Why now is the time to improve supplier diversity

November 24, 2020

Now is the time to advance your supplier diversity program 

“Never let a crisis go to waste” was a bit of timely advice I heard recently from one of the dozens of supplier diversity.

Terrez Thompson—who runs Coca-Cola’s global supplier diversity and inclusion initiative—dropped that gem of wisdom during our recent webinar. She was talking about the need to act quickly but strategically when it comes to advancing supplier diversity in businesses worldwide.

Thompson reflected on the era-defining events of 2020—notably the COVID-19 pandemic and the increased awareness of social justice inequalities resulting from the Black lives matter movement. The disproportional impact of COVID-19 on people of color—in America and around the world—has led to a growing awareness of the economic disadvantages of minority groups and minority-owned businesses. This awareness should be a focal point for procurement leaders wanting to enact change within their organizations.

It’s not about being exploitative, cynical, or opportunistic about the situation, Thompson said. Instead, with the raised profile of sustainability and diversity, companies wishing to improve their supplier diversity should act with authenticity and a genuine desire to help. Thompson herself is taking the opportunity at Coca-Cola to reemphasize the social and economic benefits of using African American and LatinX suppliers.

Alexis Bateman, director of sustainable supply chains at the Massachusetts Institute of Technology, was also on Fairmarkit’s webinar panel. Bateman said corporations have seemed more willing to change their practices. Many of the opportunities and embedded values of supplier diversity are often hidden and underexplored. Yet when these benefits are seen, they cannot be unseen, Bateman said.

Now is an excellent time to push the supplier diversity business case 

For the procurement function, supplier diversity broadens your supplier base, helps you tap into the rapidly growing minority business segment of the supplier population and the increasing spending power within those communities, and increases the number and quality of bids. Michigan State University research also shows that diverse suppliers can be a cornerstone of an organization’s success, helping companies ethically and efficiently source products and services while maintaining profits, growing customers, improving the economy, and encouraging innovation.

“This is a moment that you do not want to waste, and highlighting social justice is a way to augment your business case for supplier diversity,” says Thompson.

Procurement leaders and supply chain managers are firmly in the driver’s seat when it comes to improving supplier diversity. In our most recent poll, 55% of respondents said their company’s procurement team managed their program. Meanwhile, 22% said supplier diversity responsibility fell to the supply-chain function. 

You must be able to sell your supplier diversity program to key stakeholders

Karmetria Dunham Burton, general manager of global corporate supplier diversity and inclusion at Delta Air Lines, said procurement leaders wanting to start—or expand—their diversity program must be able to sell it up the chain as a necessity.

“Write a solid business case that will get you budget and resources. Budget is needed to promote the program, find sponsorships, pay dues for diversity organizations, buy promotional items, conduct business travel, as well as implement technology and data analysis,” said Burton. “The way to get more budget is to tie back to any success you have previously had and explain what is needed in the future to be successful and sustainable.”

Bateman agreed that building a business case is essential and said it would help dispel the misconception that supplier diversity programs are a form of “charity.”

"A critical, analytically driven business case provides the rationale to drive engagement, funding, and support.”

Progress towards supplier diversity won’t come overnight  

And after the events of 2020, a robust business case is likely to be well received by the c-suite.

“So many companies are currently trying to amplify their supplier diversity strategies, so for procurement professionals who want to increase their supplier diversity, now is an excellent time to push the supplier diversity business case,” Burton told webinar attendees.

“Corporations don’t just want to write checks to diverse suppliers, they want to be leaders in the push for greater diversity,” Thompson agreed.

Yet Thompson advises that “sometimes you have to push back on budget.” She says: “You do have to have suppliers that add value, but your executives must also understand that if you’re doing supplier diversity, there’s a social license element to it, so being able to talk about that impact is also very important.”

The advice is well-timed. Half of the respondents to our poll said their supplier diversity program was less than a year old, while 21% were managing programs between one and five years old. Just 20% said their programs had been in place for ten years or more. 

Madison Gunter, head of supplier diversity and sustainability programs for Salesforce, said companies that have diversified their supply chains in 2020 need to keep their eye on the ball once the memories of this tumultuous year fade.

“There are peaks and valleys in the growth of supplier diversity,” said Gunter. “Right now, social justice can be seen as a shiny new thing in the business world. But the imperative [for procurement professionals] is to move forward systematically to improve supplier diversity.”

Whether you’re taking your first steps, planning a significant expansion, or trying to reinvigorate a stalled program, now is the time to advance your organization’s supplier diversity program. But progress will not come overnight. It will require a robust business plan and sustained commitment.

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