Diversity is one of the biggest issues in business today, and it’s something that each organization needs to factor into its strategic planning. Diversity can be defined as the distribution of different types of people, such as race, gender, LGBT, and economic status. When your organization buys from diverse suppliers, you’re supporting businesses with majority ownership with a diverse classification. Investment in diverse businesses leads to a wider range of economic benefits because it includes a broader group of people within the supply chain your company supports. These benefits can be mapped to each phase of the procurement process.
By identifying potential suppliers that are diverse, you break free from the existing supplier pathways and expand the potential for innovation.
Early consideration and conversation with new suppliers can better inform your selection criteria, understanding of supplier fit, and overall sourcing strategy.
Diverse suppliers are more likely to have a diverse workforce and supply chain. They also tend to have a diverse customer base and understanding of the market, which means they’re more likely to understand your business needs.
Invite diverse suppliers in every RFI, RFP, and RFQ to promote inclusion and create a more competitive supplier pool looking to win your business.
In addition to having more competition within each RFx, the addition of diverse suppliers will help inform your ongoing selection process. It’s possible that the request details, criteria, and timelines make it challenging for any new supplier to participate in your selection process. The more inclusive you are the more information you will get about how even your existing practices have bias towards known, current suppliers. It’s important to track how many new and how many diverse suppliers make it through each stage of the RFx process to determine if some inherent aspects need to be adjusted to take advantage of the benefit of having more competitive proposal and quote processes.
Supplier Relationship Management
All suppliers will use your diversity goals and metrics to assess, guide, and improve their own supply chain and diverse supplier practices.
The need to align and collaborate with a more diverse supplier set will help improve the level of detail and clarity of communications. Because there will be a need to make sure your suppliers understand your overall ESG and business goals, it will increase even the internal alignment behind these key strategic targets.
Transparency and goal communication will benefit all stakeholders and keep everyone aware of current achievement and strategic direction.
Ongoing Strategic Sourcing
The discipline of examining your supply chain and considering which suppliers are not performing or where it makes sense to consider a new, diverse supplier instills more strategic examination of procurement practices.
The need to review suppliers and determine opportunities to make supply chain changes creates an intentional optimization review that benefits the entire organization. This is the key step in aligning the procurement process to the strategic goals for the company. By making sure sourcing decisions are aligned to overall strategy, the procurement team is extending the reach of all spend and making sure corporate resources are directed with intention to meet broad ESG and mission related goals as well as confirm the brand and reputation of the organization are protected. With sourcing decisions aligned to corporate goals, it will reduce the risks of working with suppliers who damage the brand.
Companies are recognizing that their success depends on it and that the best way to create successful products and services is by leveraging diverse suppliers who bring different perspectives and opportunities to the table. Clearly the benefits of supplier diversity also go beyond just the supply chain. By incorporating diversity into your procurement process, you’ll create stronger relationships with suppliers and develop a more diverse workforce that can bring new ideas to the table. Supplier diversity will make sure your organization reflects the world around you, which includes many different types of people as well as ideas, cultures, and backgrounds, and ensures your organization’s spend is directed to provide economic uplift aligned with corporate values. The added benefit is that it will help you become a more competitive business!