Top Supplier Diversity Programs Broaden Value Proposition To Drive Increased Market Share…

The Hackett Group Research Also Shows That Virtually All Diversity Suppliers Meet or Exceed Expectations

IBM, American Red Cross, and WEConnect All Spotlight the Value of Supplier Diversity Programs

MIAMI & LONDON, February 16, 2017 – Virtually all diversity suppliers meet or exceed expectations, and top corporate performers in supplier diversity experience no loss in efficiency, according to new research from The Hackett Group, Inc. (NASDAQ: HCKT). In addition, they see improved quality and often extract other benefits, including increased market share and access to new revenue opportunities. The research challenges the attitude of many business leaders, who worry that dedicating resources to supplier diversity will divert attention from other strategic activities.

To truly unlock the full potential benefits of supplier diversity efforts, The Hackett Group recommends that companies consider expanding beyond traditional goals such as complying with regulations. Top performers in supplier diversity recognize the value of objectives such as the ability to gain access to new markets and improve supplier partnerships. In addition, companies should look beyond basic measures such as the percentage of spend with diverse suppliers and calculate the true value of supplier diversity by using more sophisticated performance metrics such as satisfaction levels and other secondary metrics that are aligned to long- and short-term plans and objectives.

Companies with top-performing supplier diversity programs focus on several areas to make the most of their efforts, and go beyond the basics, the research found. These companies develop supplier partnerships, mentor local suppliers, collaborate with suppliers on product innovation, and share their experiences with other companies. They use supplier diversity as a reputation-builder to help increase market share and retain talent, and rely on social media to develop customer and brand awareness. They also actively educate internal stakeholders on the value of supplier diversity, and interact with local communities of suppliers and consumers to better understand the market, establish relationships, and share supplier diversity goals.

While most supplier diversity programs have a domestic focus, The Hackett Group’s research found that more than 40 percent of all global companies with a U.S. supplier diversity program plan to expand globally within the next two to three years. The Hackett Group recommends that companies manage U.S. and global programs as a single initiative, where appropriate. Partnering with corporate diversity groups, which manage workforce diversity, is also highly advisable, as is working with third parties that can help companies connect with diverse suppliers.

“Supplier diversity is evolving from a check-the-box corporate social responsibility requirement to a strategic enabler providing access to innovative products and increased market share in new and developing communities,” said The Hackett Group Research Director Laura Gibbons. “Top-performing organizations are taking advantage of this opportunity, and applying the tenets of social diversity to new areas such as supplier partnering, reputation management and global expansion with exceptional results.”

“There are certainly challenges that need to be overcome,” cautioned Ms. Gibbons. “It can be difficult to obtain the necessary support to invest in supplier diversity programs. Business leaders often worry that dedicating resources to this will impact procurement savings or even quality. But our research clearly shows that this is not true. Top performers are not seeing losses in efficiency, and quality often improves. Overall, the risks to focusing on supplier diversity are quite low, and the potential upside is significant. In fact, up to 10 percent of sales come with supplier diversity requirements, suggesting that the lack of such a program can even result in lost revenue.”

According to Michael Robinson Program Director – Global Supplier Diversity, IBM, “At IBM, we’ve been leading the way in corporate supplier diversity efforts for nearly 50 years. Today, we’re the only company, that we know of, which has a diverse supplier requirement in every country where we operate worldwide. We count on our supplier network, and ask the same thing of our women- and minority-owned suppliers as we do of our majority suppliers… that they help us provide value to the customer, strengthen our brand, understand our markets, and identify what’s coming next in the world of technology. It’s in our best interest to find the best suppliers, and a focus on supplier diversity is an important part of how we do that.”

According to Jillnell Joiner, Senior Supplier Diversity Manager, American Red Cross, “At American Red Cross, we’ve been very focused on expanding our supplier diversity efforts over the past few years, and communication has become a key best practice for us. We want to make sure suppliers, including minorities, women and veterans, understand that the door is open.”

“Some things are simple… if a supplier reaches out to us, we respond, no matter what,” explained Ms. Joiner. “Last year we also did workshops in 15 states across the country, in partnership with the National Minority Supplier Development Council, to help suppliers understand the extent of our supplier diversity efforts, and how best to do business with us. These workshops have been a great asset for us.”

According to Elizabeth A. Vazquez, CEO and Co-Founder of WEConnect International, “Some of the most successful supplier diversity and inclusion programs come from companies that have diversity and inclusion in their DNA. They are making strategic investments in the communities they serve not only in the U.S., but around the world. Global corporations must be committed to utilizing the world’s best suppliers. Smart companies will make a conscious effort to identify underutilized suppliers in every market that can bring value, including businesses owned by women, ethnic minorities, people with disabilities, members of the LGBT community, and other groups.”

DTE spent more than $410 million with certified diversity suppliers, representing nearly 20 percent of the company’s overall spend.

FIVE REASONS SUPPLIER DIVERSITY MATTERS

by Procurious HQ on 26/01/2017 01:16

We’re often told that supplier diversity is important for any business. But are you able to articulate exactly why this is?

Here’s a cheat-sheet to help you next time a business stakeholder asks why your organisation needs a supplier diversity programme.

1. Supply managers created a lack of diversity, so it’s up to us to fix it

There’s now a level of recognition that the historical underutilisation of diverse businesses is the fault of supply management professionals.

Contributing factors include a narrow focus on cost over other value, restrictive criteria for suppliers, inflexible and non-scalable policies. Underpinning these is a tendency for big business to be most comfortable working similarly sized entities.

A 2009 study from Pew Research has found that while minority-owned firms made up 41 per cent of all companies in the U.S., they only took in 10.9 per cent of overall revenue.

Here’s the good news. Procurement and supply managers are leading the charge to address the issue, with diversity spend now firmly on the agenda and rising every year.

Reversing the contributing factors above has led to a more inclusive focus on overall value (including social benefits) over cost, flexible and scalable policies and criteria for suppliers. There is also a recognition that the strongest business relationships are often made with smaller, more diverse suppliers.

There’s an impressive array of conferences and organisations dedicated to improving supplier diversity, including:

2. Customers are increasingly expecting diversity

Simply put, your customer base is diverse, so your business needs to be diverse as well. Partnerships with diverse suppliers will give your business a competitive advantage when facing changing customer demographics.

For example, if you operate in an area with a rapidly-growing minority population, your key relationships with minority-owned suppliers will become more important than ever.

While the public relations aspect shouldn’t be the prime reason for having a supplier diversity programme, it’s still important to track, measure and report on your diverse supplier base to win recognition from your customers for the work you have done in this area.

3. Diversity drives innovation

A study by CHI Research determined that small businesses generate 13-14 times more patents per employee than large firms. Since diverse suppliers tend to be small businesses, many companies use their supplier diversity programmes to tap into new and varied creative resources and the innovation that is occurring at these firms.

The fierce competition for business amongst diverse suppliers is another driver for innovation. Essentially, diversity brings a number of different backgrounds and life experiences into your supplier mix to overcome homogenous thinking with fresh new perspectives.

4. Diverse suppliers are often more flexible

Similarly, because most diverse suppliers are small businesses, they are usually able to offer greater flexibility, better customer focus and lower cost structures than larger businesses. Smaller, diverse suppliers are less likely to be tied down by restrictive policy, red-tape or innovation-stifling bureaucracy.

5. Well-known organisations are leading the way

Finally, some of the world’s leading companies are moving ahead with impressive supplier diversity programmes. Microsoft, for example, has recently exceeded $2 billion in annual spend with M/WBE businesses.

Another technology giant, Google, launched a best-practice supplier diversity programme in 2015. It brings key partners into the Google Academy for shared learning opportunities that will drive further innovation.

AT&T celebrate their suppliers as one of their “four pillars of diversity”, the other three being the organisation’s employees, community and marketing.

If your organisation’s supplier diversity programme is still only in its infancy, it’s important to increase your focus on this area or risk being left behind.

Interested in learning more about Diversity in Procurement? Register for ISM Diversity 2017, taking place March 1-3 in Orlando, Florida