Large Organizations That Invest in Diverse Suppliers Reap Flexibility & Innovation
Learn how at the Sixth Annual Global Supplier Diversity Conference
With many large companies now several years into robust efforts to expand relationships with diverse suppliers, they report greater supply chain agility, a broader range of product offerings, access to new markets and increased competition among suppliers. Diverse suppliers also have a higher annual retention rate (20% higher) than nondiverse suppliers, according to data from Coupa Software.
But many large companies still struggle to identify diverse suppliers, or to easily work them into their systems. Some of the most successful corporate supplier diversity programs provide ongoing support to help smaller women-owned and minority-owned companies scale their businesses. At the Sixth Annual Monica Motivates Global Supplier Diversity Conference (live September 21, 2023 in Atlanta and London and streaming worldwide) both corporate professionals and entrepreneurs learn how to connect and work together.
Recent research conducted for Monica Motivates in the United States and United Kingdom by One Poll found more than half of human resources professionals surveyed (56%) said they had strategies in place to facilitate supplier diversity; another 36% were committed to doing so. Similarly, Intel plans to spend $2 billion annually with diverse suppliers by 2030 and Target has pledged to spend $2 billion with Black-owned businesses by 2025.
A survey of 90 companies around the world conducted jointly by Jaggaer procurement and payment specialists and supplier data providers, Tealbook, also shows companies ranking supplier diversity as a “high priority.” Those who have taken proactive steps to increase supplier diversity reported “positive reputational impacts,” as well as “supplier innovation” and “supply base competition.” But a third also said they had difficulty identifying diverse suppliers that met their needs.
As much as large companies may want to work with diverse suppliers, the same practices and systems that exist between two large companies may not function as well when a large and smaller organization connect. Large corporations driving the greatest benefits from diverse supplier relationships invest in their suppliers to help them scale to meet their needs.
Investing in supplier diversity
According to Bain & Company and Coupa Software, companies that address key areas of potential challenge from the start tend to have more successful supplier diversity programs.
Companies in the top quartile for engaging diverse suppliers also have a higher rate of preapproved spending, greater use of electronic purchase orders, greater use of electronic invoicing, faster invoice approvals and faster requestion to order processing.
They also address several key challenges with an eye to long-term relationships. These include a commitment to:
- Integrate supplier diversity goals into larger company goals and commercial strategy so they are adequately funded and managed. One-off efforts don’t allow for the 12-18 months often required to fully qualify and integrate a new supplier.
- Clarify goals. It’s easier to announce a commitment to working with diverse suppliers than it is to grow your pool of vendors when faced with tight turnarounds and strict budgets. While many leaders and procurement specialists need to overcome the mistaken idea that diverse suppliers will not be as competitive on cost, quality and range of products and services, it is important to recognize that creating new relationships can take time, just as it took time to develop smooth operations with your current suppliers.
- Invest in new suppliers. “One of the key reasons supplier diversity initiatives flounder is that organizations underinvest in the capabilities required to support new or developing suppliers, including onboarding, risk mitigation, and mentoring,” according to Bain & Company. Providing coaching is critical to help small businesses understand and meet your needs.
- Expand efforts to Tier 2 suppliers. To create a more robust supplier diversity program, consider the companies that support your Tier 1 providers, as well as organizations that, even if not minority owned, excel at diversity in hiring, promotion and leadership of women and underrepresented people.
Attend the 2023 GSDC
The sixth annual Monica Motivates full-day Global Supplier Diversity Conference (GSDC) September 21, 2023 live in person in Atlanta and London and live-streaming around the world, is designed to launch new vendor partnerships and increase successful relationships between large organizations and underrepresented small business suppliers. Make plans to attend now to learn how to develop diverse supplier relationships and to meet small business owners you can engage in your network.