Increasingly companies are realizing the profound value of a supplier diversity program.  A well-formed program can help companies to address various economic, social, and business-related goals. We will explore these goals, reveal the steps to developing a successful program, and uncover how to drive fundamental change management and ensure an ongoing commitment to supplier diversity.   Steps to Building a Supplier Diversity Program; Establish Measurable Targets Review of your Existing Supply Base Categorize Diverse Suppliers Identify New Diverse Suppliers Implement Growth Initiatives for Suppliers Integrate Supplier Diversity into Your Procurement Policy Establish Reporting Best Practices   There are many organizational goals, each serving as a potential catalyst to the categorical success of a supplier diversity program. 

Enhances innovation:

A diverse supply base brings together a wide range of perspectives and experiences. This infusion of diversity stimulates innovation and creativity leading to new ideas and solutions. Suppliers from different backgrounds and cultures bring unique perspectives and experiences.  When collaborating with diverse suppliers, companies can gain insights into customer preferences and innovative ideas they may not have considered otherwise. This diversity of thought can lead to creative problem-solving and new approaches.  

Expanded reach:

Diverse suppliers can offer access to new and niche markets that help companies solve supply chain challenges and bolster competitiveness. Suppliers may have an international reach enabling organizations to traverse global markets with cultural sensitivity and local familiarity. Networking with diverse suppliers will often result in valuable connections that provide access to new resources, novel insights, and further prospects for business growth.   

Compliance with regulatory requirements:

Those that receive federal funding are often required to provide opportunities to compete for procurement of goods and services to businesses owned by minorities, woman, and other underrepresented groups.  It is necessary for them to develop supplier diversity programs that pilot the inclusion of diverse businesses in bid opportunities. Likewise, companies that seek to do business with large corporations and government entities that hold these requirements, must also have a diverse supply base. The goal of these programs is to stimulate transparency, fairness, and inclusivity in the commerce ecosystem.   Incorporation into broader ESG initiatives: A supplier diversity program should align with broader environmental, social, and governance initiatives and demonstrate the organization’s commitment to making a positive impact on society.  A company’s promotion of diversity and inclusion as part of broader initiatives plays a pivotal role in creating positive and lasting impacts on the communities and economies in which they operate. Further, awarding business to a diverse supplier has a cumulative positive effect with those businesses utilizing other diverse suppliers and extending economic growth.  Understanding the sincere importance of promoting supplier diversity, we journey into the strategy and process of crafting a robust and well-structured program. Your company’s strategy should include the goals, objectives, and actions you plan to take to foster and support supplier diversity within your supply chain. Pertinent to your strategy will be your company’s knowledge of any legal and regulatory requirements. Once you have a sound strategy, it is critical to secure the support from organizational leaders who will ensure the company’s commitment to supplier diversity. They will help champion your efforts as part of the organization’s broader ESG initiatives. Once your organization has garnered the necessary support, program development can begin.    

Steps to Building a Supplier Diversity Program for a More Expansive and Equitable Supply Chain  

Establish measurable targets

for increasing the percentage of diverse suppliers servicing your company and the amount of spend with these suppliers. 

Conduct a thorough review of your existing supply base

to identify diverse suppliers and determine whether they have the necessary certifications. Through this review, you may find that your organization needs to strengthen their supplier registration and verification processes, so suppliers are providing and proving diversity status. 

Categorize diverse suppliers based on their procurement taxonomy

to identify gaps based on your current procurement category structure.    

Identify diverse suppliers beyond those in your current supplier portfolio.

Using a combination of these methods for supplier outreach and engagement will allow you access to a broad community of diverse suppliers. 

• Leveraging diverse business databases and directories 
• Attending networking events and trade shows 
• Outreach to local and national certifying agencies 

• Conducting surveys and interviews with current and potential suppliers 
• Engaging with business associations that support diverse communities 
• Seeking recommendations and referrals from current suppliers and industry peers 

Implement initiatives to ensure that suppliers grow as part of your program.

Once you have identified and onboarded diverse suppliers that are well-aligned to your organization’s values and supplier diversity goals consider a supplier development program. The objective is to assist them in enhancing their capabilities and performance within your organization, fostering a long-term partnership. Moreover, support your diverse suppliers in building their capacity by directing your spend toward them. Recognizing and rewarding outstanding diverse suppliers with additional business will continue to progress your program.  

Integrate supplier diversity into your procurement policy.

Ensure procurement teams include diverse suppliers in sourcing events and set weighted criteria for the inclusion of diverse suppliers in sourcing decisions. Familiarize your procurement team with the organization’s overall ESG initiatives and how supplier diversity plays a critical role in the company’s culture and goals.  

Establish practices to track and report supplier diversity metrics.

Monitor progress toward your supplier diversity program goals. Share this with your stakeholders and organizational leaders to keep the continued evolution of the supplier diversity program front of mind.    Be mindful that your organization possesses its own distinct culture, goals, and objectives. While these steps provide a comprehensive framework for creating a supplier diversity program, your program will be aligned to the specific needs and aspirations of your organization.   The Hackett Group’s Supplier Diversity Study found that companies who dedicate 20% or more of their spend to diverse suppliers can attribute as much as 15% of their annual sales to supplier diversity programs.?  Once you have a program in place, your company will want to foster a culture of continuous improvement in supplier diversity.  Seek feedback and suggestions for improvement from suppliers, stakeholders, and leaders alike. Consider setting up workshops with diverse suppliers and stakeholders to garner their feedback and ideate ways to continue to develop the program.  Collaborative discussions can lead to mutually beneficial solutions. Implement mechanisms for collecting feedback. This can include surveys, one-on-one meetings, or dedicated feedback channels. Encourage open and honest communication to understand what’s working and what needs improvement. Once gaps are identified, there may be necessary adjustments to policies, procedures, and goals.  Creating a supplier diversity program takes a commitment from not only the procurement team, but the entire organization. The procurement team, as program owners, will be the drivers of change and help to spirit the company’s ongoing dedication to diversity in the supply chain. Provide training and awareness programs for employees at all levels. Ensure that everyone understands the importance of supplier diversity, the goals of the program, and their role in its success. The result will be a program that has enduring effects to fairness, equality, and innovation across your organization.   Understand that building a culture of supplier diversity is a long-term commitment. It may take time to see significant results, but the enduring effects will contribute to a fairer, more inclusive, and innovative organization.  As a small business (SBA 8 (a) Velocity Procurement understands the importance of supplier diversity program. Contact us today to help your organization build their own supplier diversity program.