Diversity and Inclusion (D&I) in the workplace has transitioned from a nice-to-have to a center stage business initiative. With increasing pressure from investors, key stakeholders, and consumers, organizations are looking at how they can improve workforce diversity and build supplier diversity across their business operations.
This focus on company diversity goes much further than simply ensuring a diverse workforce internally. It is also reaching outward across a business’s supply chain. Creating a more inclusive landscape of suppliers is an incredibly powerful way to fuel the economy, support small businesses, and create a more inclusive future. Supplier diversity also helps add an extra layer of resilience, agility, and innovation to your operations, which is critical in today’s environment.
A roster of diverse suppliers also helps companies remain competitive. Studies show that companies with diverse leaders or diverse supplier networks tend to have a competitive edge.
Not only that, but data indicates that average investor support for “diversity-related resolutions globally” during the first half of 2021 grew to 42.4% compared to 23.9% during 2020. From the consumer perspective, 75% of Gen Z consumers have indicated that they will boycott companies seen to be discriminatory against race and sexuality, and 69% of younger consumers believe that brands should show active support of the Black Lives Matter (BLM) movement.
Similar to any D&I initiative, in order to achieve real results, business leaders must set the course through key actions and strategies. In this guide, we’ll take a look at the top five ways your business can improve supplier diversity.
1. Make It a Clear Business Priority
Before change can take place, supplier diversity has to become a clear business priority. Forward-thinking leaders must set the tone, clearly and consistently communicating the critical importance of a diverse supplier network across the organization. This priority must be set for both procurement teams and for subject matter experts, such as marketing, R&D, and IT teams.
When prioritizing supplier diversity, it is essential to create clear, measurable goals for teams to meet. For example, will your company focus on increasing diverse ownership in just one or two areas, such as Black-owned, LGBTQ-owned, and women-owned organizations? Or, will it be a more general effort to increase spending across all diversity-compliant suppliers? Is there a specific area of your supply chain, like marketing, where the focus is needed the most? Set a goal. How much of an increase in spending do you expect to see across diverse suppliers?
In order to set goals, it is critical to be aware of your organization’s existing supplier landscape, focusing across areas such as IT, Marketing, and R&D, to build a robust, diverse supplier network. This will help you understand where to concentrate your efforts, as well as ensure that you can track your progress.
2. Empower Your Employees
In order for employees to successfully reach the goals outlined by leadership, company leaders need to effectively communicate these diversity goals and ensure that everyone is on the same page. Then, once leaders have set the spending goal to increase spending with diverse suppliers, employees need to have a path forward that empowers them to find these diverse suppliers.
First, it will be important to understand how teams currently search, engage, and manage their supplier relations. In many cases, a lack of diversity in the supply chain is simply due to a lack of visibility into viable options for those in charge of managing the selection and investment in these relationships.
For this reason, the first step in empowering your employees is making sure they can see your supplier landscape. Make sure that your systems are tracking diversity and it’s easy for suppliers to keep this information updated. If all the relevant employees do not have access to an internal marketplace or internal database, they won’t have the ability to see the diverse suppliers the company already does business with. With the right tools in place, employees can begin building a diverse set of suppliers to choose from.
It can also be highly beneficial for teams to look at their procurement onboarding process and how they share performance ratings on their suppliers. Cumbersome procedures and the fear of the unknown often lead to teams relying on the same set of suppliers. Teams lack access to performance data that would make it easy to choose a different supplier. Employees need a streamlined way for them to bring diverse suppliers in the door.
3. Put Supplier Management Software to Use
Many organizations are now turning to highly specialized tools to help manage their service suppliers among their subject matter experts, such as marketers, IT, and R&D teams.
These new tools help indirect procurement and services leaders to bridge the gap and allow marketers and other specialists to meet company demands. Teams can use these new tools to create change for diversity and other key measures.
Not only that, but the right supplier management software can make it easy for people across a company to search for suppliers that have a diversity component. Some tools, such as SpotSource, even allow you to search specifically by diverse-owned suppliers and make many other layers of data transparent to decision makers.
This makes it possible for teams to make faster decisions and drive goals forward with greater insights into their supplier network.
Additionally, companies like SpotSource are bringing to life suppliers with data on performance, risk management, and supplier diversity across areas such as:
- Ownership diversity along with certifications
- Supplier staff diversity breakdowns
- Commitment to pay and compensation equity
- Practices and policies to support diversity
4. Vet New Suppliers Via Reputable Review Sites
Once employees have identified a more robust network of suppliers, they should take advantage of external review sites to find diverse suppliers that are an overall good fit. Specialized review sites such as Agency Spotter, for marketing agencies,help teams vet suppliers via customer reviews, up-to-date ratings of suppliers, various performance metrics, and even minority-ownership or even more specific diversity categories.
Knowing where to search when you need to source outside your current roster of suppliers will help make the transition to a more diverse supplier network a positive one, ensuring that teams are accessing the best supplier options based on specific organizational needs.
5. Analyze Progress and Set New Goals
It is important for leaders to continually set goals and analyze the progress of the business in regard to diversity initiatives. Knowing if you are on track or if there are points of friction slowing progress down is important, especially in larger companies.
A great example of this transformation can be seen in Target’s recent push for supplier diversity. Between 2016 and 2018 alone, Target increased its business with diverse suppliers by 64.4%. Today, Target works with a diverse range of suppliers that are at least 51% owned, controlled, and operated by a mix of diverse owners, such as women; Black, Indigenous, and People of Color; LGBTQ+; veterans; or persons with disabilities.
Initiatives like this need to be measured and reported on publicly or, at a minimum, across all levels inside a company. This helps hold the entire organization responsible for meeting diversity goals.
To deliver on this, the right technology can streamline the process and quickly bring visibility that empowers decision making. Tracking progress and analyzing supplier diversity need not be a manual operation. Platforms, such as SpotSource, allow you to transform your service supplier management by digitizing your service suppliers, providing real-time insights into diversity initiatives while also helping direct spend to those suppliers.
In the end, improving supplier and company diversity is an essential component of building a better tomorrow. When leaders step forward to spearhead these initiatives, they have the chance to not only create a more profitable business but also to ensure a future in which everyone has a fair chance to succeed.