How to Increase Supplier Diversity Spend

How to Increase Supplier Diversity Spend

Recent social movements have highlighted the crucial need for companies to not only communicate a commitment to diversity and inclusion but to take meaningful action incorporating those values into their operations. Supplier diversity does this by increasing opportunities for socially or economically disadvantaged groups to participate in the supply chain. However, increasing diverse spend can be challenging while maintaining existing processes and managing demands to consolidate overall spend. Here are six steps you can take for sustainable growth in supplier diversity at your company:

Bridge Gaps Within Your Organization

Often supplier diversity is championed by a corporate citizenship team without full stakeholder buy-in. Start by ensuring that all internal business partners and leaders are aware of the strong business case for supplier diversity and have incentives in place to achieve shared goals. Create mechanisms of accountability such as including diverse spend metrics on balanced scorecards reported to the executive team and designating supplier diversity champions within each category or department.

Customize Your Approach By Category

It is often easier to find and qualify diverse suppliers in some procurement categories rather than others, such as marketing services for communicating to diverse consumer audiences versus emerging technology only offered by a few large suppliers. To customize your approach;

  • Conduct internal surveys or interviews to understand which categories present the largest challenge and/or opportunity at your company.
  • Join professional networks, industry forums, or organizations like the Billion Dollar Roundtable to learn how peer organizations’ representatives, working within those categories, are achieving similar goals.
  • Seek out creative models that best fit your category’s needs, such as forming a strategic alliance between prime and diverse suppliers or using a diverse supplier as an aggregator for other suppliers.

Actively Encourage Participation

Some potential suppliers may qualify as diverse, but have not yet pursued official certification or knew to include it in their proposal. Clearly communicate on your company website how potential suppliers can qualify as a diverse supplier and the value that you see from such partnerships. It is good practice to set a standard to always including a question about supplier diversity in your RFPs.

Utilize Certification Agencies

The organizations that certify diverse suppliers share your goal to increase opportunities for diverse suppliers. Keep them informed of upcoming procurement needs, and they can facilitate connections with qualified and diverse supplier options. You can even encourage member(s) of your leadership to serve on a certification agency board in order to gain more insight into diverse suppliers’ needs and the certification process.

Provide Executive Mentoring

Once you do find diverse suppliers to participate in the bidding process, help set them up for long-term success. Post resources or host seminars on how to do business with your company and provide constructive feedback to those that do not win an RFP. When you do start a supplier relationship with a diverse supplier, consider offering scholarships for executive training or creating a mentoring program with members of your company’s diversity resource groups in order to aid their growth.

These strategic steps to increasing your supplier diversity will still take time and resources, but they will enable you to change the status quo and eventually create a truly inclusive supply chain. As a result, your company can have a more meaningful social and economic impact in your community, as well as drive increased competition and innovation, ensure compliance with government requirements, and improve both employee and customer engagement with your brand.


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