Inclusivity, in other words how diversity goals are pursued, and achievement is measured, is a business strategy that helps organizations become more innovative, profitable, and engaging. An organization with inclusivity welcomes and values all people as employees, customers, stakeholders, and suppliers. Supply Chain Inclusivity means the organization includes diverse suppliers in bidding opportunities, awards business to diverse suppliers, and supports diverse supplier success. Inclusivity practices are used by many large corporations as an effective way to achieve supplier diversity goals. These include developing supplier diversity policies and building a diverse buyer community through networking events, diverse supplier discovery tools, equitable RFx practices, and awards programs.
Create an Inclusive Supply Chain
Where to Start
Committing to increase spend with diverse suppliers is a key first step to inclusive business practices. Buyers and stakeholders in the procurement process and DE&I program can influence policy and practice to actively pursue supplier diversity initiatives that focus on increasing participation from suppliers who have traditionally been underrepresented or excluded altogether.
Here are recommendations for those starting their supplier diversity programs:
- Assess current supplier status –
- List all current suppliers
- Include supplier source category, aka what services/products they provide
- Determine some sense of supplier contribution to the organization, vital direct suppliers vs commoditized and indirect suppliers
- Identify which current suppliers are certified and by which agency
- Identify which current suppliers may be diverse, but not officially certified
- Define the accepted list of diverse certifying agencies and certification status
- Inclusion of self-certified businesses allows for increased diversity spend options with organizations lacking the resources or bandwidth to pursue agency certification
- Review current supplier list to understand existing diversity by supplier type and by diversity category
- Identify opportunities where the organization can pursue diverse suppliers
Gainfront provides a SmartStart option to assist with assessing current supplier list, validating diverse certification status, and examining different facets of the supply chain to determine opportunities for increased diversity. Gainfront also provides a verification of self-certified suppliers to assist in customer confidence that a supplier is diverse even if not yet officially filed with an agency.
Incorporate Spend Data
To build on the initial supplier assessment, incorporate spend data. This step involves pulling data or integrating with finance or ERP systems to incorporate a better understanding of where corporate funds are being spent. This is an important lens through which to examine the supply chain. A collective number of smaller diverse suppliers may not be getting nearly as much business as a single non-diverse supplier. The initial assessment will not provide this level of detail which is why incorporating the spend data is a key next step that lends itself to visualizations and charts that easily summarize which suppliers and which categories of suppliers get the most business from the organization. Gainfront provides a Baseline option which incorporates spend data into clear dashboard views that allow for quick review and analysis of supplier spend over time by supplier category and diversity category. This insight helps direct decisions around goals and insights into the types of products and services where a diverse supplier could be leveraged.
Review RFx Process
Next, it’s important to adjust RFI, RFP, and bidding practices to make sure they are inclusive:
- Based on prior supplier analysis, determine the type of supplier, location, diversity category and other criteria that is a priority for future business
- Seek supplier diversity events (e.g., conferences, workshops) so they can develop relationships with potential new supplier
- Invest in tools that support the ability to easily discover and include diverse suppliers appropriate for the request
Tip: Always be specific in your RFI/RFP – The more specific you are when setting expectations, the better. For example, if a supplier diversity goal is to award contracts to businesses owned by women or minority groups in a particular area (say, New York City), don’t just state that “supplier diversity” will be considered—a state that women-owned businesses or minority-owned businesses will be given priority as suppliers for contracts valued at $50K+.
Gainfront provides RFx Concierge and Discovery search to help organizations find diverse suppliers. RFx Concierge provides a request service where Gainfront returns matched suppliers to the requested criteria and need. Discovery provides a self-service search of the Gainfront supplier directory where the results can be filtered based on targeted provider criteria like location, diversity certification, certifying agency, and more.
Diverse Supplier Alignment
In addition to developing these inclusive procurement practices, it is best to:
- Increase internal alignment and communication with leadership and stakeholders on goals, plans to achieve goals, and current progress
- Collaborate with and include all supply chain stakeholders in supplier diversity training programs
- Engage all suppliers via a portal for sharing updates, requests, and ongoing questionnaires
- Perform regular assessments of all suppliers to determine how each aligns to current corporate goals
- Leverage tools that simplify supplier management and compliance as well as reporting for any board, regulatory, or government requirements
- Perform a comprehensive review of the organization’s economic impact annually to better understand the overall value of the supplier diversity and inclusion practices
Gainfront provides complete Supplier Relationship Management to increase supply chain collaboration, alignment, and communication. Gainfront Diversity unlimited provides supplier diversity goal setting and dashboard view for tracking spend to date based on many different facets like supplier category, diverse category, and even project. With Tier 1 and Tier 2 supplier spend tracking leadership teams are kept informed of progress to goals. For organizations with government reporting requirements, Gainfront also provides appropriate diverse supplier spend reports for submitting to state, local and US federal governments.
Get it in Writing
Review current legal contract language to confirm it sets the correct expectations about corporate DE&I practices. Alignment up-front-during the supplier selection process is key, but it is critical any contract language follows through with appropriate terms. The language for any new supplier contract should specify that contracting and working with diverse businesses is preferred.
Tip: Make sure contract terms are measurable. Having an enforceable contract means that both parties have agreed maintaining the diverse supplier certification. All expectations around timeframes, quality, quantity, milestones are clarified and mutually agreed upon. When possible, include measurable terms of performance in contracts so that everyone knows exactly what needs to happen for their business relationship to continue moving forward. This way, there’s no ambiguity about whether the company has met its goals.
Leverage Supplier Diversity Practices across the Organization
- Use supplier diversity to expand the talent pool
- Use supplier diversity to engage a wider range of suppliers
- Use supplier diversity to build relationships with new and existing suppliers
Procurement is a key lever for supplier diversity and inclusion.
Through procurement and diverse spend tracking the organization can show the intentional investment being made in diverse companies and overall positive economic impact. Through analysis and reporting it’s possible to show how the supplier diversity program, internal DE&I program, and the procurement practices directly relate to externally visible brand values of inclusion. An Economic Impact Report shows the positive results of an inclusive supply chain practice.
Gainfront offers Economic Impact Analysis to help organizations build a comprehensive and quantitative report of the combined uplift the diverse supplier practices and intentional diverse spend provide.
Conclusion
There are many ways that procurement, DE&I, and legal can help promote supplier diversity and inclusion. Implementing inclusive procurement practices creates more opportunities for diverse suppliers and supports overall diversity and inclusion goals.
Rahul Asthana has a PhD in Operations Management from the Anderson School at UCLA. He has 25 years of experience in supply chain management, starting his career in IBM working in supply chain operations. He then moved into product management and product marketing of supply chain software while at SAP and Oracle. He manages product strategy and product management at Gainfront. In terms of hobbies outside of work, he really enjoys tennis. Follow Rahul Asthana on Linkedin!
