How (and Why) You Should Track Your Supplier Diversity Spend

by SpendHQ Marketing

Supplier diversity continues to be a priority for businesses and enterprise procurement teams. In fact, Ardent Partners’ 2023 Big Trends and Predictions report believes ESG (Environmental, Social & Governance) will be a top priority for CPOs based on their research. Working with diverse suppliers create synergies between organizations and historically underrepresented businesses, by introducing the potential for new value creation and supply chain resiliency, among other benefits. And for many businesses, especially government contractors, a supplier diversity program is a “must-have,” not a “nice-to-have.  

But it’s not enough to just spend more with small, minority-, veteran-, disabled-, or women-owned businesses. Procurement teams must be able to quantify their existing spend with diverse suppliers to demonstrate their compliance with contracting regulations or their commitment to driving positive economic and social impact.  

The Tyranny of Decentralized Data 

Supplier diversity efforts may be a priority, but the data needed to make meaningful progress may be siloed across business units and stored in disparate systems, if it’s available internally at all. For example, an organization may be spending some portion of procurement dollars with diverse suppliers, but they just may not know it or be able to show it without identifying which (if any) of those suppliers carry those classifications.  

Failure to consolidate all your spend data can obscure or distort the hard work you and your team dedicate to support diverse suppliers, which can hinder your efforts to track and disclose your performance, reap the benefits, or improve for future business cycles. 

To drive a world class supplier diversity program, you need to consolidate your organization’s procurement data to gain the most comprehensive view into your business relationships and purchasing behaviors. You can’t do this effectively or efficiently with manual processes which includes spreadsheets. You need partners, like SpendHQ, to help solve your data dispersion problem.  

How SpendHQ Helps you Track your Diverse Supplier Spend  

Our Spend Intelligence platform collects, centralizes, categorizes, cleanses, enriches, and analyzes your enterprise procurement data, which then lets you to put your spend and supplier intelligence to work. We provide you with enhanced benchmarking and reports that detail supplier diversity status at the category or subcategory level, by region/location, or based on other areas of analysis.  

Procurement teams should incorporate those supplier diversity spend insights into strategic Procurement Performance Management (PPM) programs to help set more accurate goals and prioritize decision making with their business stakeholders, in addition to procurement’s traditional performance metrics of spend under management, cost optimization, and savings realization.  

Our PPM platform also provides a snapshot view of all current procurement projects in your pipeline, including diverse suppliers, to easily track against strategic diversity goals to help you hit your larger Procurement Performance Management objectives. 

What are some things you can do with these diverse supplier insights and management features? 

  • Isolate the percentage of your total spend distributed among minority-, veteran, or women-owned businesses, or small businesses.  
  • Drill down by supplier category, location, and even spend category, to provide relevant parties with accurate subsets of your total spend. 
  • Benchmark your diversity spend to see where you have the biggest opportunities to make progress compared to hundreds other organizations who may be further along.  
  • Identify which business units lead the way to support diverse suppliers, which lag behind, and how and where the overall organization can improve.  
  • Use this spend intelligence to drive and report on the organization’s initiatives in supplier diversity 
  • Use the data to aid in conversations with internal spend owners and business partners to drive alignment, prioritization, and sourcing decisions. 

Armed with this level of spend intelligence, you and your team can articulate the scale and impact of your organization’s supplier diversity program, which we’ve shown previously has many benefits beyond compliance 

Not sure where (or how) to get started? Let us show you what we can do for you and your spend data.