How to Start a Supplier-Diversity Program

January 14, 2014 3:23 pm
How to Start a Supplier Diversity Proogram

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1. Find someone to drive and manage the process internally.

  • If your company is serious about supplier diversity, this position should be full time.
  • It is preferable that the person report into supply-chain  leadership.
  • Person should have experience in procurement/sourcing so he or she can speak the same language as internal stakeholders.

2. Understand your company’s culture and how your supply chain operates.

  • Know what the commodity strategy is internally and where the low-hanging fruit resides. This will help you gain momentum quickly.

3. Understand the market climate in which your organization operates.

  • Know how your organization is viewed by the business community and potential suppliers.
  • Determine if there are critical factors such as legislative/political/policy influence that will support you.

4. Understand the timelines for large projects relative to the sourcing process.

  • A good estimate of internal versus external support is 70/30 or 80/20.

5. Join external organizations, such as the National Minority Supplier Development Council (NMSDC), Women’s Business Enterprise National Council (WBENC) and regional affiliates.

6. Engage internal business partners.

  • Division or business-unit stakeholders are key partners. Engaging them is acutely important in a decentralized environment. In a centralized environment, where all procurement decisions are housed within the procurement department, you will often find that the business units or divisions are paying for the services or products, so they have a critical say in selection of suppliers.
  • Buying teams (sourcing teams as well as supplier-management teams) are your customers and allies. Understand what they plan on spending and the requirements for the sourcing opportunity so you can provide the right suppliers.
  • Many companies new to supplier diversity put language in their contracts for the prime supplier to require diverse participation (known as Tier II spend). However, you want to have a supplier from historically underutilized groups be the prime supplier if at all possible, which requires getting them involved at the beginning of the sourcing process.

7. Analyze existing supply chain.

  • Understand which suppliers from historically underutilized groups already are vendors. Consider scrubbing your existing record of suppliers by using a third-party vendor.

8. Set realistic goals and measure against other companies.

  • Benchmark against more experienced companies and use percentages, not dollars, as your metric. Roll up business-unit/division goals into an enterprise goal that can be projected out five years and adjusted annually.

9. Prepare marketing materials and communicate your priorities.

  • Share what you buy for prospective suppliers to understand what opportunities exist at your company.

10. Build internal champions to carry your message.

  • Get the CEO and senior leaders on board as quickly as possible to make sure supplier diversity becomes a business priority.