Are you familiar with the benefits of supplier diversity? If so, are you able to articulate them? How often do you review your program’s progress? Do you know whether it’s achieving its objectives and fostering long-term success? These are the key questions to consider to drive continuous improvement in supplier diversity. If you’ve asked these questions and you want better answers—here’s how we suggest getting started:
Are you clear about the objectives of your program?
Have you ever left a meeting and thought, “what was the value of this meeting”? You might have been part of a meeting with a vague agenda or one that didn’t accomplish its objectives or a meeting lacking a wrap-up with clear next steps.
When it comes to supplier diversity programs, this can be a big problem. If you don’t know the purpose or goals of your program, how will you know if it’s successful?
Here are some questions that will help clarify your objectives:
- What is the purpose of your program?
- What are the goals for achieving this purpose?
- How will those goals benefit your company (and its customers)?
- How will those goals benefit your suppliers?
- When do we expect to achieve these goals?
- What metrics we can use to measure our success?
When it comes to supplier diversity, you need to have a clear understanding of what you want to achieve. You also need the ability to communicate this to your team and other stakeholders. Furthermore, you should be able to measure the impact of your program, as well as share this impact with others in order for them to understand how it is being achieved.
Do you have a plan to achieve your goals?
You want to make sure that your plan is flexible and adaptable. If you follow a rigid plan, it may not work for your organization in the future. For example, if the company has grown in size since the last time you updated its diversity program, then it would be important for the plan to keep up with those changes. This can be done by making sure that there is an element of flexibility built into the plan so it can change as needed without losing its effectiveness.
A good diversity program should also be easy for employees and managers alike to follow. Everyone on staff must understand what their roles are within the program so everyone can understand where they fit into it and how they’re contributing toward achieving goals related to supplier diversity initiatives across all areas including sourcing, category strategy, RFx, compliance, contracts, material management, and invoicing processes.
An effective supplier diversity strategy should be outlined in achievable goal milestones; the momentum created through success and achieved improvements will drive future continuous improvement! Achieving goals means setting realistic expectations about what is possible given the available resources within any given time frame to avoid setting up the team for failure. Be willing to adjust expectations and goals regularly based on supply chain conditions and business needs. A successful supplier diversity program will be short-lived if the overall business is not able to remain profitable.
Are you using the right metrics to measure success?
You’re not alone if you have trouble knowing how to measure the success of your supplier diversity program. After all, it can be difficult to determine whether or not a program is effective without having established goals for the initiative in the first place.
What is the best way to know if your supplier diversity program is working as intended? Use metrics that focus on specific aspects of your organization’s supply chain regulations. These include
- Supplier Diversity Metrics: These metrics help assess how well an organization is doing at reaching its overall supplier diversity goals.
- Total Tier 1 Diversity Spend
- Tier 1 Diversity Spend By Category
- Tier 1 Diversity Spend by Diverse Classification
- Tier 1 Diversity Spend Against Forecast
- Tier 1 Diversity Spend by Project
- Total Tier 2 Diversity Spend
- Tier 2 Diversity Spend by Category
- Tier 2 Diversity Spend by Diverse Classification
- Tier 2 Diversity Spend Against Forecast
- Tier 2 Diversity Spend by Project
- Key Business Metrics: These metrics gauge how well an organization meets its internal business spend goals and targets with respect to SCM.
- Total Spend by Category
- Total Spend Against Forecast
- Total Spend by supplier
Do you have the right people in place?
What does this mean? This means that your program needs to be led by someone who not only has a clear understanding of its goals but also has the knowledge and experience necessary to bring those goals to fruition. It’s also important that they have a good relationship with senior leadership, as they will need their support when implementing initiatives or making other organizational changes. The best way to ensure these qualifications are met is by hiring an expert whose sole purpose is leading, managing, and evaluating diversity programs.
Can you clearly articulate the benefits of supplier diversity?
- Can you clearly articulate the benefits of supplier diversity?
- Do your employees know why supplier diversity is important to the organization?
- Are they aware of how it can benefit their work and lives?
If these questions are difficult to answer, it may be worth taking a step back and considering whether or not your company’s supplier diversity program is working. If there’s any question in your mind that the program isn’t effective, then it’s definitely time for a change.
Supplier diversity can improve the bottom line by generating new revenue streams through increased sales and cost savings. This is particularly true when you include suppliers that have innovative ideas, products, or services to offer.
Do you know how many diverse suppliers are in your supply chain?
You’re trying to bring in more diverse suppliers, but how do you know if your program is working? One way to measure the effectiveness of your supplier diversity efforts is by assessing how many diverse suppliers are participating in your supply chain. This can be done with data from a purchasing system or calculated manually based on the number of purchases and their values.
If you don’t have access to any data about a supplier’s background right now, that’s okay! It’s still possible to set goals and measure progress toward them while waiting for complete data collection. You may not always have access to information about who exactly is supplying what goods or services, so use what you do know—such as who won contracts over the past two years—and apply these insights toward future goals.
You need a strong supplier diversity program to manage vendors.
It’s important to know what you are looking for in a supplier. You should have a clear idea of what it is that defines a good fit. For example, if you are looking for someone who has specialized experience in your industry, then this should be reflected in the requirements section of your RFP or RFQ (request for quotation). Asking vendors about their experience with similar products or services can help identify those who truly understand what it takes to meet your needs.
A strong supplier diversity program can help:
- Identify areas of lower risk to start with unknown vendors.
- Assist existing proven vendors who are eligible to get sponsored.
- Introduce prime suppliers to diverse suppliers too small to work with directly
- Set expectations from even the initial RFI, RFP, or RFQ
What can you offer potential vendors? This is especially important if you work with small businesses since many of them don’t have access to capital or resources like big business does. In some cases, this might mean working with different payment terms or payment mechanisms (such as invoice factoring).
The best way to find out if your supplier diversity program is effective is to make sure that you are measuring its success. If you don’t measure it, then how will you know what works and what doesn’t? You need to be clear about the objectives of your program, have a plan in place to achieve those goals, and then make sure that they are being met by using metrics that reflect them accurately.