inging fresh perspectives, competitive pricing, and stronger local partnerships. However, many businesses struggle with
how to effectively implement a supplier diversity program that is both
impactful and sustainable.
This step-by-step framework will guide you through the essential strategies to build, implement, and optimize a supplier diversity program, ensuring long-term business growth and social impact.
Step 1: Define Your Supplier Diversity Goals
- Set clear objectives aligned with your company’s procurement strategy and ESG (Environmental, Social, Governance) commitments.
- Example Goals:
- Increase diverse supplier spending by 20% in three years.
- Ensure 15% of total suppliers are from underrepresented groups.
- Onboard 50 new diverse suppliers annually.
- Tip: Use benchmarks from industry leaders like Intel ($2B diverse spend by 2030) or Walmart ($10B commitment to diverse suppliers).
Step 2: Identify & Certify Diverse Suppliers
- Collaborate with supplier diversity certification agencies to verify businesses.
- Top Certification Organizations:
- NMSDC (National Minority Supplier Development Council) – Minority-owned businesses.
- WBENC (Women’s Business Enterprise National Council) – Women-owned businesses.
- NGLCC (National LGBT Chamber of Commerce) – LGBTQ+-owned businesses.
- Disability:IN – Disability-owned businesses.
- Veteran Affairs – Veteran-owned businesses.
- Tip: Use supplier databases like SAP Ariba, Coupa, and Supplier.io to find pre-vetted diverse suppliers.
Step 3: Establish Inclusive Procurement Policies
- Update RFP (Request for Proposal) criteria to include diversity requirements.
- Ensure procurement teams prioritize diverse supplier inclusion in sourcing decisions.
- Example Policy: Require that at least one diverse supplier be included in every supplier selection process.
- Case Study: Coca-Cola
- Coca-Cola’s procurement team mandates diverse supplier participation in all competitive bidding processes.
Step 4: Provide Capacity Building & Support
- Offer mentorship, funding, and technical support to help diverse suppliers scale.
- Initiatives to Support Diverse Suppliers:
- Google’s Small Business Supplier Diversity Program – Provides financial grants and training.
- JP Morgan’s Diverse Supplier Grant Initiative – Offers capital funding to small, diverse businesses.
- Tip: Host supplier development workshops to train diverse vendors in quality control, compliance, and digital transformation.
Step 5: Implement Technology & Analytics for Tracking
- Use AI-powered procurement tools to monitor diverse supplier engagement and track spending.
- Best Supplier Diversity Tracking Platforms:
- SAP Ariba – Automates supplier diversity tracking.
- Coupa – Provides real-time reporting on supplier diversity spending.
- Supplier.io – Offers benchmarking against industry diversity goals.
- Example: IBM
- IBM uses data analytics to ensure 30% of its total supplier spend comes from diverse businesses.
Step 6: Foster Long-Term Supplier Relationships
- Establish long-term contracts with diverse suppliers to ensure sustainability.
- Ways to Strengthen Supplier Relationships:
- Co-develop new products and services.
- Offer flexible payment terms to support cash flow for small suppliers.
- Conduct annual performance reviews to drive improvement.
- Case Study: Johnson & Johnson
- J&J provides multi-year contracts to high-performing diverse suppliers, ensuring long-term collaboration and stability.
Step 7: Measure, Report & Continuously Improve
- Regularly analyze supplier diversity data to assess progress and impact.
- Publish annual reports showcasing supplier diversity performance.
- What to Track:
- % of total spend on diverse suppliers.
- Growth in diverse supplier engagement over time.
- Economic impact (e.g., jobs created through diverse supplier partnerships).
- Example: Microsoft’s Annual Supplier Diversity Report
- Microsoft transparently shares progress on supplier diversity commitments, inspiring industry-wide adoption.
Conclusion
By following this step-by-step framework, businesses can create a sustainable and impactful supplier diversity program that drives innovation, enhances resilience, and strengthens community engagement.