What Supplier Diversity Means…and What it Doesn’t Mean

Daryl Hammett
Read time: 3 mins
What Supplier Diversity Means… and What it Doesn’t Mean

Top procurement and supply-chain professionals know that it’s no longer enough to follow the same tired checklists of corporate procurement and strategic sourcing best practices. In the face of today’s fiercely competitive business environment and changing customer demographics, more companies than ever before are counting on their supply chains to deliver both strategic cost savings and added value.

Whether you’re an experienced procurement professional or an executive whose responsibilities happen to include strategic sourcing and supplier diversity management, you’re dealing with a global business environment that’s growing more diverse every day. For example, there are already more than 1,000 U.S.-based information technology companies owned by women and minorities, ranging from startups to mature companies with annual revenues north of $100 million. Most of these firms operate across national borders and in several IT disciplines.

If you work for a company that claims to value workplace diversity and inclusion, it just makes good business sense to implement an inclusive and engaging supplier diversity program as part of your overarching Environmental, Social, and Governance (ESG) initiatives. Let’s start with a basic definition:

A supplier diversity program is a proactive program that encourages the procurement of goods and services from businesses owned by a diverse cross-section of different groups of people, including (but not limited to) minorities, women, the disabled, the LGBT community, and veterans.

Even at companies with the best of intentions, diverse supplier procurement programs and policies sometimes miss the mark. The trick is to build a robust, carefully monitored supplier diversity program that delivers measurable returns on your investment — not just a showpiece to brag about on your website or in your annual report.

Avoid These Four Common Mistakes

How can you tell if your supplier diversity programs need work? Here are four warning signs that they might have veered off-track:

  • You expect (and accept) lower standards of quality, accuracy, and timeliness from minority- or women-owned businesses than from other suppliers.
  • You periodically scrub your vendor data to make sure your diversity numbers look acceptable, without launching any new supplier diversity initiatives.
  • You monitor only your prime suppliers, but haven’t implemented a supplier diversity program for your Tier II through IV suppliers.
  • You have no effective processes in place to include diverse and unique perspectives in your company’s supply-chain decisions.

As the U.S. celebrates Black History Month, it’s a great time to review your organization’s supply-chain management programs. Today’s real thought leaders are companies that actively mentor, partner with, and engage their diverse prime and second-tier suppliers, setting the pace for the future of supplier diversity. Are you keeping up with industry best practices for supplier diversity?

There’s also a hidden advantage to having a proactive supplier diversity program in place. In today’s highly competitive job market, it’s not unusual to hire an outstanding consultant or contractor away from a supplier. With such fierce competition for talent, and diverse talent in particular, it helps to have multiple sources feeding your pipeline.

So if you truly want to attract the best and brightest new talent, you now have one more great reason to either 1) launch a supplier diversity program, or 2) expand your current programs to engage with diverse suppliers further down the supply chain.

At Coupa, we have powerful tools for your vendor spend and diversity data analysis needs. Please visit our Supplier Diversity Management page to learn more.