SUPPLIER DIVERSITY

Set of diverse people / suppliers are encouraged by supplier diversity consultants for supplying products and services

Taking Supplier Diversity to the Next Level

Companies world over recognize that having a diverse supplier pool is a major competitive advantage and a powerful business tool. Minority and Women Supplier Diversity Program also provide companies access to support from federal, state and local government bodies. To effectively implement supplier diversity programs, one of the problems that procurement organizations face is the relatively small number of minority business enterprises that exists in specific product and service areas.

What is Supplier Diversity Program?

Supplier Diversity is a business program that encourages the use of: diverse-owned, women owned, veteran owned, LGBT, service disabled veteran owned, historically underutilized business, and small business vendors as suppliers. Supplier diversity is the proactive business process of sourcing products and services from previously under-used suppliers. This process helps to sustain and progressively transform a corporation’s supply chain thus quantitatively reflecting the demographics of the community in which it operates by recording transactions with diverse suppliers.

Process Adopted: Supplier Diversity Best Practices

EmpoweringCPO leverages its strong strategic sourcing capabilities to help clients achieve this goal. Strategic sourcing initiative aimed at cost savings is the best vehicle to identify opportunities and increase spend with minority vendors. EmpoweringCPO helps locate potential minority suppliers and focuses on the first 3 steps of strategic sourcing process which are critical to the success of any supplier diversity program. Below mentioned table elaborates on the methods adopted to incorporate supplier diversity goals:

Strategic Sourcing steps Methods to Incorporate Supplier Diversity Goals
Develop Category Profile The focus of this step is to understand what we buy, who we buy it from, what are the product/ service characteristics/ specifications, what is the current cost, and with whom and how the spend is managed.

 

It also involves understanding market trends and economics that impact these purchases as well as current negotiation leverage with suppliers.

 

This step is also critical to supplier diversity as it enables to understand current MWBE spend levels and helps in setting realistic targets.

Generate Supplier Portfolio The objective of this step is to cast the net wide, in order to generate an effective supplier portfolio.

 

While generating portfolio, we can set diversity goals, we can allocate percentage of spend or whole subcategory of spend to be sourced with MWBEs.

 

National Minority Supplier Database or internal supplier diversity databases can be utilized to increase competition in the process

Develop Sourcing Strategy During this stage Category Positioning Matrix is created, the category is analyzed to understand complexity of the market, competitiveness, the ability to switch suppliers, and number of suppliers in the market place.

 

And subsequently the category is positioned in one of the four quadrants based on Business Impact and Supplier Risk.

 

For each quadrant sourcing strategy can be applied based on Strategic Sourcing Gemstone.

 

Supplier Diversity goals can be advanced during this stage by either contracting with MWBE vendors, setting aside some portion of the business for MWBE vendor or by negotiating Tier 2 requirements into a sole source non-MWBE scenario.

While generating portfolio, we can allocate percentage of spend or whole subcategory of spend to be sourced with MWBEs. National Minority Supplier Database or internal supplier diversity databases can be utilized to increase competition in the process. For each quadrant sourcing strategy can be applied based on Strategic Sourcing Gemstone. Supplier diversity goals can be advanced during this stage. This can be done by either contracting with MWBE vendors, setting aside some portion of the business for MWBE vendor or by negotiating Tier 2 requirements into a sole source non-MWBE scenario.

Develop Sourcing Strategy: 

During this stage Category Positioning Matrix is created.  The category is analyzed to understand

  • complexity of the market,
  • competitiveness,
  • the ability to switch suppliers and
  • number of suppliers in the market place.

And subsequently the category is positioned in one of the four quadrants based on Business Impact and Supplier Risk.

In addition to supporting the above mentioned process, EmpoweringCPO also helps in cleaning the existing database with minority indicator codes. In most cases the data base is usually unclean, the typical flaws are:

  • Not all vendors are populated with right minority indicator/ codes
  • Sometime same vendors have multiple minority indicator / codes
  • Some of the vendors at times do not have any minority indicator/ codes

In the above circumstances the first step is data cleaning and classification so as to be able to prepare and ascertain the “As Is” state. This helps in tracking the goals at regular interval and ensures the program is successful and goals are achieved.

EmpoweringCPO Capabilities: Supplier Diversity Consulting Services

The key ingredients required to design and successfully implement supplier diversity program are strategic sourcing skills and research capabilities. We have qualified team of research analyst and supplier diversity consultants to implement and ensure the program is successful.

EmpoweringCPO is one of the leading procurement consulting firms globally. Contact us for more information about our experience and case studies in this domain.

Learn more about EmpoweringCPO’s Supplier Diversity Services.Contact us today

Subscribe to our Blogs

Sign up now for our blogs and infographics for the latest insights on procurement and strategic sourcing.

Contact Us

Get in touch with us, we would like to hear from you

  • This field is for validation purposes and should be left unchanged.