Supplier diversity is often misunderstood as an isolated, stand-alone program within a business structure, segregated from other functions. However, this assumption couldn’t be further from the truth. Supplier diversity is cross-functional, interwoven with various departments and processes, and vital to the overall operational success and growth of a company.
Integrating Supplier Diversity Across Business Functions
Supplier diversity doesn’t exist in a vacuum. In fact, its success depends upon collaboration across departments and processes. Below, you’ll find a list of functions you should consider including in your organization’s supplier diversity practice
Procurement: Naturally, procurement is the function most directly tied to supplier diversity, as it involves the selection of suppliers. Procurement teams must work hand in hand with supplier diversity leaders, ensuring diverse suppliers are given equal opportunity during the bidding and selection process.
Supply Chain: Supply chain teams can integrate supplier diversity into the design and operation of the organization’s overall supply chain. This includes identifying and engaging diverse suppliers, integrating them into the supply chain, and managing their performance for continuous improvement.
Technology: As companies increasingly turn to digital solutions for supplier diversity and vendor management, technology teams have an indispensable role in their implementation and ongoing maintenance. They are responsible for selecting and integrating software platforms, like Hire Ground, that streamline supplier onboarding, risk assessment, opportunity posting, and more. These platforms enable organizations to efficiently manage their supplier diversity efforts and optimize their supply chains. Beyond setup, technology teams also ensure these systems operate smoothly and securely on a day-to-day basis, troubleshooting issues and rolling out updates as necessary.
Marketing and Public Relations: The marketing and PR teams can leverage the company’s commitment to supplier diversity to build brand reputation, attract diverse talent, and reach out to diverse customer segments.
Finance: Financial teams play a crucial role in monitoring and reporting the economic impact of a company’s supplier diversity initiatives, providing tangible proof of their effectiveness. By aligning these diverse facets of an organization, a more comprehensive, successful approach to supplier diversity can be realized.
Risk Management: Risk management plays a key role in supplier diversity programs. With diverse suppliers integrated into the supply chain, organizations can mitigate risks related to supply chain disruption, geographical concentration, and potential public relations issues. Incorporating diverse suppliers also provides the flexibility and adaptability necessary to navigate volatile markets, offering an essential buffer in uncertain times.
Strategic Planning: In an increasingly diverse business environment, supplier diversity should be a strategic priority. Strategic planning teams can incorporate supplier diversity into the organization’s vision, setting clear goals and objectives. They can ensure supplier diversity is seen as an integral part of the organization’s growth and sustainability plans, helping to drive competitive advantage and market differentiation.
Legal & Compliance: Ensuring that the organization meets federal, state, and local regulations concerning supplier diversity is a task that falls under the legal and compliance department. They work to ensure the company is in line with laws such as the Small Business Act, which mandates that a fair proportion of government purchases, contracts, and subcontracts be placed with small businesses.
Sustainability & Corporate Social Responsibility (CSR): Supplier diversity can be a key component of an organization’s sustainability and CSR strategies. It can help meet targets related to social inclusion, economic development, and environmental responsibility. Through their interactions with diverse suppliers, companies can foster community growth, support small and local businesses, and promote economic inclusivity, contributing to their broader sustainability and CSR goals.
Environmental, Social, and Governance (ESG): Though there is considerable overlap here with CSR, ESG considerations are increasingly shaping business strategy and operations. Supplier diversity is a key aspect of a company’s social responsibility, directly impacting the “S” in ESG. Incorporating diverse suppliers can contribute to social equality, community development, and economic inclusivity. It can also affect the “G” in ESG, as governance structures that value and promote diversity tend to attract a wider range of stakeholders. Environmental aspects can be enhanced as well, as diverse suppliers may bring innovative, sustainable solutions to the table, positively influencing the “E” in ESG. By including supplier diversity in their ESG agenda, companies can showcase their commitment to responsible business practices, attract socially conscious investors, and differentiate themselves in the market.
The Relevance and Importance of Cross-Functionality
The cross-functional nature of supplier diversity is essential for several reasons. Firstly, it ensures alignment between diverse procurement strategies and overall business goals. When various departments recognize and integrate supplier diversity within their operations, it amplifies the positive impact on the organization’s bottom line and reputation.
Cross-functionality also fosters collaboration and shared responsibility. It’s not just the job of the supplier diversity professional or procurement team to promote and implement supplier diversity – when all departments understand their role in advancing supplier diversity, the company’s commitment to those initiatives is significantly strengthened.
Finally, cross-functionality supports innovation. Diverse suppliers often bring unique perspectives, novel solutions, and local market knowledge that can spark innovation in various business functions, from product development to fresh marketing strategies.
Influencing Corporate Policies and Culture
Supplier diversity initiatives can also influence corporate policies and practices. The commitment to diversity in supply chain management can inspire similar inclusivity in other areas, such as recruitment, promotions, and overall workplace culture. This holistic approach to diversity can create an inclusive space where everyone – employees, suppliers, customers – feel valued and respected.
For supplier diversity initiatives to genuinely change an organization’s culture and policies, they must extend beyond procurement. Building cross-functionality into your supplier diversity practice can result in a more inclusive, innovative, and resilient organization.
Influence on HR Policies and Recruitment: Supplier diversity practices can inspire HR policies to be more inclusive in terms of hiring, talent management, and leadership development. If a company is committed to engaging with diverse suppliers, it signals that diversity is a core value, which should reflect in their workforce composition. This approach can lead to a diverse talent pool, fostering creativity, innovation, and better decision-making.
Impact on Marketing and Brand Image: A strong commitment to supplier diversity can significantly enhance a company’s reputation and brand image. It sends a message to customers and the public about the company’s values and its commitment to promoting economic equality and inclusivity.
Connection to Corporate Social Responsibility (CSR): A robust supplier diversity program can significantly contribute to a company’s CSR initiatives. By supporting diverse suppliers, organizations can demonstrate their commitment to social justice, economic equity, and community development.
When crafting a cross-functional supplier diversity policy, consider the following:
Clear Objectives: Define what you aim to achieve with your supplier diversity program. Goals should be specific, measurable, achievable, relevant, and time-bound (SMART).
Departmental Responsibilities: Clearly outline the responsibilities of each department in implementing and upholding the supplier diversity policy.
Communication Plan: Develop a plan to communicate the policy across the organization. This can include training programs, regular updates, and resources for employees to learn more about the policy.
Supplier Identification and Engagement: Outline how you will identify, engage with, and support diverse suppliers. This could include attending diverse supplier trade shows, partnering with diverse supplier organizations, or implementing a supplier mentorship program.
Measurement and Reporting: Define how you will measure and report on the success of your supplier diversity policy. Metrics could include the amount spent with diverse suppliers, the number of diverse suppliers engaged, or the impact of your supplier diversity policy on business outcomes.
Continuous Improvement: Just like any other business process, your supplier diversity policy should be subject to regular review and improvement. Regular feedback and updates can ensure the policy remains relevant and effective.
Building a Future of Equity and Inclusion
By understanding and embracing the cross-functional nature of supplier diversity, companies can drive innovation, improve competitiveness, and contribute to a more equitable business environment. Together, we can redefine what’s possible when diversity and inclusivity take the center stage in business.
- Supplier diversity is cross-functional: It influences not only procurement and supply chain management but also various other aspects of business operations.
- Boosts economic growth and competitiveness: Supplier diversity promotes competition, creates jobs, and stimulates economic growth by supporting diverse and locally-owned businesses.
- Enhances resilience and adaptability: Diverse suppliers enhance supply chain resilience, making businesses more adaptable to disruptions or crises.
- Fosters community engagement and social responsibility: By supporting local and diverse suppliers, businesses can foster stronger community ties and demonstrate their commitment to social responsibility.
- Promotes environmental sustainability: Partnering with diverse suppliers that align with green initiatives can contribute to a company’s ESG goals.
- Shapes corporate policies and culture: Supplier diversity initiatives can inspire more inclusive policies and practices throughout the business, shaping a more diverse and inclusive corporate culture.