Fairmarkit and supplier.io are excited to announce our official partnership. Over the last two months, we have had the pleasure to work closely to identify an opportunity to impact supplier diversity programs. Through our collaboration, we are committed to driving corporate spending to diverse vendors through tail spend.
Today’s leading enterprises have a unique opportunity to make a lasting impact on the communities they serve by ensuring diversity amongst their supplier base and directing more spend to those vendors. Public commitments made by leaders across industries such as Jamie Dimon of JPMorgan Chase, Zander Lurie of SurveyMonkey, and Bracken Darrell of Logitech, have energized other organizations to do the same. As technology providers, we recognize that we have a role to play as well, and view it as our responsibility to help make those commitments a reality.
The combined power of supplier.io and Fairmarkit gives procurement organizations an innovative solution to supplier diversity, allowing these programs to become a more integrated part of the sourcing process. Powered by the robust dataset from supplier.io, Fairmarkit makes it easy to implement, enforce, and report on supplier diversity initiatives across all spend, not just large RFPs. With Fairmarkit’s automated sourcing platform, now you can ensure that diverse vendors are identified, recommended, and invited to bid for every requisition.
So why have these diverse suppliers and vendors traditionally been limited to a small segment of requisitions? At Fairmarkit, we interviewed over 30 supplier diversity leaders to find out the answer. Common challenges emerged including:
Due to these challenges, most programs and supplier diversity professionals only focus on large RFPs. Diverse vendors are identified by manually searching through a database and inviting them to participate. After being invited, the chance that the RFP is actually awarded to diverse suppliers is low, as incumbents are awarded most of the business.
Supplier diversity teams are doing the best they can with the tools and resources at their disposal. However, shifting actual dollars to diverse vendors continues to be challenging. According to a supplier.io study in 2019, only 23% reported that their supplier diversity program was very effective.
It is clear that there is the potential to have a bigger impact. By focusing solely on these few, high-value RFPs, organizations are missing a massive opportunity to divert spending across the rest of their transactions.
Tail spend is typically considered the frequent, and often unmanaged, purchases that account for a relatively small percentage of a company’s overall spend, but a disproportionately large percentage of its total transaction volume. It is around 80% of transactions in volume, yet only constitutes about 20% of a company’s spend in dollars.
Given the frequency of these tail spend purchases, it makes it difficult to include them in supplier diversity programs because of the high volume of requisitions. It becomes nearly impossible for humans to manually intervene to properly identify, invite, and ensure compliance for thousands of transactions, and thousands and thousands of diverse vendors per request.
Removing these manual processes allows them to easily ensure that diverse vendors are identified, recommended, and invited to bid for every requisition—large strategic RFPs or small tail spend RFQ purchases. This leads to a multitude of benefits including:
Driving tail spend to diverse vendors helps you hit your supplier diversity goals faster. With a higher volume of transactions, procurement teams have the ability to invite more diverse vendors to bid. This helps organizations reach supplier diversity goals faster including how many diverse suppliers are being invited to bid per requisition, adding new diverse suppliers to your supplier database, and de-risking the overall supply chain by diversifying the number of suppliers and vendors you work with.
supplier.io shared in their 2019 State of Supplier Diversity for Diverse Suppliers that one of the biggest challenges for diverse suppliers is difficulty being discovered by larger companies. 77% of the respondents had less than 50 employees that work at their company. In inviting these small businesses to bid on smaller purchases, tail spend gives diverse vendors a better chance of actually winning business, not just learning about the business opportunities available to them.
Gone are the days of passing the responsibility down the chain. To the diverse vendors and suppliers, we are here to help shift the dynamics for you. This partnership will help break the cycle of passing the baton to your vendors’ vendors. Our solution creates a path for every organization to easily hit their supplier diversity goals for tier 1, tier 2, tier 3, etc. suppliers using the data and automation Fairmarkit and supplier.io provides. We are all responsible for doing our part.
Fairmarkit’s automation of tail spend sourcing removes many of the barriers of sourcing from diverse suppliers. Organizations can easily identify diverse businesses from Fairmarkit’s and supplier.io’s directories. They also no longer have to restrict themselves to artificial limits such as “3-bids-and-buy.” It is now just as easy to invite tens of suppliers and increase the number of opportunities which include diverse candidates.
According to figures from The National Minority Supplier Diversity Council, certified MBEs generate $400 billion in economic output that leads to the creation or preservation of 2.2 million jobs and $49 billion in annual revenue for local, state, and federal tax authorities. Spending money with these diverse suppliers helps your organization plus the economy, both on a local and national level. It’s a win-win.
We know supplier diversity is more than just the right thing to do and our impact needs to be more than just words in a blog. Whether you are just getting started, or have been building a supplier diversity program for over 20 years, Fairmarkit and supplier.io are here you help you achieve your goals.
To show our commitment to helping organizations reach their 2021 diversity initiatives, we are extending our supplier diversity capabilities at no cost and a discount on diversity database enrichment for any customers that join the Fairmarkit community by the end of the year 2020.
Additionally, for every company that joins the Fairmarkit and supplier.io family, we will commit 10 hours of our team’s time to work with local nonprofits that help support diverse businesses in the Boston community.
If you are interested in what a more integrated, supplier diversity program could look like for your organization, please set up time with our team to learn more.
We look forward to learning more about your commitment to supplier diversity and how we can help!