Supplier diversity has continued to be one of the many competing priorities for supply chain, procurement, and business leaders in 2022. Some of the largest and most successful brands and businesses have announced commitments to supplier diversity through increased spending on diverse suppliers, diversity requirements for suppliers, or new benchmarks to create accountability toward supplier diversity.
Corporations want to ensure they positively impact the local economy and regions where they have a corporate presence, contributing to an increased focus on supplier diversity. There are also pressures and initiatives to make sure their supplier base looks like or reflects their customer/consumer base. When executed properly this can strengthen consumer loyalty and companies can realize a bottom-line benefit with a greater emphasis on supplier diversity.
The Benefits of Diverse Suppliers
For businesses in the food industry, supplier diversity can unlock greater resiliency in the face of uncertainty. A diverse supplier often has a smaller footprint than a traditional supplier and can be flexible and adaptable in the face of shifting circumstances. The overall base of suppliers also inherently grows as the company expands to more diverse talent. This growth has proven as a leading contributor to more significant innovation and, ultimately, more extraordinary business performance.
While studies have proven the efficacy and potential of supplier diversity to improve business performance, companies across industries continue to be challenged in realizing a sustainable approach to this initiative. A recent survey showed that most professionals are still in the early stages of actualizing supplier diversity initiatives within their business. Conversely, some companies have mature supplier diversity programs that have been in effect for decades. The success of those programs is evidenced by the formation of the Billion Dollar Roundtable for corporations whose 1st and 2nd-tier supplier diversity spend has reached a billion dollars.
Getting Started on a Supplier Diversity Program
Enabling a more robust and scalable supplier diversity program within your business begins with executive buy-in to institutionalize the business’ approach. Too often, supplier diversity programs struggle to gain traction as they cannot wield influence in procurement decisions.
“To truly drive toward economic equality, supplier diversity can’t feel like a secret tucked away in the procurement function; it has to hit the main stage.”
Kris Oswold, Vice President of Global Supplier Diversity at UPS
From there, businesses must establish a clear set of metrics and goals to measure progress toward supplier diversity. For many companies, the most common metrics are the dollars spent on and the total number of suppliers. As your business matures, it will be essential to track the economic impact of your program and the impacts on market share.
Tools to Help Enable Your Program
With executive buy-in and established KPIs, it will be critical to leverage a supplier management portal to effectively onboard, track, and collaborate with your diverse suppliers. A robust supplier management tool will ensure easy onboarding for diverse suppliers and provide documentation for your organization’s supplier diversity qualifications and criteria while allowing for centralized communication with your suppliers. Furthermore, the platform should enable comprehensive document management capabilities for easy reference. It is imperative to have certified diverse suppliers to count toward the company’s spend goals and annual certifications.
Some solutions are focused solely on managing diverse suppliers. While niche portals can be a baseline starting point, expansion is limited. When the supplier diversity program is embedded within a solution, the company promotes visibility and growth. A siloed system becomes an extra step for buyers and internal stakeholders. This siloed system adds unnecessary complexity, band-width overload, and in the long-term, could impact the company’s bottom line.
Supplier management tools, like FoodLogiQ’s Manage + Monitor platform, put the diverse suppliers on a level playing field with the rest of your supply base and creates a user-centric supplier experience to ensure compliance and enable streamlined communications with your suppliers. Customized dashboarding will further allow your business to measure the most impactful metrics to your organization’s supplier diversity program while providing immediate and actionable insights.
Committing to a More Diverse Supply Chain
Supplier diversity is becoming increasingly critical for businesses operating today. There is a strong business case for building a network of diverse suppliers, and consumers are demanding brands and businesses patronized. Demonstrating a commitment to supplier diversity and communicating that commitment through reportable metrics and documentation is table stakes. In a consumer-focused industry, no company wants to be left behind. Contact us today to learn how FoodLogiQ can enable your supplier diversity program with Manage + Monitor.
