Answering the question “is this good?” has always been the biggest challenge faced by Supplier Diversity leaders. Historically, the only real data to measure against was your own program.
With supplier.io’s new, comprehensive Supplier Diversity Benchmarking, you now have insight into the supplier diversity performance of hundreds of companies across all sectors. With that information, you can gain insight into how your performance compares to other supplier diversity programs, to help make strategic plans and set goals for your program based on industry and aggregate level benchmarks. But going beyond having a number, how do you make this actionable?
1. Identify Where You Are
Benchmarking is an effective tool for measuring the progress of a program or initiative. We often talk about the value of an internal benchmark when creating a supplier diversity program. This is one of the crucial first steps to establishing the goals and metrics of your program. You will refer back to this data as your supplier diversity efforts mature, measuring the effectiveness and impact of the initiatives you execute, but benchmarks are what will really help you complete the picture. So you have your performance and your peers’ performance to help you identify where you are today.
Clarity into how your supplier diversity program measures up to your peers can also provide internal and external marketing capital. If your company exceeds the median in a category, then use that information to celebrate your success! An announcement that your company surpassed 5 percent diverse spend is even more impressive when you can state with confidence that this accomplishment places you in the upper echelons of your peers.
2. Design Your Supplier Diversity Program
Comparing performance metrics to other companies offers clarity to help you create a strategic plan for your supplier diversity program. Where do you rate in comparison to your peers? Do your goals need to change to meet best practices? For example, if your diverse spend goal—the most common KPI for supplier diversity programs—is set at 2 percent of annual spend, but benchmarking shows that the median is 5 percent, then it’s time to revisit that goal.
Drilling Down on Supplier Diversity Metrics That Matter
Another example comes when breaking down spend categories. The Supplier Diversity Benchmarking measures the number of diverse suppliers utilized by category and commodities, providing actionable insights.
Perhaps your diverse spend is concentrated in Transportation and Warehousing, but the benchmarking tool reveals that others in your industry are finding more success with diverse manufacturers. With the assistance of Supplier Explorer, you can begin incorporating more qualified diverse-owned manufacturing businesses in your RFPs.
Whether your company is launching a supplier diversity program or has an established program, you can use benchmarking to create strategic plans by identifying where you outperform your peers and spotting opportunities to grow your program from where others have found success.
3. Establish the Business Case for Supplier Diversity
Gaining buy-in for supplier diversity is key to a successful program. Even if your company already has a supplier diversity program, securing ongoing, sustainable support can be challenging. Priorities shift along with the marketplace, new leadership may not understand the value of supplier diversity, and enthusiasm can wane.
A Broader View for a More Complete Picture
Benchmarking injects urgency and helps argue the business case for supplier diversity with data.
Consider a company that established a supplier diversity program seven years ago, full of promises to reflect the diversity of its customer base and embrace fresh, innovative solutions. The program is successful by internal metrics: Diverse spend is up two percent, the company’s supplier base is more diverse, and the ESG report is positive.
Requests for increased budget to expand or implement new initiatives are denied. After all, according to reports from the supplier diversity team, goals are being met and the program is effective. What more needs to be done?
Along comes Supplier Diversity Benchmarking, allowing the company to compare its performance against similar companies in the industry and in the overall market. Suddenly “good enough” is not as impressive. Armed with information about external performance and best practices, supplier diversity leaders can support their business case internally to maintain or even increase the supplier diversity budget.
The ability to know with confidence how your performance for established supplier diversity KPIs compared to the overall market and select peers is invaluable for the growth and success of your program.