6 Ways to Support Supplier Diversity
George Floyd died on Memorial Day 2020, a day for remembering soldiers who lost their lives on the battlefield. His death sparked protests on the treatment of blacks that have lasted throughout June, also celebrated as Pride Month.
Individuals and corporations are responding to the wake-up call. Most are sending messages of support. Better yet, some are declaring specific actions they will take to create change to the world. Join those corporations taking actions and create, or revamp, your Supplier Diversity Programs.
6 Impacts Your Company Can Have by Consciously Improving Your Supplier Diversity Program
1. Reduce the Racial Wealth Gap
Today, the median wealth for white families is about 12 times that for Black families, averaging around $140,000, and one in four black households have zero or negative net worth compared to less than one in ten white families without wealth. Even more concerning is that by 2053, the median wealth for Black families is projected to fall to zero. And Latino households will join them at zero or negative wealth by 2073.
Small businesses and entrepreneurs have been longtime wealth builders in our society. By supporting Black-and Minority-owned small businesses, responsible corporations can create more opportunities for meaningful savings, property ownership, credit building, and generational wealth.
Support the diverse suppliers where you already have relationships and contracts. Find ways to shift your spending to give these vendors more of your business.
If you don’t know which vendors in our supply chain are certified minority suppliers, Simfoni Spend Analytics can quickly analyze your procurement to show you how much you currently spend with diverse suppliers and in what categories.
2. Increase Tier II Spend
Tier II spend refers to the payments to the suppliers of your suppliers. The Billion Dollar Roundtable identifies a Tier II program as an essential best practice of a mature supplier diversity program, offering opportunities for greater impact throughout the supply chain. According to figures released at the 2017 BDR Summit, consolidated Tier II diverse spending among corporate members for 2016 was $22 billion.
Actively working with your Tier I suppliers to improve their supplier diversity programs ultimately boosts your own supplier diversity success. For starters, the number of suppliers your company can partner with is finite, but once you get to Tier II, the potential is almost unlimited.
Corporations relying on manual data collection processes using spreadsheets make it impossible to even think of executing such a strategy. However, the scalable technology and tools available today make it extremely simple and inexpensive to build a truly world-class diversity program that delivers real quantifiable results. A win-win for all.
3. Hold Your Suppliers and Yourself Accountable
Many large companies vocally support minorities and their diverse cultures but practice policies that keep systems of injustice intact. Whether it’s questionable marketing, hiring practices, or removing people from its stores, African-Americans and other minorities often bear the brunt of corporate discrimination.
Check-in with each of your suppliers to not only hear their statements of support and planned initiatives but to see their actions and metrics on progress to date. It is critical to be able to identify those companies who do not share your values and replace them with the ones that do.
You should also demonstrate your own progress. If you are a Tier I vendor to another company, be able to state your values, explain your diversity program, the initiatives taking place, and the progress to date. Proactively sharing this with your customers will also let them know that by supporting you they are supporting the small and diverse-owned businesses you support – their Tier II suppliers.
Analyzing the diversity status of your entire supply chain may seem like a huge, daunting task. With a detailed spend classification and clean granular data down to the service, product, or even part number you can have a solution to quickly find alternative suppliers. Simfoni Spend Analytics uses automation and AI to review and classify your procurement spend in days, not weeks or months, making the initial diversity review and regular updates to check on progress a simple reality.
4. Foster Job Creation
Among US firms, 99.9% of small businesses, and 50% of those are women- and minority-owned.
Since small businesses are likely to hire from their local community, supporting them can create jobs where they are needed most. In 2018, the unemployment rate for African-Americans fell to 6.6%, which was higher than other minority groups and almost double that for white Americans. Supporting small business grows the entire community around those businesses—providing new opportunities to achieve financial stability in locations where it can be rare.
5. Celebrate Diversity
Many entrepreneurs start businesses inspired by the richness of their culture itself—ethnic clothing stores, hair care, and make-up products, food, and children’s toys are just a few examples. And some diverse and minority-owned businesses are created to bring specific products and services to meet their community’s preferences and needs. When you support these special businesses, you get products and services that are valuable for the unique character they bring.
Think broadly. Why reward a team for a job well done with plastic trophies and certificates that collect dust. Treat them to dinner at some of the best ethnic restaurants in town. Or bring the experience to them with catering or food trucks. Reward new parents with a nursing pillow from the local veteran-owned shop rather than a Target gift certificate.
6. Increase Visibility and Representation of Diversity
The #BlackLivesMatters movement is everybody’s movement. Diverse groups are supporting each other so that this time people will take action and change the status quo. Today we are acknowledging the reality that #AllLivesMatter.
Being able to measure and report on the improvement of supplier diversity will go a long way to proving that corporations are taking effective action to drive positive change. Publishing these numbers will show the sad, starting state and keep the movement front and center.
Choose to make diversity a priority in your organization and those that you do business with. Take action and don’t hide it. When you vote with your dollar, are you voting for an inclusive economy.
Incorporating Supplier Diversity in procurement helps promote innovation through the entrance of new products, services, and solutions. It provides multiple channels from which to procure goods and services and drives competition (on price and service levels) between your company’s existing and potential vendors.
Simfoni Spend Analytics’ Free Supplier Diversity Dashboard and Reporting can help you make that difference by accurately categorizing and analyzing your company’s spend. We provide visibility and analysis into how you spend today and the breakdown of the information you need to strategically diversify your supplier base.
You can find more information on corporations that share the social responsibly to track and spend more with black-owned businesses here.
Websites of Diverse Supplier Organizations and Certifiers:
- National Minority Supplier Development Council (NMSDC)
- Women’s Business Enterprise National Council (WBENC)
- National Women Business Owners Corporation (NWBOC)
- National Association of Women Business Owners (NAWBO)
- National Gay & Lesbian Chamber of Commerce (NGLCC)
- United State Hispanic Chamber of Commerce (USHCC)
- Asian Pacific American Chamber of Commerce (APAAC)
- Native American Chamber of Commerce (NACC)
- Vets First Certification Program (for veteran-owned small businesses)
- U.S. Business Leadership Network (USBLN, for disabled-owned small businesses)