Supplier diversity is a relationship-based discipline: developing internal stakeholders who understand the value of diverse suppliers, as well as building relationships with qualified diverse suppliers. For many, finding those diverse suppliers can be a challenge.
Supplier diversity programs depend on an internal partnership with the procurement function, a relationship that is based on knowledge and shared goals. Procurement teams and supplier diversity programs, by becoming collaborators, forge a culture of supplier inclusion. This typically isn’t an easy process, as introducing diverse suppliers requires the disruption of established processes and a culture change. The procurement team must expand bid opportunities beyond incumbents, most of whom are old, established relationships.
A Supplier Diversity Strategy
These measures can help facilitate establishing a successful supplier diversity program.
Remember the importance of time. Give colleagues time to adjust, allow processes to stabilize and set realistic shared targets.
Supplier diversity is a shared responsibility. Supplier diversity leads should prepare for gradual growth and adjustment with patience and persistence. Begin by selecting diverse suppliers that can win the business and give them an opportunity to shine. While they might not win the first contract, they will impress the business, and start to build a connection.
Managers of fledgling programs can experience frustration, spending time and effort building internal connections and managing interdependencies. Since the procurement function owns the supplier relationships, the supplier diversity manager is responsible for education, explaining the “why” or the business case for supplier diversity, and executing the “how” by integrating diverse suppliers seamlessly into competitive bids.
Often, procurement teams are playing beat the clock, working with the business to create requirements while juggling multiple projects and managing deadlines. They are ill-equipped to identify or pre-qualify diverse suppliers and must remember to notify the supplier diversity team with sufficient time to find a slate of diverse suppliers. As a result, this step may be overlooked, treated as a box to check or an inconsequential exercise — all because your collaborators do not realize the business value of supplier diversity. However, the situation can be remedied with education and awareness.
Build a process. While procurement professionals may be experts in their industry for specific commodities, they might not be skilled project managers or supplier diversity advocates. Developing a slate of qualified diverse suppliers depends on a partnership with the supplier diversity team. In some organizations, this relationship is well-choreographed, where each department knows its role and functions together in a hand-in-glove manner. Some organizations streamline the process by agreeing on the best opportunities for introducing diverse suppliers, often focusing on specific commodities. Other companies develop a list of prequalified suppliers for frequent purchases.
Maintain perspective. The purpose of supplier diversity is not to oust existing prime suppliers that have become trusted partners woven into your company’s processes. It is intended to remind incumbents to think outside the box to improve the quality of their products and services, as well as avoid falling into comfortable patterns. Simply adding competition, especially from suppliers or providers that bring in creative diverse solutions, can infuse excitement, innovation and exploration. Changing perspectives can produce results.
Collaboration is key. Supplier diversity and procurement teams should be collaborators, identifying the category or product to fill emerging needs, discussing the business requirements and infusing diverse suppliers in the mix. New suppliers are typically identified based on relationships and their reputation in the field.
Finding the Right Supplier
Anyone can search a list of suppliers to find matches, but finding the right match is an art. It’s like a dating game: It begins by comparing capabilities against business requirements for an on-the-surface alignment. The right match goes deeper, finding a supplier that fits your brand and budget and will deliver consistent quality. This requires due diligence and conversations, a process that takes time — which is always in short supply. So, start early and set the bar high.
Treat incumbent suppliers as an extension of your supply chain. Encourage them to create, innovate, improve product quality and reduce cost. Focus on collaborations that promote continuous improvement and support your organization’s internal vision. Infuse your focus on supplier diversity into their processes. Set the expectation that your suppliers use diverse suppliers.
Value your current suppliers, but don’t baby them. Hold them accountable for delivering amazing results and staying on top of their game. Task them to use diverse suppliers. Relationship building is foundational to supplier diversity, discovering new businesses and infusing diverse suppliers throughout your supply chain — this is where the magic happens.