What are some common misconceptions about what supplier diversity is?
At the top of the list is that using diverse suppliers will require compromising cost, service or quality. Done properly, organizations find these attributes can improve or at least maintain the current levels. Another myth is that supplier diversity is a handout or a social program: Businesses must still compete, innovate and be technology-savvy to win the opportunity.
What's the biggest challenge to implementing a successful supplier-diversity program?
What it's not: finding and vetting suppliers who can meet your business requirements. Generally speaking, the most difficult part is preparing your own organization for success. This means having visible top-down support, securing cross-functional ownership of the process, communication and training for all stakeholders to understand their role in success.
What are some practical steps I can take to start a supplier-diversity program?
A common thread in the most successful supplier-diversity programs is having the full support and commitment of the organization's leadership; getting the necessary buy-in is critical. Establish your baseline spend with diverse suppliers—you'll need this to track progress. Develop a plan for how to move forward. You'll want to consider a range of topics from developing the business case, to how it will be integrated into the sourcing process, establishing tracking mechanisms, supplier development and more. You may want to start with a small pilot to help make the case and establish some "quick wins" that can be leveraged for growth.
How do we find diverse suppliers?
This is actually the easy part, although there are clearly some industries that attract greater participation from diverse suppliers than others. There is a tremendous ecosystem around supplier diversity that helps organizations connect with diverse suppliers. This includes organizations such as but not limited to Chicago Minority Supplier Development Council, Disability IN and Women's Business Enterprise National Council. Another approach is to use an e-procurement platform with diverse suppliers.
Leverage your existing relationships: With diverse suppliers, how could they grow? Can they refer other diverse suppliers? For non-diverse suppliers: Ask them about their supplier diversity program. What can you learn from them about their own program or potentially those of other customers without compromising confidential information? Publicize your supplier diversity efforts—this will attract diverse suppliers.
What's a common mistake companies make in starting a supplier-diversity program?
Unfortunately, it is a mistake made with a range of programs—not just supplier diversity—and that is failure to do the hard work of organizational change management. There is a paradox here—the fastest way to go far is go slow. It takes time to educate stakeholders and secure their commitment—and it is not a "once and done" proposition. It is an ongoing process of communication to maintain alignment toward the goals.
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How can I measure how our program is working?
In many respects this is also very similar to how you measure performance of your non-diverse supplier base: scoring how well they meet the cost, service, quality and capacity needs of your organization. Beyond this, though, you should consider such things as growth and share of spend with diverse suppliers by category, how are the suppliers contributing to innovation, sales growth, risk mitigation, etc.
What if you are an employee of a company that doesn't have a supplier-diversity program and are not in a position to mandate one?
Even starting with top-down support, successful supplier-diversity programs, like any worthwhile change, take time to implement. There is much you can do, but it will likely take a little longer. A few good places to start:
- If you are in a position to, establish your baseline spend with diverse suppliers now. Many organizations have some spend with diverse suppliers even absent a formal program. You'll need this to chart your progress, and examining the suppliers and categories will provide ideas for possible expansion.
- Recruit like-minded colleagues in various departments who could be able to help.
- Look for opportunities to share how a more diverse-supplier base will help the organization reach its goals.
- Look for small opportunities to expand usage of diverse suppliers to generate wins. The idea is to eventually secure the leadership support through a groundswell of interest and commitment within the organization created by successful proofs of concept and a steady drumbeat of messaging.
Harry Haney is director of the Supply Chain & Sustainability Center at Loyola University Chicago.
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