What Is Supplier Diversity?
The main essence of the supplier diversity program is to provide an opportunity to diverse suppliers that include minority, women, LGBTQ, veteran, and disabled-owned businesses. It is a proactive business strategy providing suppliers equal sourcing and purchasing opportunities. Under the supplier diversity initiative, businesses opt for 51% or more ownership managed by individuals or members of traditionally underrepresented or underserved groups.
Divedln is a cloud-based tool from LOCOMeX that de-risks the prequalification process and automates the goals settings for supply chain diversity and local content (Buy America) programs. Strategies from LOCOMeX bring a positive social and economic impact and enhance the brand image by providing cost savings, meeting the supplier diversity goals, and satisfying local content compliance.
Track And Report Metrics Of Supplier Diversity Program
Implementing a supplier diversity program is the first great step towards meeting and exceeding the organizational diversity and ESG goals. However, to reap the benefits of any program implemented, one should have the means to evaluate and improvise it.
DivedIn Tier 2 is a supplier diversity and spend management software from LOCOMeX that aids in tracking and reporting the supplier diversity program to seek the greatest impact on your business. Following are the core features of the cloud-based and AI-powered spend automation and optimization tracking tool- Divedin Tier 2.
- Goal optimization – It helps set diverse achievable spend goals based on current supply chain conditions.
- Category management optimization – Based on supplier and spend data, the tool helps to analyze and optimize your spend goals setting capabilities to drive future improvements.
- Spend automation – Helps in your spend-to-payment (S2P) process, enabling Tier 2 program spend tracking, planning, and forecasting.
- Spend optimization – Helps to optimize the mix of suppliers for a given project. Maximizing your chances of achieving your the spend goals.
- Predictive insights and intelligence – Obtain predictive insights and intelligence on diverse spending using compliance analytics and reporting capabilities.
Importance Of Tracking The Performance Of The Supplier Diversity Program
At the end of the day, any initiative the company takes should not merely stop at the company headquarters. The management should monitor and track it to determine if it is a sound strategy.
Supplier diversity metrics provide companies with an objective way to evaluate the performance of their suppliers. The metrics can also be used as benchmarks to determine how well corporate sourcing objectives are achieved with supplier relationships. Additionally, the supplier’s performance in terms of delivery time should also be consistent with agreed-upon standards and timelines so your company’s deliveries are not delayed.
Benefits Of Implementing A Supplier Diversity Program
Besides being just a (CSR) corporate social responsibility initiative, supplier diversity has shown proven results for companies to gain access to innovative suppliers. Many reputed companies, like Coca-Cola, UPS, Target, Walmart, Toyota, etc., have aligned to supplier diversity programs and gained a commercial advantage. Here are a few benefits of implementing a supplier diversity program:
- Supports sales improvements
- Creates innovation in products and services
- It helps in increasing flexibility and resilience
- Increase cost savings in the supply chain
- Ensures compliance with regulatory requirements
- Shows involvement in promoting social change
- Supports the business strategies of supply chain management
- Increases brand loyalty
According to the Hackett Group survey, 76% of diverse suppliers reached buyers’ expectations, 23% exceeded them, and only 1% fell short of expectations. Hootolgy research confirmed that supplier diversity initiatives enhance customer brand loyalty three times more. Big brands like Walmart, Johnson & Johnson, AT & T, etc., have gained financial advantages while partnering with minority-run businesses.
5 Key Factors To Evaluate Supply Chain
Keeping track of a set of unified metrics enhances organizational alignment and enables agility, leading to greater customer satisfaction. Here are a few options to track the supply chain:
- Production capacity – The production evaluation should always depend on the supplier’s abilities and limitations. The production should focus on business goals, including quality, timely delivery, and safety standards.
- Quality – Quality is a key component of a supplier evaluation. An ISO certification determines the quality standards of a company. Quality evaluation is the organization’s responsibility to deliver the best product to the market.
- Performance – An industry should clarify as many doubts as possible to determine if a supplier can handle critical situations. This can be assessed with the help of their previous projects, experience with the previous industry, and the reviews of their present supply chain products.
- Risk – A risk in a business is very common, but suppliers should always be attentive to handle and reduce the risk in the entire supply chain process. Performance should be reviewed based on the delay of delivery, average response time, and actions taken to correct the issue can help reduce the risk, accumulate greater insight into operations, and develop work quality.
- Impact on the environment – Sustainability plays a very important role in any business for the supply chain’s financial and ethical reasons. Environmental sustainability works in several areas, such as energy consumption, climate, pollution, safety requirements, water usage, etc.
Conclusion
As the business grows and expects a demographic change in the present competitive world, there must be a switch in the arguments for supplier diversity.
LOCOMeX makes smart recommendations relying on data analysis and interpretation that helps a predictive study of ESG, local content objectives, and supplier diversity. The LOCOMeX supplier diversity data analytic solutions leverage an AI data-driven methodology to assist the industry in successfully achieving its supplier diversity targets and goals.
