By Julia Hubbel, CPSD
During a recent discussion with a colleague about risk management, I was reminded of why it’s so challenging at times for a diverse supplier to gain access to our corporate supply chains. As we talked about the importance of supplier relationships and understanding capacity, my buyer said that procurement professionals often don’t consider "total landed cost, and how much time it takes to supervise a new supplier."
"Isn’t it easier," he argued, "to go with a known supplier and see if they can produce what we need?"
These words are a death knell for supplier diversity professionals, as well as for any supplier hoping to break into the supply chain with new and creative ideas. Choosing what’s known and comfortable — diverse or not — is the default position for many of us. We rationalize that doing so costs less, carries less risk and results in a predictable, positive outcome.
But does it?
Every supplier has to be supervised at some point. Given milestones and performance metrics, we reach a comfort level with our suppliers. But that doesn’t mean we ignore them. We still periodically must do on-site audits, recheck capabilities and ensure that we understand what a supplier can and can’t do as it grows or shrinks with the times, and with us.
Most of us resist change, which is natural and predictable. If we’ve got strong connections with our suppliers, know their families and pets and go back many years, making even a small change is uncomfortable at best. Yet opening doors to new suppliers helps develop new ideas and thinking in our companies, as well as gain highly creative input.
Customers and clients are becoming increasingly aware of and sensitive to how corporations buy their supplies. With good management and sound systems, diverse suppliers can bring extraordinary value to the supply chain and to their communities as their companies grow and add jobs. Here are seven strategies to keep in mind when considering a diverse supplier option for your supply chain:
1. Challenge your attitudes. At times, you may feel pressure from the top and from your supplier diversity team to include diverse suppliers. While it’s natural to push back, try to keep an open mind. As submarine captain Marko Ramius said in The Hunt for Red October, "A little revolution now and then is a healthy thing, don't you think?"
2. Know your supplier diversity professional. How well does this person understand the needs and priorities of your business? Does he or she meet with you regularly to determine potential opportunities? Is the supplier a diversity advocate or a business person who understands your strategic goals?
3. Explore lower-tier opportunities. If you aren’t currently counting tier-two spend, it may be time to explore that opportunity. Ideally, you want your suppliers to know the industry well enough to have knowledge of who their potential diverse suppliers are.
4. Diversity feeds creativity. In nearly every business environment where diverse ideas are introduced, creativity and inventiveness are enhanced. Diversifying your supply chain with energetic new suppliers eager to prove their value can inspire others to compete. It can also engender collaboration and reveal different ways of serving customers, depending on your product or service. Likewise, it could inspire you to think and work more creatively when working with inventive suppliers that have new approaches.
5. Provide your supplier diversity professional with guidelines. Coach your supplier diversity professional on how to be a good strategic partner to you. The more he or she understands your world — your concerns and needs — the better he or she can be of service. Work with the professional to identify potential diverse suppliers on both the direct and indirect side. While capacity may drive some companies to lower tiers, small companies — even a one-person office — can often provide unexpected opportunities, such as innovative software or high-tech solutions. For example, a retired military pilot created a new set of headphones to reduce hearing loss among pilots — he worked out of his basement, not a large corporate office. Size doesn’t always determine value.
6. Be willing to work outside your comfort zone. Any promising new supplier must be vetted. Don’t let that deter you from working with a diverse supplier. While the habit is to look internally first, a company in the diverse database might offer a potential solution. It takes a few extra moments and might unearth a surprising outcome.
7. Be patient. Diverse or small suppliers may not possess the sophistication you’re accustomed to. They may stumble in presentations or be intimidated at first. Some may overstate their capacity to do a job. These small or diverse suppliers are learning on the job, just as everyone does. Remember that someone believed they had a solution worth considering.
By keeping these strategies in mind when considering diverse suppliers, your organization will be better equipped to explore the value and opportunities that they can provide.
Julia Hubbel, CPSD, is president of The Hubbel Group in Lakewood, Colorado.