Supplier diversity is top of mind for strategic sourcing teams looking to overcome uncertainty and build resilience into their supply chains. With ongoing supply chain disruption, more and more enterprises are understanding the massive impact that a diverse supply chain generates. A more diverse supply base not only enables agile sourcing processes, but also drives widespread impact at every level. According to the National Minority Supplier Diversity Council (NMSDC), “MBEs [Minority Business Enterprises] generated more than $400B in economic output that resulted in the creation or preservation of 2.2M jobs and also contributed $49B in revenue to local, state, and federal tax authorities.”
This quarter, Sourcing Leaders from Silicon Valley, Chicago, and New York City came together for a virtual meetup to discuss the importance of supplier diversity and best practices for embedding supplier diversity and inclusion (D&I) in every step of the sourcing process. Expert panelists from Western Regional Minority Supplier Development Council (WRMSDC), Adobe, SurveyMonkey, and more shared their insights and experiences on embedding inclusion into the supply base.
How do you make the business case to secure buy-in for a supplier diversity program?
As Dr. Scott Vowels, award-winning diversity and inclusion professional and bestselling author, said in our session: “Supplier diversity is a business imperative.” With D&I efforts at the forefront of the enterprise, supplier diversity is absolutely essential to agile and resilient sourcing processes. Our expert panelists gave the following arguments to make the case for supplier diversity:
- Introducing diverse suppliers increases competition and incentivizes suppliers to bring more value
- Diversity in the supply base drives innovation for the business
- Prioritizing supplier diversity will elevate the brand and encourage greater engagement from customers and prospective employees
Ultimately, Sal Peinado, member of the Insurance Diversity Task Force at CSAA, advised that the best way to make the case for supplier diversity is to ensure your program is aligned with corporate values and can directly contribute to the goals of your stakeholders and executives. By digging deep into stakeholders’ needs and wants, you can create a program that both empowers diverse suppliers and achieves better business outcomes.
What benefits have you seen from your supplier diversity efforts?
Cecil Plummer, president and chief executive officer of WRMSDC explained that the benefits of effective supplier diversity efforts are far-reaching. According to Cecil, in the Western Region alone, diverse businesses generate over $15B in value, which translates to job creation, tax revenue, and access to healthcare, housing, and higher education for underserved communities. Our panelists also noted the following as benefits of their programs:
- Increased access to the C-suite as a driver of D&I
- Enhanced collaboration with cross-functional teams to ensure each department is engaging with diverse suppliers
- Stronger relationships with suppliers and stakeholders
- Increased awareness of procurement within the organization as a strategic partner to the business.
Kathleen Wong, program manager for Supplier Corporate Responsibility at Adobe, highlighted that the most meaningful outcomes of supplier diversity are not necessarily seen by the business, but by underrepresented minority groups that are directly impacted by increased economic opportunity.
How do you define success with your supplier diversity program?
Jeanette Milano, director of procurement at SurveyMonkey, noted measuring supplier D&I in an organization can be challenging.That’s why she suggested leveraging available technology and databases to understand your baseline and measure against it. Our supplier diversity panelists also offered more ways to define success:
- Number of contracts awarded to minority-owned businesses
- Percentage of spend dedicated to diverse suppliers over time
- Level of awareness of your supplier diversity initiative and access to senior leadership
- Alignment with D&I and greater business on corporate diversity goals
While deciding what to measure and what goals to reach for, our panelists all agree that metrics matter. Having a way to aggregate, track, and report on supplier data will help you prove your program’s efficacy. Our panelists advised starting with small, meaningful goals, like rate of supplier participation or increased awareness of your program, within the company in order to build the foundation for your business.
Top Takeaways for Improving Supplier Diversity
Building a supplier diversity program from scratch is no easy task. That is why our expert panelists all emphasized the need to collaborate cross-functionally with your stakeholders and D&I team in order to build a sustainable and scalable supplier diversity initiative. They also suggested tapping your network and collaborating with fellow sourcing leaders to drive impact far beyond the business.
Curious about how technology can help you embed supplier diversity into your sourcing processes? Join our live demo on Oct. 30 and find out how the Scout strategic sourcing platform can help you manage, track, and strengthen supplier D&I in your organization.