity helps procurement teams reduce supplier risk, strengthen supplier relationships, and build a more resilient supply chain. A diverse supplier base also supports ESG objectives and creates a long-term competitive advantage for the organization.
A certified diverse supplier is a vendor that has obtained a recognized supplier diversity certification, such as minority-owned, women-owned, veteran-owned, or LGBTQ-owned status. Certification validates eligibility for supplier diversity reporting and diversity spend tracking.
Organizations measure supplier diversity success using supplier diversity metrics such as diverse supplier spend, percentage of certified suppliers in the supplier base, progress toward supplier diversity goals, and year-over-year changes in diversity spend.
Accurate supplier diversity reporting requires clean supplier data, validated supplier diversity certification records, spend data by vendor, and visibility into supplier relationships across the supply chain.
Supplier diversification reduces reliance on a small group of prime suppliers or prime contractors. By expanding access to qualified diverse suppliers, organizations can respond more effectively to supply chain disruptions and reduce operational risk.
Procurement teams lead supplier diversity initiatives by identifying procurement opportunities, managing supplier relationships, validating certifications, tracking diversity metrics, and reporting progress to leadership. Procurement is responsible for ensuring supplier diversity efforts are measurable and sustainable.
Supplier diversity data should be reviewed regularly—typically monthly or quarterly—to ensure certifications remain valid, supplier spend is accurately captured, and diversity goals are being met across the organization.
Supplier diversity directly supports ESG and CSR objectives by promoting inclusive economic growth, strengthening diverse supply chains, and demonstrating measurable social impact through supplier diversity reporting and diversity spend transparency.
The biggest challenge is maintaining a single source of truth for supplier diversity data. Without centralized reporting, organizations struggle to track certified diverse suppliers, validate certifications, and measure supplier diversity efforts consistently.
Procurement technology enables centralized supplier data, automated certification tracking, accurate diversity reporting, and better visibility into diverse supplier spend. This allows organizations to scale supplier diversity initiatives efficiently and make data-driven decisions.