Supplier diversity is a variation in the supply chain process that includes diverse business groups which are usually underrepresented. It is not just a business strategy but also a social responsibility that creates a positive economic impact on the organization and the nation. Companies who wish to incorporate the supplier diversity strategy in their entrepreneurship seek the assistance of the right partner who can provide them with ideal supplier diversity data analytic solutions.
Benefits Of the Supplier Diversity Program
Supplier Diversity Certification
Suppliers need to identify themselves as ‘diverse’ to be visible to businesses seeking the inclusion of diverse suppliers. The fundamental criterion to be called diverse is that at least 51 percent of the business should be owned by an individual or group of people from diverse backgrounds. Hence, the first step is to identify the minority classification of the business, as businesses owned by African-Americans, Subcontinent Asian American Hispanic American and more, veteran-owned, women-owned, permanent US residents owned, small businesses as determined by the NAICS code, and more.
Various agencies like the National Minority Supplier Development Council, Women’s Business Enterprise National Council, Asian Pacific American Chamber of Commerce, and many others are authorized to issue suppliers a certificate of their diverse origin. Organizations seeking inclusion through supplier diversity programs would easily find certified suppliers.
Supplier Diversity Metrics For Leadership
Percentage of spending with diverse suppliers
Most companies track their investment in diverse suppliers, intending to spend at least 10 percent. However, this goal of 10 percent gives the true picture only when explained by the absolute number of diverse suppliers the company deals with compared to the total number of suppliers.Impact-oriented metrics
Companies measure the success of their supplier diversity program with the percentage of diverse suppliers who exceeded their performance targets, the number of innovative solutions they provided, and the monetary benefit that came along.Community impact
Companies that include diverse suppliers in their network create employment among diverse groups. They measure the community impact by considering the number of jobs created, the product of the investment and the number of suppliers, and their contribution to the taxes. These numbers also contribute to the GDP of the nation. In brief, a data-driven approach to the factors listed above sets the goals of ambitious organizations which estimate the success of their program by comparing the achieved numbers against their targets. The best way to track the metrics accurately is through supplier diversity reporting software designed for the purpose.
Tips For A Successful Supplier Diversity Program
Keep your supply chain transparent
Transparency in your supply chain makes identifying diverse suppliers easier for your business and keeps your business functioning smoothly.Set your supplier diversity goals
Decide which diversity groups you would like to add more to your supplier network and why, and keep track of it. A data-driven approach consisting of planning and tracking metrics would help you see the curve of how you progress toward your goals.
An important tip here is to not over-depend on a particular supplier as it may adversely impact your business. Suppose a particular diverse supplier constitutes a large part of your investment. In that case, you risk losing your spending on the supplier if he loses his identity through acquisition by another business.
