As we’ve learned in previous posts, a diverse supplier base can provide any company with competitive advantages, including increased goodwill with diverse consumer groups and business communities. To advance your company’s supplier-diversity (SD) program to an even higher standard, however, consider integrating your efforts at every level of your organization’s procurement processes.
Writing in the Canadian magazine Purchasing B2B in 2011, Michael Power pointed out how similar the benefits can be between SD and sustainable procurement: “Enhanced reputation, competitive advantage, morale boosting, innovation and improved stakeholder relationships all accrue from both … both endeavors also need to show the cost savings companies can hope for if they pursue such policies.”
Get Top-Down Commitment
Because procurement managers are accustomed to working with numbers –dollar figures, product quantities, and spreadsheets – every day, they may find it difficult to explain the benefits of supplier diversity to senior management. Fortunately, there are many solid metrics you can use to build a business case for a more diverse supply chains. And the more you can cite dollar figures and cost savings, the more likely senior managers are to wholeheartedly support your efforts.
In the past decade, several major studies have confirmed the need for “C-level” and board support if supplier diversity programs are to succeed. Research has also revealed three key factors common to those companies with successful programs:
1. Their CEOs personally sign off on supplier-diversity goals and metrics.
2. They regularly audit their supplier-diversity numbers.
3. SD metrics are required in every RFP.
Given the current economic climate, how else can corporations open up contract-bidding opportunities to vendors from all backgrounds?
Set Metrics for Accountability
Many SD leaders not only audit their supply chain’s supplier-diversity numbers, but also have report to the chief of procurement to ensure accountability. Some are also required to report quarterly to a board-level committee.
While requiring supplier diversity as part of its competitive-bidding process, Cox Communications has also created a sophisticated scorecard to measure the benefits of selecting diverse vendors. In addition, Cox sets individual goals for each of its business systems, based on its size, and provides purchasers with incentives through performance bonuses for meeting monthly and quarterly SD targets.
Get Everyone on the Same Page
When employees at every level understand how supplier diversity program relates to the success of the organization, you are much more likely to enjoy its benefits. At Indianapolis-based WellPoint, the supplier-diversity department works closely with the sourcing team, sales,and marketing throughout the RFP process. WellPoint also designates enterprise-wide commodity champions who “serve as liaisons between [the supplier-diversity department] and their commodity stakeholders and assist with diverse spend targets for those areas.”
Other companies are partnering with resource groups to help integrate supplier diversity. For example, PepsiCo’s global procurement and supplier-diversity teams partnered with EQUAL@PepsiCo to jointly sponsor a supplier-diversity roundtable in Chicago, produced by the certifying organization National Gay & Lesbian Chamber of Commerce.
In the end, how you measure success of a program also depends on the way your organization defines success. “One thing that’s sometimes missing is a review within an organization using diverse suppliers,” said Canadian supply-chain executive Patricia Moser.
She recommends asking, “‘How have you found the[se] diverse suppliers? And how have they helped you be successful in what you’re providing to your clients or within the organization? I think that second part is often not done.”
STAY TUNED! Next time, we’ll discuss reasons to make supplier diversity a budget priority.