In today’s corporate landscape, supplier diversity has evolved from a compliance checkbox to a driving force of business success. Recent trends indicate that companies increasingly define supplier diversity goals, create annual plans, and incorporate supplier diversity metrics into performance objectives.
This shift reflects a growing awareness among leadership of the strategic and competitive advantages of supplier diversity. With upper management becoming more engaged with their organization’s supplier diversity initiatives, understanding the key metrics supplier diversity leaders need to know is critical to the growth of your supplier diversity program.
Let’s explore what data your leaders are looking for and why.
What Data Supplier Diversity Leaders Want and Need
If you are just starting to gather data on your supplier diversity program, there are some baseline metrics you will want to capture.
Supplier Diversity Spend:
This is the total amount you spend with diverse suppliers and a foundational metric that reflects your organization’s commitment to supplier diversity.
Supplier Diversity Spend as a % of Total Company Spend:
This metric provides additional context to your supplier diversity spend, showing the proportion of overall expenditure dedicated to diverse suppliers.
# of Diverse Suppliers:
This simple metric showcases the breadth and depth of your supplier diversity program.
# of Diverse Suppliers as a % of Total Suppliers:
While your number of diverse suppliers may be high, if they only account for a small percentage of your total suppliers, your supplier diversity program may not be as robust as you hoped.
Beyond standard metrics, leaders like to see a blend of data and stories, including responses to requests for proposals, supplier diversity wins, and the alignment of supplier diversity with broader organizational values that contribute to a more inclusive corporate culture. You should also use industry benchmarks to set program goals, track results against those goals, measure the data you collect over time, and compare metrics year over year. If possible, drill down to business unit specifics, illustrating the impact of supplier diversity at a granular level.
Mature Supplier Diversity Programs Demand Mature Metrics
As your supplier diversity program grows and you become more mature in your supplier diversity metrics reporting, you should explore more detailed metrics to showcase the success of your program to leadership. One example of a more mature metric is the performance of your diverse suppliers. It’s important not to treat diverse suppliers differently from our non-diverse suppliers; we have to expect performance from them, just like non-diverse suppliers. Other metrics to consider include the impact of supplier diversity efforts on the growth of the organizations and sales, the impact of your diverse supplier efforts on the economies in which you operate—tax generated and jobs created, and the individual success of your diverse suppliers—have they been more successful since becoming part of your business ecosystem?
Why Does Leadership Need Supplier Diversity Metrics?
Providing internal leadership with supplier diversity metrics will showcase the value of your supplier diversity program. Internal leadership can use these metrics to highlight how supplier diversity drives organizational success, helps build a positive brand image, and mitigates risks. Supplier diversity is recognized as a value driver across organizations, and leadership knows that a more diverse supplier base protects stakeholder interests because it contributes to innovation, resilience, and long-term success.
Proactively Propose Supplier Diversity Metrics
If your leadership team hasn’t asked you for supplier diversity metrics yet, it’s coming. Be proactive in proposing their inclusion in quarterly and/or annual reports. Educate leadership on the fundamental mission of supplier diversity and its value in enriching the supplier pool, fostering competition, and ensuring optimal business outcomes. The metrics you present to leadership should include supplier diversity spending figures, but they should also tell a story of success, growth, and the tangible impact of supplier diversity on the organization. By blending priorities of cost and diversification and being proactive in reporting, you position supplier diversity as a strategic imperative that aligns with the values and goals of the entire organization.
Download the Supplier Diversity Top 5 Best Practices for 2024 to gain insights from top performing supplier diversity programs.