Spend Analysis and the Diverse Supplier Base

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Procurement has gotten complicated, and that’s a good thing.

Sure, procurement is not as simple as it used to be, when simply finding the best price meant a pat on the back and a "job well done" from the boss. There are a lot more factors to consider today than there were just a decade or two ago. As our society as a whole evolves and improves, we find that procurement professionals are being (rightfully) held to a higher standard when it comes to social issues that relate to purchasing, including sustainability and supplier diversity.

Here at JAGGAER, we’re seeing this shift reflected more and more with our customers, who are among the biggest companies in the world. In fact, recently we’ve seen two customers – a multi-billion dollar oil and gas company and one of America’s largest retailers – dedicate entire departments within their procurement organizations to supplier diversity. When entire departments within Fortune 500 companies sprout up, it’s safe to say that supplier diversity has emerged as a priority, and organizations are under pressure to make their supplier base more inclusive of minority and women-owned businesses.

Government mandates remain the primary driver for this increase, but even within our clients, I’ve noticed a shift – it’s becoming increasingly clear that (and embraced because) it’s simply the right thing to do. So how can organizations work to make sure they’re diversifying their supplier base? The answer might surprise you: spend analysis.

We’ve seen the aforementioned customers begin to actively analyze their spending allocated to minority and women-owned businesses with our Spend Radar solution, and using the reporting and analysis tool to report the results to their executives. Visibility into spending habits is clearly the first hurdle organizations must overcome – you can’t move the needle for a metric you’re not tracking.

When you boil it down, supplier diversity is no different from any other data element. And JAGGAER’s Spend Radar solution’s detailed classification capabilities, the tool’s flexibility and the ability to build out custom reporting helps drive visibility into and understanding of any organizational spending habit or process, up to and including diversity. Spend Radar is designed with a flexible data model that can process any kind of data to provide unmatched analysis across all spend data sources, delivering visibility in real time.

Organizations concerned with supplier diversification often focus on improving supplier relationships and negotiating contracts with diverse suppliers in order to drive more sourcing events to these groups, but the ability to analyze and derive actionable intelligence from your spend data lays the foundation for all of these activities.

In our experience, the time is right for increased supplier diversity. Ensuring that your organization is equipped to meet those diversification needs might take a little more work, but we’ve got the tools to help customers make it happen.

What are you doing to ensure your organization is on the path to supplier diversity? Join the conversation on Twitter at @JAGGAER.

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