What is a supplier diversity program, and what does it mean for an organization? A supplier diversity program is a company initiative that aims to increase the number of diverse suppliers in the supply chain. It can be challenging to create, but there are many benefits to having one in place.
This blog post will help you understand what a supplier diversity program is and how it’s defined. We’ll also break down what steps you need to take if you want to create your supplier diversity program, from limiting your goals and figuring out what resources are available for support, all the way through evaluating its success with growth metrics!
A supplier diversity program within the procurement process supports a range of potential social and financial benefits for savvy businesses committed to inclusion and equal opportunity by building a supply chain comprised of diverse companies.
A supplier diversity program is an initiative that helps organizations meet their diverse workforce and supply needs by partnering with small, minority-owned, and women-owned businesses. An SDP is a business practice designed to improve the sourcing of goods and services from diverse suppliers. There are many benefits that come with this type of program: increased revenue, decreased risk, increased productivity in supply chains, and improved employee engagement.
What is a supplier diversity program, and how can it help your business thrive? Supplier diversity programs help companies build a more inclusive supply chain to better serve customers while also building bonds in the community through joint business ventures such as mentoring or collaboration on projects.
A diverse supplier program will help ensure that you are meeting your company’s social responsibility goals and increasing the representation of minority-owned businesses in your supply chain.
“Diversity is a business issue, not just an HR issue.”
Beyond ensuring equal opportunity for all suppliers, there are additional benefits to having diverse suppliers. The input from different perspectives leads to innovation and creativity within the organization; this can have positive effects on everything from new product development to market research.
Having a wide variety of partnerships with suppliers means people with different ideas working together, which increases productivity by challenging each one’s assumptions about what needs to be done or how it should be accomplished. This is also a positive step in the process of overcoming challenges such as bias towards minority-owned businesses.
There are three key components of success when it comes to creating your own supplier diversity program: defining your goals and what resources you need (e.g., funding), identifying which suppliers you already work with who have indicated interest/committed themselves.
In defining clear goals for your organization’s SDP, it is essential to look at where your program is now and benchmark progress in expanding and growing your diverse supplier base. Examine what competitors in the market are doing successfully in partnering with diverse suppliers, and borrow some ideas to help improve your program and business strategies.
What is a supplier diversity program without goals, and what are the best practices to achieve program growth and longevity? Goals can vary depending on what KPIs (key performance indicators) need improvement or what improvements have been made since initiating the program. Some examples include an increase in minority contracting dollars by 50 percent where there was none before or attaining 40% minority employment at all tiers within one year, among other changes needed to be achieved for progress. Setting these goals ahead of time will guide how successful your supplier diversity program initiatives become over time.
Resources needed for a successful supplier diversity program include internal and external stakeholders, training for management, staff, and suppliers, a plan for how to work with supplier diversity program changes due to company or industry factors.
It is vital to consider the suppliers you currently work with and partner with who have an invested interest and commitment to diversity in aspects of their businesses. Consider what products and services they provide, how diverse their leadership is, which regions of the world they are operating in etc.
Some of the best tips for successfully launching a supplier diversity plan include improving the transparency of your supply chain. It is key to remove any obstacles that may hinder your organization’s goals of creating a more diverse supply chain.
Communicate effectively with your suppliers and share the details of products and services your business needs. It is also useful to create resources to educate small businesses on how to work with your organization.
Increased supply chain visibility will likely allow you to identify the diverse suppliers that currently exist in your supply chain and your current spend with those suppliers. After identifying the diversity categories, detail the spend information for each supplier so you have a better understanding of the diversity among your suppliers.
You might want to have an executive sponsor for your program from within your company, so that you can leverage his or her power and influence with suppliers who may not be working with diverse small businesses and encourage them to do so to improve the system and widen opportunities for everyone.
Your goal is to develop strong relationships with suppliers who can provide what your company needs and work collaboratively together for the success of your business. From there, you’ll want to commit resources in order to create diversity programs that will help your organization thrive by creating a supportive environment where all cultures are accepted, and employees and supply partners feel safe from discrimination or harassment.
There are many ways companies can start implementing supplier diversity programs-from setting quotas on new hires who come through diverse pipelines, encouraging executives within their organizations not only have diverse teams but also make sure they’re getting opportunities at the executive level; working with universities or other educational institutions as potential partners in supplying talent pipeline (or investing in them), and increasing supplier resource groups.