Building Inclusive Supply Chains: Connecting Corporations and Diverse-Owned Businesses

Every major effort requires a ‘change management’ component for a good reason: CHANGE IS HARD. It can be uncomfortable to leave well-worn paths or adopt new habits, and wanting to see change isn’t enough to bring it about. People have to make an active effort, sustained over time.??

We can't lead positive change without big solutions, and big solutions require us all to work together.?

In this case, the opportunity - and the change that is needed - is making a commitment to supplier diversity.?

Corporate supplier diversity programs proactively seek to increase their spending with businesses that are at least 51% owned by minorities, women, veterans, LGBTQ or disabled individuals, small businesses, or businesses that are located in Federally-designated HUBZones.?

The supplier diversity movement isn’t new, but it has reached a new level of prominence… a moment in time when people are naturally coming together to drive change.?

If we can harness this moment, and not waste it, we can change the course of countless communities, businesses, and lives.

According to the most recent State of Supplier Diversity report, 2021 was a “momentous” year for supplier diversity. “40% of respondents started their programs in just the last two years,” wrote supplier.io CEO Neeraj Shah. “These newcomers are motivated by a desire to make a positive impact on diversity and inclusion. They must now transition from budding initiatives to sustainable actions that drive meaningful change in underrepresented communities.”?

Corporations and diverse-owned suppliers have an immediate opportunity to work together, and both groups are enthusiastic… but even so, change remains elusive.

Presenting a Strong, Sustainable Business Case

Corporate supplier diversity advocates face three primary challenges:?

1. Discovering diverse suppliers that offer the products and services they need without slowing down the buying process
2. Documenting diverse ownership through certification(s) from recognized third-party organizations?
3. Demonstrating that working with diverse-owned suppliers does not mean paying higher rates or taking on additional risk???

This third point is particularly important in today’s competitive business landscape. If a supplier diversity program is to last, making a solid business case to the leadership team is essential.

“I hadn't heard any supplier diversity professional explain the business case for supplier diversity - and that is critical,” advised Lamont Robinson, Director of Supplier Diversity at AmerisourceBergen, when I spoke with him this week. “If you can't thoroughly articulate the purpose of supplier diversity, it's going to be difficult for you to gain any kind of traction to help build the program, especially internally.”

Fortunately, most companies already have more diverse-owned suppliers than they know. When customers express their desire to see the companies they buy from support diverse businesses, these companies have to engage in an outreach program to learn more about their current supply partners.

"In most cases, companies are being driven to increase their supplier diversity programs in response to demand from customers and shareholders,” Matthew Pavelek, President and CEO of the National Veteran-Owned Business Association (NaVOBA) explained to me. "Many of these suppliers are already valued partners, and companies want to ensure they are accurately measuring their diversity spend. Supplier diversity managers are talking to those in their supply chains and actively advocating for any eligible businesses to get certified. Most businesses have more veteran-owned suppliers than they know, they just need to measure the spend."

Moving the needle on diversity supplier spend takes time and effort, but for many corporate professionals it is a passion - one that they take very seriously. As diverse-owned businesses find new opportunities to share their voice, these programs are becoming more influential and effective.

Hearing the Diverse Supplier Perspective

It is not always easy for a small business to be ‘heard’ by corporate customers, but diverse business owners are more passionate than most. They want large companies to know that they not only represent a range of communities that have gone under-leveraged in the past, they can perform just as well as non-diverse businesses - and their commercial terms are just as competitive.

Diverse-owned suppliers don’t just want to be considered for new opportunities, they want to partner - building lasting relationships that fuel their own growth and contribute to their customers’ competitive advantage.?

Elizabeth Blount McCormick is the President of UNIGLOBE Travel Designers, a black and woman-owned business. Not only is she eager to use her voice to reach corporations, she is passionate about the fact that her business can go toe-to-toe with anyone on quality and service. She also senses that this is the moment to push the movement forward.

“My message to procurement is, ‘This is your time.’ You have the power to direct where the company is spending; just do it,” she told me on a recent episode of The Sourcing Hero podcast. “There are so many resources. The National Minority Supplier Development Council (NMSDC) has a database, there are African American Chambers of Commerce in different cities, there's the National Association of Women Business Owners (NAWBO), and the Women’s Business Enterprise National Council (WBENC). Be intentional about it, because you have the power to make the change and to move us forward.”

As Elizabeth points out, every new corporate contract is an opportunity to make a difference and each buy-side individual has more power than they realize. True change starts with a decision and a commitment, but it doesn’t end there. For that, many more conversations need to be had, and many more relationships need to be built and fostered.?

Working Together to Drive Change

What should be at the heart of those successful conversations and relationships? Trust.?

If we really want to build inclusive supply chains, everyone is going to have to pull in the same direction. There is potential risk for corporations and suppliers, but there is also a lot of upside.?

• RISK: Procurement leaders are worried that now is not the time to take on additional risk or introduce added costs. Diverse-owned suppliers are sometimes perceived to be riskier and more expensive, and since procurement is rarely the ultimate decision maker, we have to ‘sell’ the opportunity to others inside the business.
• UPSIDE: Procurement has always hungered for more attention from the CEO. If we can drive this effort, one that customers and shareholders are clamoring for, we can get that attention AND improve our results.
• RISK: Diverse-owned businesses are often smaller organizations, with limited business development resources. If they allocate scarce time to big deals that never deliver for their company, they may be pursuing opportunity at the cost of growth.
• OPPORTUNITY: Getting the right corporate account can open the door to more, helping diverse-owned businesses put improved processes and systems in place, and serving as referenceable accounts when future invitations come along.

Corporations and diverse-owned suppliers each need to form their own vision and then take informed, committed leaps of faith towards it. Corporations often move more slowly than diverse-owned suppliers, many of which are small and agile. It is going to take some time for corporations to achieve their supplier diversity visions, let alone reach the point diverse-owned businesses want them to, but many people are working hard behind the scenes to apply forward pressure.

Change is hard, and progress feels slow, but the momentum is building - as is the passion for increased investment in, and partnership with, diverse businesses.