Finding Success with Your Supplier Diversity Program
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.
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 , meaning many companies are still defining and building out what it looks like to have a successful Supplier Diversity program.
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 diverse 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 robust 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. Your Supplier Diversity Program should help you do that. First, you need visibility into:
- How many diverse suppliers you’re currently working with
- How much spend you have with those diverse suppliers
- Whether your diverse suppliers still meet the requirements to be considered diverse
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. For a successful Supplier Diversity program, you should track your annual increase in spend and percentage of diverse suppliers within your preferred supplier portfolio. This point leads us to:
3. Have a single source of truth
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.
A successful Supplier Diversity program has a single source of truth that gives you all the answers to those exact questions we already mentioned: the how many, how much, and the accuracy. Without that single view into your supplier diversity portfolio 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 spend data, and you need it all in one place. Your spend data can (and should) answer:
- How much spend you have with diverse suppliers (by the individual supplier and as a whole)
- Where you’re gaining in diverse spend
- Where you’re losing diverse spend
- How many new unique diverse suppliers have been added
These are the key indicators you can watch to evaluate the health of your Supplier Diversity program. Need the foundation for better 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 diverse spend data.
 supplier.io, 2021. 2021 State of Supplier Diversity: Supplier Diversity Programs.