Most business leaders say that they value supplier diversity. But across industries, the average spend on diverse suppliers is only 3.6%.
Encouragingly, if you look beyond that average to individual organizations, you see a different picture. Some companies are delivering on the promise of supplier diversity, going way beyond their peers to find and hire diverse vendors at 2 and 3X the industry standard. So who are those leaders, and what can they teach us?
At Supplier.io, we partnered with the Sourcing Industry Group to find those organizations and understand how they’re achieving so much more. Interestingly, there was no clear correlation between supplier diversity success and the age, budget, or staff size of the program. Instead, success was tied to the actions taken.
What are the actions that leading supplier diversity teams take? We found five specific behaviors that differentiate the top performers from their peers:
- They dive deeper with data.
- They take action earlier in the process.
- They stay more connected to the business.
- They initiate and maintain collaboration.
- They leverage both data and relationships.
For an overview of all five behaviors, see 5 ways to boost supplier diversity success – from the orgs that do it best—or read the full report. In this blog entry, we’re focusing on the first behavior: diving deeper with data.
“It’s a question of identifying the right level of engagement: which internal groups need the backward-looking reporting, and which groups need to know about current opportunities. Once the latter group is engaged, the next step is knowing which specific people I can connect directly with the supplier to determine what a working relationship might look like.”Kevin Deese, Supplier Diversity Program Manager, Wilmington Trust and M&T Bank
What does “more data-driven” mean, exactly?
Everyone uses data—but how they use it, and the level of detail they drill down to, varies a lot. Leading organizations track metrics down to the business unit (BU) or product level. They set very clear goals and targets. And they use data to hold specific teams accountable. To make sure their insights are accurate, all the leaders we interviewed use third-party diversity data, and they map it down to the BU level. After that, they use the insights in multiple ways:
- Dashboards – Leaders make data visible. That means including supplier diversity metrics in the same dashboards that report on the overall business, next to things like shipments and revenue. The supplier diversity metrics are tailored to the BU and even drill down to the product level. In purchasing, category managers have their own dashboard, which includes supplier diversity metrics they review almost daily.
- BU-specific targets – Supplier diversity leaders work with business leaders to set a goal for each major department. And that target doesn’t come out of nowhere. It’s based on historical trends, current results, upcoming business plans, new contract availability, and feedback for what’s needed to win specific contracts.
- Forecasting – Leaders go beyond setting goals to actual forecasting. The supplier diversity leader meets with procurement category and BU leaders to create a plan for achieving the goal. Once the goal, forecast, and key milestones are established, all teams regularly monitor progress to make sure that the business is on track.
- Focusing on behaviors – Tracking results is essential, of course. But many leading programs also monitor the behaviors most likely to get results. For example, one program regularly surveys buyers to gauge whether they understand the strategy and tools for their supplier diversity program. At another, buyers are held accountable to using 100% accurate data that’s reported on a quarterly basis. And speaking of accountability . . .
- Accountability – BU leaders are not only measured at the behavior level but also held accountable to their supplier diversity goals. At one organization, 20% of the executive scorecard is tied to achieving supplier-diversity goals, which carries the same weight as cost-savings goals.
“I’ve been working with executives for years. When it comes to how the corporation spends money, you must paint a complete picture . . . You must break the data down to individual locations or properties to reflect what each is doing in their respective line of business.”Neal A. Poland, Regional Business Development Manager, Diverse Supply Chain Solutions, CDW
Curious to dive deeper? In Supplier Diversity Strategies Report 2023: Moving Beyond Best Practices, you’ll find a closer look at each of the five top behaviors—and you’ll see specific tips from leaders at Unilever, Ford, Motorola, and more.