Supplier Diversity Best Practices – Part 1

By Akiva Lewis

An integral part of any organization’s diversity program is to ensure that they promote diversity outside of the company in addition to their internal efforts.  One way organizations accomplish this goal is through supplier diversity programs that support minority owned businesses with which they do business.  Supplier diversity can include all underrepresented groups who can provide goods or services to the organization.  They are commonly referred to as minority and women owned business enterprises (M/WBE’s).  However, it can include all types of organizations that are owned or operated by underrepresented members of the population.  There are five key steps every company should follow to set up and run an extensive and effective supplier diversity program:

  1. Defining the Scope of Supplier Diversity

  2. Link Supplier Diversity with Organizational Goals – Make the Business Case

  3. Connecting with Underrepresented Suppliers

  4. Running the Supplier Diversity Program

  5. Supplier Development Program for Underrepresented Suppliers

The first step, defining the scope of supplier diversity, is critical to the successful development of an effective program.  Like any business objective, the mission statement of the supplier diversity initiative must define what it is, why it is important, and how it will impact the organization.  To make a true commitment to supplier diversity, the organization should consider all suppliers of goods and services that the organization purchases.  This includes everything from raw materials and IT suppliers to legal services and janitorial supplies.  Incorporating all types of goods and services is a powerful statement of how serious the organization really is in supporting underrepresented companies with whom they do business.

Additionally, organizations should set measurable goals for their supplier diversity program.  What percent of total purchases does the organization want to make from underrepresented suppliers in one year, five years, and ten years?  How many new minority/women/disabled suppliers does the organization want to do business each year?  Are there certain competitors that you want to surpass in your commitment to supplier diversity?  How do they measure their performance on supplier diversity?  These are all questions that an organization should consider as it begins its development of a supplier diversity initiative.

Linking supplier diversity with the organization’s goals is the next step in creating a successful program.  The objectives and motivations that drive the supplier diversity initiative must support those of the organization as a whole.  The business case for supplier diversity must be clear to everyone in the organization.  This is an important step in getting support from all members of senior management, from operations to finance, marketing, and human resources. The organization must develop and communicate a clear and concise mission statement and vision for supplier diversity to employees, vendors, customers, and shareholders. Everyone connected with the organizations must understand the role and level of importance of supplier diversity so they can be active participants in the program.  One key tool that will help demonstrate the organization’s commitment to supplier diversity is to make it part of the performance review process.  Hold all relevant employees accountable for achieving specific goals with supplier diversity and reward those that exceed those goals.