Supplier Diversity 101

Overview 

As organisations strive to become more inclusive, It's not just about hiring diverse employees, but also about supporting diverse businesses. Diversity is not just a buzzword; it's a business imperative. Studies have shown that diverse organisations perform better and are more innovative. However, many organisations overlook the diversity of their suppliers, which could limit their potential for growth and innovation.

By expanding diversity among your suppliers, you not only help support diverse businesses but also add value to your organisation. It's a win-win situation. In this article, we will discuss the benefits of supplier diversity and provide tips on how to implement it in your organisation.

What Is Supplier Diversity?

Supplier diversity is a business strategy that aims to include a diverse set of suppliers in the supply chain of an organisation. The procurement process is made more holistic through supplier diversity as it involves sourcing and procurement from a range of diverse suppliers offering a variety of goods and services. Supplier diversity programs focus on bringing in underrepresented businesses to ensure that both commercial and social enterprises have an equal opportunity to participate in procurement strategies. This strategy involves reaching out to businesses owned by minorities, women, veterans, and people with disabilities. Supplier diversity efforts enable organisations to increase competition in their supply chain and promotes innovation, while also contributing to the growth and sustainability of diverse suppliers.

Why Companies Should Invest in Supplier Diversity Program?

In today's world, diversity and inclusion are very important for an enterprise to be successful. A supplier diversity program is one of the best practices that any business can adopt to provide goods and services from diverse suppliers. By implementing a supplier diversity program, companies can build meaningful relationships with minority businesses, small businesses, and women-owned enterprises, and establish them as valued business partners. A diverse supplier base enriches a company's pool of resources, providing a range of innovative products and services, ultimately leading to higher quality and cost-effectiveness. Moreover, a supplier diversity program helps companies to meet their corporate social responsibility goals by supporting the growth of minority-owned businesses. Overall, investing in a supplier diversity program is a win-win solution for both the company and the diverse suppliers.

How to Determine Objectives and Best Practice in Supplier Diversity?

In order to establish a successful supplier diversity program, companies must first determine their objectives and the best practices for achieving them. This process often involves assessing the diversity of the company's current supplier base and identifying areas for improvement. In order to increase the number of diverse businesses in their supply chain, companies can seek out new suppliers through targeted outreach and networking events. Additionally, procurement policies and procedures can be revised to ensure that diverse suppliers have equal opportunities to compete for business. Best practices for supplier diversity also include tracking and reporting on program success, establishing mentorship and training programs for diverse suppliers, and fostering a culture of inclusion and diversity throughout the supply chain. By implementing these strategies, companies can create a diverse supplier base that supports their business objectives while also contributing to a more equitable and inclusive economy.

Why Is Supplier Diversity Valuable?

 Supplier diversity is valuable because it promotes inclusivity and allows organisations to draw upon a wider pool of vendors. A supplier diversity program encourages the inclusion of diverse suppliers in the procurement process. This means that an enterprise actively seeks out and supports businesses owned by minority populations, including women, people of color, veterans or diverse backgrounds. Including diverse businesses in supply chains has a ripple effect on the economy. These suppliers are given new opportunities to introduce their goods and services, creating jobs and fostering economic growth in their communities. Ultimately, supplier diversity is a key tool for achieving a more equitable business environment and driving real economic impact across the nation.

Key Steps to Start and Grow Your Supplier Diversity Program

1. Define your goals and objectives: Start by understanding why you want to establish a supplier diversity program. What are your core values and how can you incorporate diversity into your value proposition? Once you develop clear objectives, it becomes easy to identify the right suppliers to support your mission. 

2. Identify key metrics and measures: Metrics are critical in measuring success and tracking progress. Consider the number of diverse suppliers you bring on board, the total spend with diverse suppliers, and the percentage of spend allocated to diverse suppliers. By tracking these metrics, you can evaluate the performance of your supplier diversity program and make adjustments accordingly.

3. Develop policies and procedures: Develop policies and procedures that outline the processes and procedures for identifying, qualifying, and onboarding diverse suppliers. These policies should be transparent, easy to understand, and communicate the commitment of the organisation to diversity and inclusion.

4. Engage diverse suppliers: Partner with diverse suppliers that align with your objectives and values, and provide opportunities for them to demonstrate their capabilities. Work with them to understand their capabilities, capacity, and limitations. Provide training and support to help them meet your requirements and goals.

5. Monitor and report progress: Regularly monitor the progress of your supplier diversity program and report it to stakeholders. Use the metrics identified in step two to measure the success of the program and identify opportunities for improvement. Celebrate successes and identify areas for continued growth.

Remember, supplier diversity is a long-term commitment that requires continuous effort and investment. By following these steps, you can build a strong, sustainable supplier diversity program that supports the values and objectives of your organisation.

So who is successfully implementing supplier diversity?

Here are a few examples of supplier diversity in play across some Australian as well as global organisations.

Schneider Electric Australia: Schneider Electric Australia is committed to supplier diversity, and has dedicated a Supplier Diversity Manager to ensure that the organisation is engaging with a diverse group of suppliers. They utilise minority owned and operated small businesses, veteran-owned businesses, women-owned businesses, LGBT-owned businesses, and disability-owned businesses.

IBM Australia: IBM Australia has a comprehensive strategy for engaging with suppliers from diverse backgrounds. They have dedicated dedicated resources to actively building relationships with important stakeholders in the supplier diversity community, and they make sure they only choose suppliers who can demonstrate their capability in diversity. 

Telstra: Telstra has a dedicated Supplier Diversity Team that is focused on increasing the number of minority-owned businesses they do business with. Their goal is to boost supplier diversity throughout the company's supply chain and to ensure that their contracts are going to businesses that share the same values and goals as Telstra.

Starbucks has been a leader in supplier diversity. They have forged relationships with diverse suppliers to help them reach larger markets, such as minority-owned coffee roasters and coffee farmers in Africa, Latin America, and Southeast Asia.

McDonald’s supports supplier diversity by partnering with small, minority-owned businesses and entrepreneurs like graphic designers and printers, event marketing firms, and software developers.

Walmart is one of the most prominent retailers supporting supplier diversity. They have a Supplier Inclusion Program that works with minority-owned companies to highlight top products from diverse companies, including jewellery, home décor, ethnic foods, apparel, and much more.

Microsoft has a Supplier Diversity Program, which works to develop relationships with diverse suppliers and to support their growth through business opportunities. The program works with some of Microsoft’s key suppliers such as other technology companies, marketing firms, IT system integrators, event producers, and media agencies.

Summary

Supplier diversity is a business strategy that involves including a diverse set of suppliers in an organisation's supply chain. This promotes inclusivity and allows for a wider pool of vendors, ultimately driving economic growth in diverse communities. Companies should invest in supplier diversity programs to build relationships with underrepresented businesses, promote innovation, and meet corporate social responsibility goals. To establish a successful program, companies must determine their objectives and best practices, such as assessing current supplier diversity, seeking out new suppliers through outreach and networking, and fostering a culture of inclusion throughout the supply chain. Ultimately, supplier diversity is valuable for achieving a more equitable business environment and driving real economic impact.