Where’s The Supplier Diversity? The Problem With Procurement and Supplier Diversity Programs

supplier diversity

Supplier Diversity

You can call it supplier diversity, but I call empowering and supporting local suppliers. (Even if it is driven by government contract compliance within Pharma).

I’ve read supplier diversity programs, can have an amazing ROI. On average programs can add, $3.6 million for every $1 million in procurement operational costs. Not to mention the other benefits such as innovation, competition, and reputation.

So if creating a diversity program is so important, why are so many getting it wrong? What are some of the hurdles I’ve seen in my tenure? Well, let me tell you!

(Especially if you don’t want to lose the interest of the Millenials and Gen Z crowds.)

Supplier Diversity Challenges

1. Finding Diverse Suppliers

Sometimes it’s just this simple. If you can’t find a supplier in the service type you are seeking, they may not exist. Even if they do exist, trying to find them becomes a task in itself.

It’s therefore probably one of the top reasons programs fail. Especially when the supplier can’t provide the paperwork, prove their status, or are just don’t have enough time to verify their status.

2. Putting Diverse Suppliers on a Level Playing Field

It’s all about how you sell certain suppliers to business partners. If procurement isn’t embracing the diversity quota, they won’t be keen on selling these suppliers to the business.

Just by calling them out as such, can be a detriment in itself. You’re already giving the business a reason to exclude them from being down-selected. Or you’re putting the pressure on them to select this supplier. Either way can end in disastrous results.

3. Dirty Data for Government Reporting and Measuring

From having suppliers enter in their own information to having internal business partners doing it too, it’s hard to gain consistency. And with the smaller businesses I’ve been in, even being aware that they qualify and why it’s important seems to be lacking.

Which is why the data is a bloody nightmare. You can’t depend on it. There are some new solutions (ahem tealbook) that can help you manage this. But this solution has only been around for a year or two.

In past organizations, I can remember it taking days, weeks, if not months to try and get accurate reporting. Motivated anyone?!

4. Supplier Diversity Training Programs and Certifications

Now, I know I’m old, but having a supplier diversity degree would be a first for me. I know there are courses and certifications, but I haven’t seen an entire program dedicated to this.

Typically it’s part of a supply chain or procurement degree. And not to say these aren’t useful, but can you really build an entire department on the basis of a couple of courses?

So although there is information out there on the subject, there still doesn’t appear to be a lot of experts. It always seems like a portion of something larger.

5. Executive Buy-in and Embracing the Shift

Lack of awareness sometimes is an excuse, but can also be the truth. The problem really focuses in on the C-Suite and Executive buy-in of the program.  If you can’t gain their support to push and set mandates to meet these objectives, the odds are stacked against you from the start.

6. Goals and Enforcement

For most of us in Pharmaceutical and other industries with government contracts, we have our goals set for us. But no one really questions if they are reasonable or make sense. Not to mention, do we know if the government even enforces them?  Quite frankly I’ve never heard of any company being penalized for not submitting on time or missing their goals. Which really makes you wonder…

A Supplier Diversity Program is a proactive business program that encourages the use of women-owned, ethnic/minority-owned, veteran-owned, LGBTQ-owned, disability-owned, and small businesses as suppliers.

supplier diversity

Supplier Diversity Solutions

  • The first three issues can be addressed by technology like tealbook.com. Not only can help with the data and reporting problems, and certifications, they also can find diverse suppliers in their 4M+ and growing database.
  • To address the training – here are the 8 Best Diversity Training Programs
  • Gaining executive buy-in and embracing the change is no easy feat. But if you can build the business case to show the ROI and benefits, you’ll be a step ahead.
  • Goals – you can’t change what the government enforces, but you can when it comes to company-wide goals. Set stretch goals to motivate your team to ensure the success of the program, and the drive to find new diverse suppliers.

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