MBN USA

May 04, 2023

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Expertise matters in developing supplier diversity programs

By Ralph G. Moore, president, Ralph G. Moore & Associates

America’s aha moment on race has spurred corporations, significant nonprofits and universities, chambers of commerce and industry groups to take the following encouraging actions:

• Expand focus on supplier diversity and its impact on economic justice and community engagement.

• Substantially increase membership in national and regional nongovernmental organizations or NGOs focused on supplier diversity and economic opportunity.

• Advance racial equity and supplier diversity using over $50 billion in pledges.

• Fund at record levels private equity firms to expand their focus on creating scalable, diverse corporate suppliers.

• Expand influential nonprofit Business RoundTable’s “Purpose of a Corporation” doctrine to include the communities where its members do business.

However, this increased interest has also created a new class of the supplier-diversity ecosystem — impostors!

Ralph G. Moore & Associates Inc. (RGMA) defines impostors as established organizations and consulting firms — historically focused on community engagement; supply-chain management; and diversity, equity and inclusion (DEI) consulting — that suddenly, without the prerequisite experience, become self-anointed supplier diversity experts.

When well-intentioned buying organizations engage impostors for guidance on how to establish a new supplier diversity program or refresh an existing one, bad advice produces disappointing outcomes, including:

• Failure to align with overall business objectives.

• Ill-conceived notions on the supplier diversity value proposition.

• Inability to secure leadership engagement.

• Inability to distinguish supplier diversity technology from supplier diversity strategy.

• Illogical stakeholder categories when creating global supplier diversity strategies.

• Ineffective diverse supplier capacity-building strategies.

Another damaging aspect of the impostor phenomenon is the scores of corporations that will fail to realize the supplier diversity return on investment (ROI) from engaging some of the thousands of outstanding minority suppliers. In addition, corporations with adverse supplier diversity outcomes are more likely to disengage from supplier diversity altogether.

Impostors’ negative impact on the supplier diversity ecosystem

Beyond delivering questionable advice to leaders of major buying organizations, impostors are gaining footholds throughout the supplier diversity ecosystem, leaving a wake of chaos and dysfunction created by incoherent guidance on governance, outreach and capacity-building strategies in the name of “fresh ideas.” There is a plethora of examples of this problem, including:

Hypocrisy of the impostors adds insult to injury

The hypocrisy displayed by these overnight experts is the impostor phenomenon’s most offensive aspect. At the dawn of the 21st century, many impostors refused to establish supplier diversity programs within their organizations—despite being consultants of choice to corporations with industry-leading supplier diversity programs. In some cases, impostors created token supplier diversity programs to appease their clients, and they refused to become members of the diverse-supplier advocacy groups that they now want to advise. 

To fully understand the extent of the hypocrisy displayed, many of these impostors were the most vocal critics of supplier diversity over the past 25 years. Several veteran supplier diversity practitioners shared how they were threatened and intimidated by staff members from impostor firms when their supplier diversity strategies “got in the way” of the projected savings targets recommended by the impostors — which also impacted the impostors’ fee structure.

Following is a summary of a supplier diversity comment contained in a strategic sourcing report from one of the impostors that was shared with me in confidence and reflects the aggressive push back on the notion of doing business with diverse suppliers:

“The continued pursuit of the corporation’s supplier diversity spend goals have a potentially negative impact on the organization’s ability to meet the projected savings targets.”

Translation: Dear corporate leaders: Supplier diversity is not a prudent business activity.

How to identify impostors

Impostors are thriving because few supplier diversity stakeholders dare to question the capabilities of these branded firms. RGMA suggests that members of the supplier diversity ecosystem use the same vetting approach when the potential supplier vets a diverse firm. A few basic questions will expose the impostor without the need for confrontation. Here they are:

1. Does your company have a supplier diversity program? If yes, what year was it established?

2. Please share the list of diverse-supplier NGOs where your company is a member and the tenure of those memberships.

3. Please share the bio of your company’s supplier-diversity team and how long its members have worked for your company.

4. Regarding your firm providing consulting or training services to our organization:

a. Please provide three references from clients to whom you have provided similar services.

b. Please provide bios of the proposed engagement team.

Call to action

Despite the current chaos among some NGOs, others continue to embrace excellence and integrity. Collectively, we must expand our support of those well-managed NGOs, while challenging the directors of mismanaged NGOs to step up and do their jobs. These directors must assess the organization’s performance, read their mission statements, meet with their lawyers, seek guidance from bona fide supplier diversity subject matter experts and utilize provisions within the bylaws to return such NGOs to sane and impactful operations.

Now is the time!

Numerous supplier diversity stakeholders share my perspective but are waiting for someone else to act. This is not a time to sit on the sidelines, as waiting is a losing strategy.

• If you are a dues-paying member of an NGO that is in flux, now is the time to get involved.

• If you are a board member of an NGO, now is the time to question the judgment of your leaders if they have hired an impostor to create a “new strategy.”

• If you are a supplier diversity leader in a Fortune 500 corporation, now is the time to ask your leadership team to reconsider hiring a DEI firm to create your “impact sourcing strategy.”

• If you are an active member of your industry association, now is the time to challenge the group’s need to focus on diverse supplier capacity-building and measurement standards.

Expertise matters

Expertise is often the difference between success and failure in a critical moment. With the proper knowledge, tools and strategies, firms and businesses can maximize their resources and potential. We must collectively minimize the influence of impostors, while collaborating with subject matter experts to develop and implement today’s best practices and tomorrow’s next practices.

Don’t let the big names and fancy graphics fool you. There are several seasoned supplier diversity consulting firms in the marketplace with the expertise and experience that can assist supplier diversity stakeholders in developing and executing their strategies.

Join us as we meet this critical challenge.