Supplier
Diversity, What’s Strategic About It?
Guest Contributor: Patrick Chavis, Esq. --
Strategic Resources Group
Lalita said it
well.
All organizations
(at least the ones that want to be around for the long haul) perform
some degree of strategic planning. Whether the process is informal
or serves as an integral part of an organization's business model,
most organizations will acknowledge the importance of utilizing a
basic planning process. When an organization sets out to “plan”
strategically, there are many common themes that arise. Goals are
set and procedures/strategies are developed to meet those
goals. Objectives such as operational efficiency, business
development, resource management and cost containment tend to become
a part of the planning process. Some organizations also create
sub-plans in the form of separate marketing, business interruption
and information technology, and related plans.
Very rarely,
however, will one see a supplier diversity sub-plan or aspects of
its tenets integrated into the organization's global planning
mechanism. Minorities in the US alone, have an annual spending power
of in excess of $650 billion -- more than the gross national product
of Canada. Harnessing the massive spending power is about more than
corporate citizenship -- its about economic survival.
Organizations
have begun to understand the “business benefits” of supplier
diversity -- really looking at and understanding the nature of
and impact of with whom they do business. Benefits include
increasing vendor competition, reduced commodity costs, development
of a loyal vendor base, compliance with funding mandates and
increasing an organization’s customer base. Supplier diversity
programs strive to increase the breadth and depth of the
organization’s supplier base to include more minority and women
businesses. These vendors have traditionally been underrepresented
in an organization’s supply chain process. Though organizations have
vastly improved in the hiring of a diverse workforce, little
improvement has been realized in achieving true parity in utilizing
diverse vendors when purchasing goods, services and labor (“GSL”).
Plan for
Diversity -- Plan for Profits
In order to
implement systemic change in the way GSL is procured, there must
first be a fundamental change in the mindset of the
organization. The most important initial step in managing the change
is the unqualified support from top executives within the
organization. This support must be communicated directly through
issuance of policy statements and other corporate communications,
and through palpable action. There can be no greater indicator of an
organization’s commitment to supplier diversity than to incorporate,
implement, define and promote diversity as a primary objective
within the strategic plan. Supplier diversity’s integration must
touch all business units, and be incorporated into all
organizational processes starting with the strategic planning
process.
The supplier
diversity program’s success can be enhanced through the strategic
planning process. Supplier diversity goals should become a part of
the organization’s performance standards and measures. Accordingly,
organizations should create attainable incentives as well as
baseline (minimal) expectations. To optimize opportunities for
success, the organizational performance “report card” must include a
diversity grade. Without communicating expectations and supporting
the program’s objectives, supplier diversity will remain a
theoretical proposition with no real opportunity to take root and
flourish.
Supplier
Diversity -- From Foreign to Fundamental
When a supplier diversity program
takes its rightful place as a corporate priority its role in the
planning process becomes apparent. Integrating diversity into the
supply chain management process is, for many, a foreign concept.
Most procurement processes utilize some form of competition through
bid or proposal. When competition is not required, contracts are
negotiated with the goal of obtaining the best deal (not necessarily
the best price) for the organization. When the nuances of supplier
diversity are added into the process, the system cannot accommodate
the unique variables that accompany the organizations new
procurement requirements. Clearly a creative (and strategic) process
must be developed to complete the process. How can you integrate a
program and simultaneously obtain a fair price, secure quality GSL,
efficiently manage staff time, keep current vendors happy, bring in
new and untested vendors and still meet all job/project performance
expectations?
The fact is, supplier diversity can
be done, and it is being done. From Fortune 500 companies to small
community based not-for-profit entities, supplier diversity makes
sense, and it works. Regretfully, there is no cookie cutter approach
to be followed. The good news is that organizations that make it
their mission to effectively integrate supplier diversity into the
strategic planning process, overcome the challenges of
implementation. Successful organizations, learn to proficiently
manage the “strategy” of diversity.
Patrick is the Co-Managing Principal for
Strategic Resource Group, LLC. SRG is a management consulting firm
that serves to promote supply chain management processes, and their
improvement; including implementation and coordination of supplier
diversity programs. More information on SRG can be found at
www.strategic-rg.com
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