Amidst the growing demand on companies to demonstrate social responsibility and ethical compliance, many organizations are looking for ways to develop supplier diversity. There are a wide range of benefits to creating a more diverse network of vendors. For example, companies can position themselves as equal opportunity providers. In addition, the more suppliers that are interested in working together, the better chances managers have of being able to choose vendors that will lead to lower procurement costs.
However, many supply chain leaders think that the purpose of supplier diversity programs is to simply meet a quota and that the system only benefits certain parties. And, as a result, too many organizations are missing out on the opportunity to gain an edge on competitors.
The outlook on supplier diversity
To understand the value of incorporating underrepresented groups into a supplier network, it is essential to first consider economic trends and the impact they are expected to have on business strategy and operations. For example, according to the United States Census Bureau, the number of minority-owned businesses in America jumped by over 2 million between 2007 and 2012. As the population becomes more culturally diverse and minorities begin having a stronger influence and share in consumer markets, supply chain executives will continue to recognize the advantages of leveraging these vendors.
Additional trends and predictions fueling the evolution of supply chain diversity initiatives were recently highlighted by Rod Robinson in an article for Wharton Magazine. He pointed out that it will eventually be a requirement for publicly traded companies to disclose the information on how well their programs are performing. And because organizations will have to release more information, there will be increased levels of data to be scrutinized. Therefore, it is going to become critical that businesses are able to ensure their supplier diversity programs and practices are reliable.
Robinson also explained that there will be a bigger push for supplier relationship and risk management processes. Supply chains have long since been encouraged to monitor and assess the integrity and performance of their suppliers. However, these actions will likely accelerate as businesses begin onboarding new, diverse vendors. And, the source added, more companies will begin improving transparency at deeper levels of the organizations, extending to distant tiers.
Improving the effectiveness of inclusion initiatives
In a recently published eBook, CVM Solutions explained that some of the challenges plaguing business leaders in their attempts to enhance supplier diversity programs include limited access to resources, not having enough time to dedicate to implementation and execution, inaccurate reporting and a shortage of effective data management.
However, all of these pain points can be alleviated by working with a third-party procurement services and solutions provider. In addition to designing a program that will meet the specific needs relating to a company's objectives, these industry experts will be able to identify quality minority suppliers, as well as define key performance indicators and metrics that will help to ensure spend targets are reached. By outsourcing the diversity aspect of supplier relationship management, organizations will be able to focus on other critical areas of business.