More companies are focusing on supplier diversity as a way to create economic growth, meet customer demands and impact company culture, among other reasons. To do so, “they’re adding more enlightened metrics and pushing harder from the C-suite to get more progress in this space,” said Shelley Stewart, CPSM, retired CPO at DuPont and chair of the Billion Dollar Roundtable.
During “It’s All About Diversity! How Procurement Will Drive the Future,” a session at the ISM World 2021 Annual Conference on Tuesday, Stewart and Tiffany Hickerson, a partner with Kearney in Chicago, talked about key metrics. These include: (1) the amount of diverse spend versus total spend, (2) the type of spend (woman-owned businesses and minority-owned businesses, for example), (3) where the organization is most successful in diverse spend and (4) development areas.
Tiffany Hickerson, a partner with Kearney in Chicago, and Shelley Stewart, CPSM, chair of the Billion Dollar Roundtable, discuss supplier diversity metrics during their session at the ISM World 2021 Annual Conference on Tuesday.
Additionally, Stewart said, there might be other metrics organizations will want to track. He and Hickerson also talked about the six key elements that make up successful supplier diversity programs:
- Leadership commitment. It’s also important to align with corporate goals.
- Know where you’re starting from. Establish a baseline of spend, and regularly revisit it. This is an ongoing activity, Steward said.
- Internal collaboration. One measure can be setting up a cross-function diversity committee. Also, Hickerson said, link to the business’s broader diversity measures.
- Goals and targets. For example, include supplier diversity as evaluation criteria for suppliers.
- External collaboration. Partner with the company’s diverse suppliers for mutual growth.
- Performance management and recognition. Look at metrics to determine how well a program is performing and meeting goals.
- In a 2021 Kearney study, 53 percent of respondents said their supplier diversity spend had increased over the past year. In the coming year, 43 percent said they expect to spend more with diverse suppliers. “So, there’s definitely that momentum across the board to spend more with diverse suppliers,” Hickerson said.
- According to the study, corporate social responsibility (CSR) was the No. 1 driver for companies starting supplier diversity programs. Rounding out the top five: aligning with corporate culture and workforce initiatives, customer requirements, government compliance and supplier development.
- The top five categories for diverse suppliers, according to the study are: information technology, marketing, raw materials, construction and project management.
“There’s a tagline that two public company boards I’m sitting on are talking about, and that’s ESG (environmental, social and governance). … In many cases, diversity and supplier diversity in the company are getting a light shown on them in a different way. So, we’re probably going to hear more and more about companies driving supplier diversity because of the metrics that are being imposed now by corporations through this ESG lens.” — Stewart