Authored by ConnXus CEO, Rod Robinson
Many supplier diversity trends that began in 2015 will gain traction as we enter 2016. Here are my top five supplier diversity predictions for 2016.
1. Increased focus on supplier diversity data accuracy. As the importance of supplier diversity continues to grow, more companies leverage it as a source of competitive advantage. Additionally, as increasing numbers of third-parties use the underlying data in decision-making—accuracy and reliability are critical. Just do a quick google search to see the numerous embarrassing and costly episodes associated with reporting erroneous diversity data.
2. Heightened focus on Tier 2 spend tracking & reporting. As I wrote in a previous post, many best practicing companies leverage technology applications to collect, track and analyze the relevant diversity spend associated with several of their prime suppliers. As the trend toward supplier consolidation continues, Tier 2 programs are a great way for large companies to foster the development of small and diverse suppliers who will become the primes of the future. Some companies, like P&G, are going as far as connecting key primes with top performing diverse suppliers to create value-added relationships that benefit both the supply and demand sides of the equation.
3. Supplier diversity will be more tightly aligned with procurement and supply chain. In many organizations, supplier diversity has historically been a disconnected bolt-on to procurement. However, as the demographics and dynamics of the business world shift—supplier diversity practices are also changing. Given the rapid growth of minority- and woman-owned businesses, representing over 70% of all U.S. businesses, the relationships and knowledge base of supplier diversity professionals will play a key role in the future sustainability of supply chains.
4. Diverse supplier relationship management processes will expand to broader supply chains. Supplier reliability, risk, transparency, validation… These are all buzz words being tossed around to emphasize the importance of effectively managing supplier relationships and supplier data. Many best practicing supplier diversity companies have captured relevant supplier qualification data on diverse suppliers for years via registration portals. However, many of these same companies are now realizing the benefit of having the same level of transparency for all suppliers.
5. Increased emphasis on innovation. As large corporations continue to reduce the number of suppliers participating in their supply chains, this will make it that much more difficult for small and diverse suppliers to breakthrough without significant size and scale. The best way to combat the scale challenge is coming to the table with unique, innovative solutions that bring value. These solutions could come in various forms including development of new software applications to streamline manual processes or a new innovative approach to product marketing.
The key message for small and diverse suppliers looking to breakthrough large corporate supply chains is this: Innovation will overrule size and scale where true value is delivered. Above average gross profit margins will follow. Here is to a rewarding 2016!