One of the most pressing issues facing modern society – and by extension the business community – is the prodigious gap that exists between people and companies on various tiers of the American experience. Disparities exist in practically every category, rendering the pathway to success even more difficult for those who hail from traditionally disadvantaged communities. Statistical analysis of any metric that is used to measure success – accumulated wealth, level of education, career achievement, income, access to housing, health care, civil rights, voting rights, or standard of living – only points out the magnitude of the chasm that separates the ‘haves’ from the ‘have nots’ in our economic ecosystems. Nowhere is that disparity more evident than in business, where firms owned by women, minorities, veterans, the disabled and members of the LGBTQIA+ community are at a significant disadvantage in pursuing business opportunity within corporate supply chains. How do we, as a business community, address and remediate these ongoing disparities?
Corporate America has utilized Supplier Diversity programs – distinct and coordinated outreach to businesses from traditionally disadvantaged communities – for more than 50 years, with mixed results. Entities like the National Minority Supplier Development Council (NMSDC) – the nation’s largest advocacy organization for minority business inclusion, established in 1972 – and the Billion Dollar Roundtable (BDR) – an association of corporate entities that spend at least $1 billion annually with diverse suppliers – are leading the charge to a more equitable supply chain environment, providing programming, resources and advocacy for their stakeholders. The ultimate target of these efforts – often defined as economic equity – remains elusive, however, as five decades of activity have not substantially closed the gap.
As the nation grapples with equal opportunity, discrimination and economic equity on a global scale, the first issue that must be resolved is defining how we measure success…what are the key indicators that most accurately reflect where we stand and what kind of progress we are making? While civil, social and political objectives are intrinsically difficult to quantify, the supply chain metric that is most meaningful is actually fairly straightforward – diverse spend. Defined as the dollars spent on contracts with suppliers who qualify as diverse, and sometimes expressed as a percentage of a company’s overall investment in goods and services purchased from all suppliers, diverse spend provides a clear and irrefutable reflection of a company’s supplier diversity performance. Perhaps most importantly, it gives a corporate supply chain a baseline to evaluate its effectiveness year over year. A simple trend analysis over 2 to 5 years is all that is needed to quantify success.
There are many obstacles to achieving economic equity within corporate supply chains. Some companies are in specialized industries where suppliers must possess deep institutional knowledge, acquire expensive technology, or make cost-prohibitive investments in machinery or equipment to compete, or face other legitimate barriers to entry, resulting in a very small number of diverse firms in the space. Some supply chains demand scope and scale, often instantaneously, that can be nearly impossible for an emerging firm to achieve within a client’s expectations for ramping up a contract after execution. Historically, lending and investing communities have often not welcomed diverse clients, creating artificial barriers to participation by restricting access to the capital necessary to build, grow, scale and compete.
Perhaps the most elusive variable in growing diverse spend and achieving supplier diversity success is supply chain inertia, or the entrenched tendency of an organization – and its team members – to prefer to do what it’s always done. People prefer to do business with those they know, like and trust, so the willingness to invite new players to the table may be a challenge. “If it ain’t broke, don’t fix it,” right? “If I have a supplier in that category that works for me, whose performance meets my standards and whose people and practices are familiar, why rock the boat?” The simple answer is to consider the outsized influence of societal factors that have systematically excluded or diminished some communities and accept the responsibility we all share to rectify that history and create opportunity for all.
Certifiably Diverse, the software suite for supplier management and Supplier Diversity from IBEX IT Business Experts, offers a comprehensive set of tools that allow a supply chain organization to engage, enroll, track and communicate with all types of diverse suppliers, including a simple yet sophisticated user interface that allows a supplier to input company information into one online location and become searchable and accessible to an entire universe of potential clients. The spend tracking and customizable reporting capabilities are next level, enabling ESG, DEI, Procurement and Supplier Diversity leaders to fully analyze performance, track spend on multiple levels and tiers, and produce reports and presentations that tell a convincing story. CD also gives buyers, leaders and C-Suite executives a crystal-clear view of their actual diverse spend numbers, with a forecasting capability that utilizes current and past spend performance to establish trend lines and predict future performance.
The importance of diverse spend reporting and analysis to supplier diversity achievement cannot be overstated. It is the fundamental measure that tells the true story of a company’s real commitment to diversity and inclusion in its supply chain. If your percentage of spend with diverse suppliers is relatively the same year over year, you are missing the target. If you need help with measuring your diverse spend and establishing real-time metrics that can help you meet and exceed your growth goals, talk to the pros at Certifiably Diverse and set up a product demonstration. Stay tuned for a future post where we break down the capabilities of our solution and show you how it can assist you in all of your governmental compliance requirements and take your spend tracking to the next level. Are you Certifiably Diverse?