MBN USA

January 25, 2022

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Significant increase in supplier diversity programs in 2021

By Kelly Barner, Supplier.io

One of the most compelling findings of the 2021 State of Supplier Diversity Report is a significant increase in the number of new suppliers' diversity programs. 40% of this year’s survey participants work for businesses with supplier diversity programs that are less than 3 years old. This same group accounted for 22-26% of all programs between 2017 and 2019, showing 60% growth in the last two years alone.

The executive approval to start these new programs was granted with little delay or deliberation, as leadership teams were influenced by worldwide demonstrations in favor of equity and inclusion. New supplier diversity managers were propelled forward with little pushback or internal debate.

While anyone following the supplier diversity movement should be encouraged by this surge of enthusiasm, it falls to each company’s supplier diversity manager to ensure they have the leadership commitment required to sustain their program.

I suggest the following practices for securing fully informed buy-in for supplier diversity, ensuring it turns into long-term commitment at the executive leadership level.

Invest in executive education
Executives that are new to supplier diversity may have questions or need additional background or context. This is especially true given the ease with which many new supplier diversity programs were launched over the last year. Just because a decision is right does not mean that the work will be easy, and the more understanding exists among leadership from the outset, the better.

When possible, facilitate a combination of question-and-answer session formats, sometimes with the whole executive leadership team, other times with individual executives that are in a position to open doors for supplier diversity or close them. And remember that learning is a two-way process; diversity managers should be as willing to listen to the thoughts and concerns of executives as they are to provide information. Learning sessions should be as inclusive as the diversity program itself, seeking to foster understanding no matter how much experience each executive has.

Book a standing meeting
Some of the strongest commitments start out as just a habit. When nurtured over time, these habits breed ownership – and that is a key component of leadership commitment. A monthly or quarterly meeting can be used to update the executive team on core metrics, share success stories, and raise concerns. As the diversity program naturally evolves over time, executives will remain actively connected to its mission and vision.

The more preparation supplier diversity managers do for these meetings, the more commitment they will drive. Although the agenda may remain consistent for the sake of simplicity, the information shared should not be repetitive, or executives will see the effort as passive and become complacent about the program. As with education, these meetings should be forums for discussion and exchange, with everyone present playing an active part.

Secure visibility through corporate reports

Once a supplier diversity program is sufficiently mature, it is natural to include the results in public-facing reports. This may include a section in the annual report as well as supplier diversity-specific reports that are released to get the attention of qualified suppliers, attract new customers, and contribute to positive shareholder/investor sentiment. Or a Supplier Diversity Economic Impact Analysis to report the real impact supplier diversity spending has on the diverse businesses and the multiplier effect it has on their communities.

Nothing holds an executive’s attention like something they may be asked about by a financial report or shareholder. Helping them see the connection between their involvement and positive market responses is critical. The decision about reporting, when to begin, and what to include, will reflect upon the company. Deciding to release information is a form of commitment that can be translated into action by the supplier diversity manager.

Share the supplier experience
Although many companies include in their diversity, equity, and inclusion mission statement that they are making an investment in or prioritizing traditionally disadvantaged suppliers, most of the time and effort associated with supplier diversity is focused on the company’s own actions. Rather than being overly inward, this is natural, as companies have more control over their own actions than those of distant supply partners.

Leaders should have the opportunity to hear from or speak with diverse suppliers. In some cases, they will share success stories, and in others present challenges that need to be overcome jointly. Participating in these conversations will keep the mission front and center and separate the supplier diversity program from other corporate initiatives.

Benchmark against the competition
There are two ways to look at who ‘the competition is for the sake of supplier diversity, and both can spur leadership commitment. In the most literal sense, the competition provides the same product or service. When the target consumer is motivated by a company’s commitment to environmental, social, and governance (ESG) causes, this can win new customers and help expand market share.

At the same time, every other company with a supplier diversity program is ‘the competition.’ This is not to say that a financial services firm will find themselves in competition for sales with a manufacturer, but that the best practices of supplier diversity programs are highly transferrable. Learning from others, whether through associations, personal connections, or stories in the news, presents a source of inspiration that keeps everyone’s commitment high.

Whether a supplier diversity program is brand new or has been around for a decade or more, leadership commitment is essential to success. Commitment makes sure that resources are available, priorities remain aligned, and the vision is revised as appropriate. Seventy percent of supplier diversity programs have at least one dedicated manager, a finding that was consistent from 2019 to 2021. That manager needs keep the leadership team engaged even though they have many other responsibilities, finding ways to secure and sustain their commitment over time.