Are you struggling to get your supplier diversity program funded? Not sure how to meet your goals without a supplier diversity budget? You’re not alone.
In our 2021 State of Supplier Diversity report, 65 percent of respondents reported that having an adequate budget to meet the objectives of the program is somewhat to extremely challenging.
The good news is that you can build a strong foundation for your supplier diversity program without a big supplier diversity budget.
Let’s talk about activities and initiatives that will get your program off to a good start, leveraging both internal and external resources.
1. Start with a pilot program.
If your company is just getting started with supplier diversity, a pilot program is a low-stakes way to test the waters. This could be as simple as hosting a small networking event in collaboration with a local business council. Bring some of your buyers to meet with diverse suppliers and start building relationships.
2. Use what you have.
Do you know how many diverse suppliers are already in your supply chain? It can take considerable time to track down and confirm every diverse supplier, but that information is invaluable as you move forward. Third-party tools such as supplier.io’s Supplier Explorer can speed up the process considerably and give you confidence that your information is accurate.
Once you have identified the diverse suppliers you already do business with, look for opportunities to expand those relationships. Ask buyers to include them in upcoming requests for proposals or increase their current contracts. Maximizing spend with these proven suppliers is an easy way to strengthen your supplier diversity program.
3. Establish strategic partnerships.
Supplier diversity has been around—and evolving—for more than 50 years, which means there’s a multitude of people and organizations you can tap for help.
Diverse business advocacy organizations are designed to support both diverse enterprises and the companies that want to do business with them. Explore the national and regional affiliates of entities such as the National Minority Supplier Diversity Council, Women’s Business Enterprise National Council, The National LGBT Chamber of Commerce, and Disability:IN.
The U.S. Small Business Administration focuses on resources for small and diverse businesses, but there are opportunities to expand your supplier diversity program as well. SCORE is the nation’s largest network of volunteer, expert business mentors. If mentoring is part of your supplier diversity program plan, SCORE is a good way to get started within an already established infrastructure.
4. Find diverse suppliers.
Another key to building a successful supplier diversity program is increasing the pool of potential suppliers. To do that, you need to find diverse firms that provide the products and services your company needs.
Leverage your peers, advocacy organizations, and trade shows to find qualified diverse suppliers. Word of mouth still goes a long way!
A third-party database allows you to automate the supplier discovery process. The 2021 State of Supplier Diversity report revealed that 81 percent of respondents use a third-party database, and 78 percent said buyers in their organizations also have access to the database.
5. Track diverse spend.
The most common supplier diversity metric is diverse spend, which is the amount your company spends with diverse suppliers. The sooner you start tracking diverse spend, the sooner you can establish a baseline.
You may be thinking, “My company has a decentralized procurement model with each department purchasing independently. How am I supposed to track diverse spend across the enterprise?” This is another common challenge for young supplier diversity programs, but it is not insurmountable.
Third-party software can track various metrics, such as spend, and generate reports. Or you might be using an Excel spreadsheet for now. Either way, the key is to get your buyers to report diverse spend to a central database, and that will require training from you. Look at this as an opportunity to raise your program’s profile and gain buy-in from your colleagues. Both are crucial for the long-term success of your supplier diversity program.
6. Set SMART goals.
Tracking diverse spend alone is not enough to create an inclusive procurement process. To do that, you must set SMART goals. Use the diversity spend information you collected in Step One and the number of diverse suppliers already in your supply chain from Step Two to establish your benchmarks.
Next, review your company’s goals and values, then make sure your supplier diversity goals are in alignment. One secret to a successful supplier diversity program is setting meaningful goals that tie supplier diversity to business strategy for the organization as a whole.
Your goals should be reasonable and achievable, help to identify weak areas that need improvement, challenge the status quo and discourage complacency, confirm the need for change, and provide strong motivation for change.
You can build the foundation for a successful program without a big supplier diversity budget. Leverage the resources you already have access to, build strategic relationships, and get smart about setting goals and tracking metrics. Soon you’ll have a proven track record that makes funding a larger initiative an easy decision.
To learn more about supplier diversity programs, download the full 2021 State of Supplier Diversity report.