Steps to a Supplier Diversity Program
Roger Blumberg - VP Corporate & Product Marketing

5 Steps to Start and Grow Your Supplier Diversity Program

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A strategic and proactive supplier diversity program can impact your organization on many different levels. From bottom-line savings to CSR, and even recruiting, the benefits are slowly gaining widespread attention. With these benefits in mind, many organizations are making supplier diversity initiatives a priority going forward, but how do you get started?

For a quick guide on supplier diversity download this free infographic from The Hackett Group.

1. Establish a Business Case and Get Executive Support 

Supplier diversity starts from within

Before starting on this path towards supplier diversity, we as organizations need to step back and look in the mirror. Any good supplier diversity program has to start with the right company culture. In a webinar that we hosted on supplier diversity, along with Chris Sawchuk from The Hackett Group, Natonya Harbison from Papa John’s, and Jamie Crump from The Richwell Group, JAGGAER CEO Jim Bureau gave his thoughts on this point saying, “I’m a big believer that supplier diversity actually starts with company diversity and culture, because if you don’t have one, you’re likely not going to get the other in a meaningful way.

That’s why at JAGGAER we started our Human Equity Project, which has three main components: equity, philanthropy, and recruiting / career progression. While it doesn’t have to look exactly like this at your organization, the other speakers echoed these sentiments as well; an effective supplier diversity program starts with company culture.

Building a Business Case for a Supplier Diversity Program

After building the right culture internally, the rest will begin to fall into place. However, like any new strategic initiative, you need to have a clear business case that communicates value before the executive team and other stakeholders will buy in. Supplier diversity initiatives provide no shortage of benefits, both tangible and intangible. These include minimized supply chain risk, increased collaboration and innovation, CSR, cost savings, as well as community and economic impacts. Somebenefits of supplier diversity may surprise you, impacting talent recruiting and retention efforts.

Getting Executive Support

Once you’ve researched and clearly understood the value that a supplier diversity plan can bring to your organization, it’s time to pitch it to executives. In the webinar we hosted, Chris Sawchuk said, “the main sponsor for supplier diversification within our companies came from the chief procurement officer of our organizations, but what we have seen … over the last six months is the elevation of this issue as a focus and interest area for CEOs as well as the board of directors.

Just gaining leadership sign-off isn’t the end of the conversation, though. It is very important to get an “executive-level champion,” as Chris called it. Someone who will be an active voice in and for the organization. Someone who will attend supplier diversity events, network with groups like the national minority supplier development council and be a true sponsor of your supplier diversity program. It doesn’t just need to be leadership from your procurement function either, the more organizational support the better.

2. Identify Diverse Suppliers

Now that you’ve grabbed your organization’s attention and got your executive-level champion onboard, you can begin to develop your supplier diversity program. The first step in this process is to identify various suppliers.

Collaboration

Do your research and find other companies with existing supplier diversity programs as well as those who are just starting out. Collaborating can provide a wealth of knowledge, support, or even just a sounding board for potential ideas. You can get actionable and reliable information on various suppliers in your field and advice on supplier diversity initiatives as a whole.

Attend diversity events

There are a number of events and groups that exist to promote supplier diversity and provide networking opportunities. Getting involved with groups like the national minority supplier development council and others can be a valuable resource to find diverse suppliers, connect with other like-minded organizations and establish best practices.

Leverage Technology

Sawchuk said, “this emergence of database tools that allow you to identify various suppliers across all the various diversity organizations that are out there today. And many of these tools are now using web crawling technologies to keep the information updated … it’s making these efforts so much easier than it has been in the past. Using technology like JAGGAER’s Supplier Management can help you get the most out of your supplier relationships and Spend Analyticscan show you how much of your spend is through various suppliers. Solutions like these and others can go a long way in taking your supplier diversity programs to the next level.

3. Invest in your Supplier Diversity Program

You’ve laid the groundwork, it’s time to invest in your supplier diversity program. First things first, you need someone to head up this program. While it’s not a set requirement to hire someone or create a new job role solely for leading your supplier diversity program, it is strongly recommended to get the most out of your efforts. Supplier diversity is meant to be very proactive and involved and will eventually need a dedicated professional in order to take your efforts to new heights.

To go along with a personnel investment, as mentioned above, a technology investment can bring significant value to your organization. The right solution  can streamline your supplier diversity program by identifying the right minority-owned businesses for your vertical or product, providing insights from analytical capabilities to bring visibility and ROI, and offering benefits for your entire procurement function.

A good supplier diversity program also requires a significant time investment. Simply onboarding a set of small and various suppliers is only the first step. Your supplier diversity manager must develop a program for training, mentoring, and networking. Chris said, “How do we mentor them, how do we create environments that it’s easier for them to engage? Many of us have very large organizations; It’s very difficult to navigate these organizations. How do we mentor them to be able to better engage with us, to better work through the risk assessments that we put all of our suppliers including our diverse suppliers through? It must be a true relationship with these suppliers where both sides are offering value and growing together.

4. Establish Goals and Best Practice

Like any good business program, you will need to establish a set of KPIs and goals, and constantly evaluate your process, comparing it to other organizations’ best practices. This will vary between every company, but it is crucial to have these benchmarks and goals in order to measure your supplier diversity program’s effectiveness. These should be reviewed and adapted periodically as your organization’s needs and strategies change to ensure that your supplier diversity program remains a focal point.

5. Keep an eye on performance

While monitoring your supplier diversity programs’ performance, it’s important to evaluate several metrics. While these will vary based on your needs and goals, some are not always what you first think of, so here’s a few to get you started:

 

  • Number of new diverse suppliers onboarded
  • Percentage increase of various spend
  • Savings from your supplier diversity program
  • Increase in internal customer satisfaction
  • External economic impact (eg, jobs created)
  • Impact on your local communities
Diversity

Infographic

For more on supplier diversity benefits and best practices download this free infographic from The Hackett Group.

Download Now!

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