Supplier Diversity Program Best Practices – Supplier diversity refers to suppliers that are at least 51% owned and operated by people from underrepresented groups in the business. Some common examples are women, people of color, the disabled, veterans, and the LGBTQ community.
The “set-aside provisions” of Public Law 95-507, enacted in 1978, amended the Small Business Act of twenty years ago. The act established the policy of the US government to provide historically underrepresented companies with as many opportunities as possible in its acquisitions. These groups are often referred to as small businesses (SBEs), minority-owned businesses (MBEs), and women-owned businesses (WBEs), to name a few.
Supplier Diversity Program Best Practices
In addition to government mandated requirements, several studies have demonstrated the business benefits of a more diverse supplier base including, but not limited to:
Steps To Start And Grow Your Supplier Diversity Program
Given this background and the above benefits, many organizations are trying to diversify their supplier base. We have built a knowledge base of proven methods and approaches that have led to successful supplier diversity programs. These are summarized in seven best practices below.
Implementing a supplier diversity program requires significant effort. However, with leadership buy-in, the right delivery methods, and metrics that hold the organization accountable, the program can be successful and provide many benefits to the organization as a whole.
If you are planning to start a supplier diversity program or already have one that needs improvement to deliver the results you need, please feel free to contact us. We look forward to hearing from you at DEIintheWorkplace@
The System for Award Management, or SAM, is a government portal that consolidates resources from the various systems and information sources used by the federal government. There is no fee to register with SAM. This site can be helpful in locating the size criteria and representation of registered organizations.
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The Dynamic Small Business Search (DSBS) tool is maintained by the Small Business Administration (SBA) as a tool used to identify potential small businesses. Also there is information about impersonation.
VetBiz is an online web portal maintained by the US Department of Veterans Affairs that hosts a database of Vendor Information Pages (VIPs) – a searchable list of veteran-owned businesses. Veteran-owned businesses may be vetted by the US Department of Veterans Affairs to compete for veteran-related land acquisition. Additionally, these businesses may be certified veteran-owned by the National Veterans Business Development Council (NVBDC) or the National Association of Veterans Businesses (NaVOBA).
The National Minority Supplier Development Council (NMSDC) certifies minority-owned companies (MBEs) and can be used as a resource for locating MBE companies.
The Women’s Business Enterprise National Council (WBENC) certifies women-owned businesses (WBEs) and is a resource for locating women-owned businesses.
Benefits Of Supplier Diversity Go Way Beyond The Bottom Line
The National LGBT (Lesbian, Gay, Bisexual and Transgender Chamber of Commerce (NGLCC) certifies LGBTQ-owned businesses and can be used as a resource. Providers | Tags: Guest Posts, L2, Process and Best Practices
“The Supplier Diversity Program is a proactive business program that encourages the use of minority-owned, women-owned, veteran-owned, LGBT-owned, service-disabled veteran-owned, historically underutilized, and defined businesses. SBA). Small business concerns as suppliers.. .Supplier diversity programs help sourcing products and services from previously untapped suppliers to sustain and gradually transform a company’s supply chain, quantitatively reflecting the demographics of the community in which it operates, documenting transactions with multiple vendors.-Wikipedia (SBA an agency of the US government)
Provider diversity can have positive effects on businesses and communities, but history suggests that program implementation is difficult and, in some cases, almost ineffective. In CVM Solutions’ 2018 Supplier Diversity Report, only 32% of respondents rated their supplier diversity programs as very effective,
. This white paper from Gilead, one of the world’s largest biopharmaceutical companies with suppliers around the world, contains reflections and learnings from our work to advance our company’s supplier diversity program. Our goal is to move beyond spending as “the” metric for program success, to measure inspirational and broader impact.
Pdf) Supplier Diversity And Supply Chain Management: A Strategic Approach
The ineffectiveness of supplier diversity programs is, in our opinion, exacerbated by this historical focus on spending with multiple suppliers as a metric. A 2016 Hackett Group survey stated that it is the most common indicator used to monitor program success. While this is an important metric, a broader lens is needed to capture the full impact of supplier diversity.
The objectives of a progressive supplier diversity program should focus on including suppliers who represent the company’s values, positively impact communities, and help the company deliver its product/service value to diverse communities.
In a 2016 Hackett survey, recipients were asked which diversity program goals they thought were very important or important. The top four responses in order are 1) improving corporate image in the marketplace 2) supporting corporate culture around diversity and social responsibility 3) meeting customer/government requirements in RFPs/contracts and; 4) Comply with regulatory requirements.
Hackett’s survey responses are consistent with our observations: supplier diversity metrics have stalled and are poised to stall. Expenditures are certainly aligned with regulatory requirements, but we believe they are incomplete. It does not capture the full impact of multiple hires on companies and communities.
Turning Supplier Diversity Programs Into A Competitive Advantage
For example, it limits visibility into understanding whether multiple vendors receiving corporate business are encouraging inclusion in their workforce and sub-vendors. If a value-added, diversified proprietary technology hardware reseller buys hardware from a large company and only adds incremental features or services to an existing product, a fraction of the total contract dollars may reach the diversified company.
Second, “diversity” presents challenges in a global context. At the end of 2017, Gilead had offices in 35 countries. In each of these countries, “diversity” has a different meaning. This, along with the potential loss of eligible spending for US compliance goals, hinders global expansion. In Hackett’s survey, only 15% of global companies have a global supplier diversity program.
With this historical research in mind, we were challenged to rethink our program design and practice. Our hypothesis is that program success, at least for our company, requires (a) alignment with internal corporate goals and (b) key performance indicators (KPIs) that measure broader impact. For companies brave enough to reconsider the original design of their program, Table 1 demonstrates a set of program parameters that will go a long way toward dictating overall program outcomes.
A core value is the fundamental belief of an organization. In October 2016, Gilead added inclusion as a core value and renamed its supplier diversity program “Supplier Inclusion.” In addition to spending on diversity, Gilead has expanded its definition of inclusion and built these metrics into its supplier selection framework and into our overall business.
Steps To Establish Supplier Development And Diversity Program
Acting as a core value, supplier inclusion improves our corporate performance through three key drivers: innovation, supplier engagement and community impact. This evolved value proposition establishes a framework for open dialogue between executives, business units and government relations.
Developing a criteria framework and brainstorming around a short list of key drivers proved to be a valuable change management exercise. We recognize that the above program parameters are certainly not exhaustive, and we fully anticipate the evolution of our core drivers.
In October 2016, Gilead added inclusion as a core value to reflect our identity as a company and process in how we approach our work on a daily basis. To sum it up internally, we categorize our supplier diversity program as “supplier inclusion” and believe that workforce diversity research applies to the supplier base as well – this diversity of thinking ultimately leads to improved products and results.
Despite the impact of globalization and digital trends, collaboration on process innovations occurs more when suppliers are closer to buyers.
Accenture Recognized As No. 1 On Diversityinc Top 50 Companies For Diversity® List; Joins Hall Of Fame
Proximity is especially important when it comes to small businesses where more personal interactions and services are involved. Trust and satisfaction enable open innovation and high-performance teams.
To measure proximity, we look at the locations of our operational footprints and high-density areas where people benefit from Gilead’s products. Through this analysis, we identified 15 high-focus sectors spanning the globe. The goal is to increase the percentage of small, diverse suppliers within 100 miles of these zones, increasing the likelihood that collaborative innovation will occur. For example, Rev One Design, a small LGBT-owned and women-owned graphic communications agency near Gilead’s headquarters in Foster City, California, developed an agile business model that helped Gilead reduce design refresh times from weeks to days. .
The Gilead program strives to foster collaboration with suppliers through engagement. “It’s the right thing for Gilead to pursue relationships with suppliers that are underrepresented in terms of size, geography and ownership,” says Andy Murray, senior director of procurement. “It allows us to stay connected with the people we serve and contribute to economic development in the communities where we operate.”
For example, Gilead engaged with ScienceExchange, which took an innovative approach to securing third-party research and development services.
Supplier Diversity Benchmarking Report
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