How can you identify diverse suppliers?

To identify diverse suppliers, you can look for businesses that are majority-owned (51% or more) and operated by people from a protected characteristic such as gender, race, disability, or sexual orientation 1. You can also leverage technology to identify diverse suppliers, ask suppliers to report on their own diversity spend, or partner with certified organizations 2. It is important to note that supplier diversity classifications are at each company’s discretion and should always be in accordance with local laws 3. Creating inclusive workspaces where all employees feel that they belong, that they can contribute to the business and thrive is the right and fair thing to do 1.

We recommend Buyers take a fully-inclusive approach. Supplier diversity has matured over the last 48 years. With an intention to remove prejudice from a supplier diversity programme working with one individual group creates exclusive engagement. The purpose of supplier diversity is to be inclusive. For us, we believe that exclusive is not inclusive. Find a partner that offers access to all diverse groups, not just one group.

Consider partnering diverse suppliers with your tier 1 suppliers and portion off a percent of the spend to be allocated to the partnering diverse supplier (90/10). This allows the tier one to earn whilst supporting a small business/diverse supplier to earn, grow, invest and mature.

When new Request for Quotations are launched, new bidders can be disadvantaged because they present more risk: will they be reliable? Trustworthy? One way to reduce risks is to propose SMALL PROJECTS (eg a prototype or a proof of concept) ahead of future calls for tenders (eg 1 to 2 years earlier). This way, you can better evaluate their capacity to serve your company (skills, commercial relationship etc.). This requires anticipation, and a real procurement strategy involving procurement and the business.

This is sound advice. We also encourage buyers to measure the success of their supplier diversity programme not by spend but by the amount of ‘access to opportunities’ they created. Any tender award should be down to competency. But did the buyer make the sales opportunity available to marginalised communities so they could evaluate and then compete?

Supplier diversity is vital for organizations fostering innovation, expanding market access and mitigating risks. It demonstrates commitment to social responsibility aligning with customer expectations and enhances corporate reputation. Diverse suppliers contribute unique perspectives, driving creativity and inclusive decision-making. Additionally, it stimulates economic development and can lead to increased supplier loyalty and performance making it an impactful business practice.

Using the Pareto principle assume that 80% of your suppliers where you spend 20% of your budget will be SMEs who fall into the tail-spend area of your supply chain. As a result ‘Tenders’ (RFP) are likely to be inappropriate for them to participate in. When building your supplier diversity programme consider ‘opportunities’ as well as tenders. RFQs, PO spend, and the purchases below the tender threshold value. By actively creating access to opportunities you will have significant impact of the economic outcomes of those marginalised businesses.