Is Your Supplier Management Strategy Inclusive?

Supplier diversity programs are common in large organizations such as Apple, Johnson & Johnson, and Walmart. Even smaller organizations are starting to recognize the importance of having a supplier diversity program in place. Usually procurement is responsible for managing and reporting on progress against diversity targets, but successful organizations will find ways to include and inspire the entire company to participate in the supplier diversity program.

Even though supplier diversity can mean something different for every company, a recent article on eSourcing Forum focused on this definition, “Supplier diversity is a proactive approach of sourcing projects and services from any of the following business categories: minority-owned, woman-owned, disabled-owned, small business, etc.”

One advantage to creating a diversity program is that companies make their policies public, mostly for shareholders and investors to review, but for other professionals to look at as well.

A new term is finding its way into more of these policies: inclusion. Supplier diversity and inclusion policies are becoming the new norm, but little has been written on what the addition of this term really means to companies or to procurement.

From my research, the emphasis on inclusion suggests some changes in corporate attitudes toward the benefits of diversity:

  1. Companies are giving themselves credit for making it possible for suppliers to participate in their bids – not just for winning them. Despite all the good intentions, it is not easy to find certified diverse companies that meet stated award requirements and land a contract. Sometimes the best a company can do is require their winning supplier(s) to sub-contract a portion of the work to a diverse supplier. But good intentions remain, and so companies strive to be inclusive by making it easy for diverse suppliers to be approved to compete for business, if nothing else.
  2. More categories of ‘diverse’ suppliers exist than any policy can capture in a list, and no list will be complete for long. In addition, suppliers are traditionally required to be certified in order for the awarding company to get credit for their diversity status. The certification process can be onerous and can certainly distract from the primary business of the supplier. As a result, many suppliers don’t bother getting certified. Using a broader label makes it possible to recognize companies that are uncertified either because they have not pursued the designation or because there is no oversight body to provide one.

Either way, the continuing evolution of supplier diversity programs substantiates the fact that they provide value to the organization – through innovation, responsiveness, or positive public relations. Any expansion of the definition may create additional work for procurement but it also increases our importance to the organization as the stewards of the program – whether it is diverse, inclusive, or both.

One Response to Is Your Supplier Management Strategy Inclusive?

  1. There are resources for purchasing professionals to use when finding diverse suppliers including the National Minority Supplier Diversity Council and its local affiliates, the United States Small Business Administration, and local government offices.

    In addition, it is sometimes quite difficult to sustain supplier diversity momentum. .According to an article on the University of Tennessee’s Web site, the majority of businesses fail within their first year and about half of those that survive that first year fail within in years two through five. Because diverse suppliers are often new and small in size, they are susceptible to failure. Some organizations actively invest in developing their diverse suppliers through training and setting up alliances with other suppliers.

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