Once a decision has been made to implement a global supplier diversity program, a company may look to any one of several existing step by step models for designing and implementing a program. The model described below adapted from a system originally developed by sourcing professionals among the membership of the organization Minority Supplier Development UK.
This six step process is a roadmap to help companies on the journey towards establishing an effective supplier diversity program. It is for companies that have identified the business case and need for diverse suppliers and are looking for practical guidance on how to engage them within supply chains.
As I discussed in my blog article “The 3 C’s of Supplier Diversity“, there is no global supplier diversity “cookie cutter-method” for implementation. It is a mistake for companies to believe they can be successful by simply adopting a “copy exactly” approach and transporting the companies’ U.S. supplier diversity tools, processes, and policies into non-U.S. locations. While some process and policy consistency is required, supplier diversity programs must be adapted to reflect the cultural and societal norms of the geographies in which they are implemented.
Despite these regional differences in implementation, the business case for global supplier diversity is consistent. I frequently discuss this business case in the context of what I refer to as “the three C’s of supplier diversity“.
This following six steps can help guide program implementation, once a company has moved past the business case and determined that it will institute a global program:
STEP ONE – DEVELOP GLOBAL SUPPLIER DIVERSITY GUIDING PRINCIPLES & POLICIES
When building out a global supplier diversity program, a company must develop a set a guiding principles and polices specific to global expansion. Companies with a mature US-based program will likely already have a defined set of core policies and principles, however – these may not sufficiently address the nuances of a program that is global in scope. It may not be enough to simply dust off a company’s existing policy and changing a few words.
Before embarking on a global supplier diversity program journey it is essential to develop a succinct corporate-level policy which defines the primary objectives and benefits of this program for the company, the employees, company shareholders, and for the communities in which the company operates.
This statement should be endorsed by a senior figure within the company, for example CEO, Chairman or Chief Procurement Officer (CPO), as a demonstration of senior level commitment to the global supplier diversity program.
Without top-level support it can be very difficult to convey a call to action down through the company.
While drafting a supplier diversity policy statement that strategically aligns with corporate plans and policies, communicates the right message to different stakeholders and drives results, the following points need to be considered:
- Who are the Target Beneficiaries?
- Ethnic minority-owned businesses,
- Women-owned businesses,
- Disabled-owned businesses,
- Lesbian, Gay, Bisexual, Transsexual-owned businesses
- other specific under-represented groups
- Why should these groups be considered? Reasons for their under-representation
- How does the company aim to assist these businesses?
- Explain process of reaching out to these businesses with potential business opportunities, training and mentoring program, financial and technical assistance
- What are the benefits for the company, its shareholders and the community
- How does this align with other company policies?
STEP TWO – DEVELOP A GLOBAL SUPPLIER DIVERSITY ACTION PLAN
CEO support and senior management commitment is the first step towards developing a sustainable program; however it is equally important to develop a robust action plan that is cross departmental and cross functional. The Global Supplier Diversity action plan acts as a means of ensuring that there is a corporate-wide commitment to Global Supplier Diversity and everyone across the organization shares common processes and measurements in implementing.
A model Global Supplier Diversity action plan should act as a guide for any department within a company to embed the process within its function. Key elements should look at the company’s strategic sourcing process and establish actions at each stage that enable the identification and inclusion of underrepresented businesses:
- Understand the internal spend and external market
- Develop a minority supplier portfolio
- Communicate supplier diversity goals internally and externally
- Work with 1st and 2nd tier suppliers
- Develop learning and training opportunities for underrepresented businesses
- Monitor and track program performance
STEP THREE – ESTABLISH AN INTERNAL AND EXTERNAL COMMUNICATIONS STRATEGY
Once a commitment to Global Supplier Diversity has been made and an action plan has been developed to support its implementation, it is of absolutely no use unless it is communicated effectively. This communication needs to target two key sets of stakeholders, those that are internal to the organization and those that are external. Of course accurate and timely communication in itself underpins every section of the Toolkit and should be considered as a continuous process throughout the program implementation.
Internal Communication – Most companies have well established methods of communication with its people. Company intranets, team meetings, newsletters, notice boards, internal networks are some of the most common tools used to communicate. As a first step these existing tools can be used to promote the ethos of supplier diversity and why the company has embarked on this initiative.
The aim is to not only create a sense of understanding but to also engender confidence in the program and in the overall approach. It will be difficult to encourage staff to do things differently but allowing them an opportunity to ask questions and engage in debate can be fundamental to motivating behavior change.
External Communication – Consider your target audience and tailor your messages accordingly. Some companies may opt to begin a program based on demands from clients in which case there is a clear need to articulate and communicate perhaps within bid or tender documents. Non-diverse existing and new suppliers may also need to be reassured that they will not be losing business as a result of the global supplier diversity program but that it will be used to ensure more inclusivity amongst a wider supplier base.
External communication will also need to address issues and questions such as:
- Why has the company embarked on this initiative at this time?
- What does it hope to achieve?
- Who is it designed to benefit?
- How will it measure this benefit?
- How can I get involved?
- How does it intend to make it successful?
Some ways of communicating messages externally are through company web sites, this can be particularly helpful as it allows external stakeholders to get answers to most of these frequently asked questions. Company / Annual reports are another useful way of communicating program activities and successes with clients and customers as well as through any external newsletters / e-communications that may be produced.
STEP FOUR – INCREASE OPPORTUNITIES FOR DIVERSE BUSINESSES
In an increasingly diverse marketplace, making every effort to include minority businesses among suppliers, always on the basis of merit, makes good business sense. In a way this is the essence of any good supplier diversity program and the one that will most impact the reputation of the company amongst suppliers. Companies that have embraced diverse suppliers identify a number of advantages including a dedicated and more responsive customer service, and innovation in products and services and cost savings.
For success in any supplier diversity program it is important to identify and offer opportunities to under-represented businesses so that they can compete for business. Key steps in identifying and increasing opportunities for under-represented suppliers:
- Provide leadership and clearly defined strategy and process
- Communicate success stories to demonstrate the positive contribution that minority suppliers are making to supply chain
- Forecast and communicate future sourcing requirements
- Educate and train buyers and suppliers to achieve greater success
STEP FIVE – ESTABLISH MINORITY SUPPLIER DEVELOPMENT PROCESSES
Under-represented development and capacity building are an important element of a company’s supplier diversity efforts. Research and evidence suggest that the majority of under-represented businesses tend to be small in size and capacity and any large company that is encouraging diversity in its supply chain needs to have processes and programs in place which help and assist minority businesses to develop and grow. It is for each company to establish the appropriate supplier development goals and objectives for their program and to develop appropriate initiatives within those parameters.
Before investing resources on developing under-represented supplier development program, research should be conducted to:
- Identify training and mentoring programs, tools and resources that already exist
- Identify various training, procurement training programs delivered by the Government or through other industry partners
- Identify resources to fund and deliver these programs
- Different supplier development program options
A model under-represented supplier development program should aim to look at various aspects of training and business growth needs. A company can choose all or any aspect of supplier mentoring and development. We can look at these training programs in three different stages of supplier engagement:
- Preliminary / supplier introduction stage
- Bidding stage
- Post-delivery stage – to prepare suppliers for growth
Here are some examples of different types of training, development and mentoring that can be provided at different stages of a supplier’s engagement with a company:
- Seminars on future supply chain trends
- Training on softer business skills e.g. improving presentation skills
- Training on different e-procurement tools like e-tender, reverse auction
- Training on quality, health & safety policies
- Capacity building training e.g. raising finance, venture capital, acquisition and mergers, workforce development
- Technical assistance e.g. business process restructuring, managing growth, executive development
STEP SIX – TRACK AND MEASURE PROGRESS
As with any program, setting objectives and suitable benchmarks for supplier diversity is crucial. Developing targets both strengthens commitments and helps assess progress, providing accountability and recognition throughout the organization. However without first assessing and understanding your baseline starting position, measuring and tracking effectively becomes very difficult.
Program measurement – Position the supplier diversity metrics to track the effectiveness of the supplier diversity program and link to company objectives by:
Defining how, when and what is to be measured; some example metrics include:
- Measuring the number of under-represented suppliers at the outset of the program and then on annual basis
- Measuring the spend with under-represented suppliers at the outset of the program and then on annual basis
- Measuring the overall value of opportunities offered to under-represented suppliers over a set time period
- Measuring the number of under-represented suppliers included in the RFP/RFI stage of tenders offered
- Measuring the number of under-represented suppliers who go through the full tender process and are shortlisted
- Reviewing and implementing a tool to capture activity through different parts of the business (through mandatory fields for example) and provide an audit to demonstrate compliance and by which companies can be audited by customers/suppliers
- Increase the number and variety of means used to reach under-represented suppliers and create a deadline for setting up mentoring programs, for example via Meet the Buyer events and company website etc.
- Capture feedback from under-represented suppliers that did not apply after making enquiries, or who did not submit tenders when invited to do so