Good Business: Making Your Supplier Diversity Program Work

By: Sandra Leek - Of Counsel , Baker & Daniels LLP

Category: Diversity

A strong business case exists for adopting supplier diversity programs. AT&T, for example, credits its supplier diversity program with playing a significant role in generating $11 billion in revenue in 2006.

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Today, about 20 percent of Fortune 500 companies have supplier diversity programs that set annual goals to buy goods and services from businesses owned by women, members of racial and ethnic minority groups, people with disabilities, GLBT, veterans, or business designated as small or disadvantaged. These programs aren�t just doing well by doing good � they�re simply good for business. Because they typically target small companies, these programs can lead to more personalized service and better quality. They also can help with landing government contracts that favor diversity, and encourage good relationships with certain audiences. Case in point: The Women�s Business Enterprise National Council reports that up to 85 percent of women said they would buy from a company that made a special effort to support women-owned businesses.

If you�re thinking about developing a supplier diversity program at your company, consider these practical tips:

1. Define the program.
Supplier diversity programs can focus on businesses owned by women, specific racial and ethnic groups, people with disabilities, veterans, gays, lesbians, bisexuals and transgendered groups, or businesses designated as HUBZone, small or disadvantaged. To succeed, you�ll need to understand how your organization defines diversity.

2. Create a policy.
Once you�ve decided which groups to target, create a supplier diversity policy statement. For example, your policy might define a minority-owned business consistent with the government definition as �a company that is at least 51 percent owned, managed and controlled by one or more minority persons (Asian-American, African-American, Hispanic-American, Native-American).� Set the policy as a permanent, standard, non-negotiable operating procedure.

3. Engage senior management.
Your program won�t work if it doesn�t have the unqualified endorsement of your chief executive officer. Ask your corporate leader to support the program through written and verbal communication.

4. Empower your staff.
Establish a dedicated team for your program. This starts with a supplier diversity director �
a position that should be embedded in the supply chain of the organization. Your supplier diversity director should have the authority to establish and define procurement practices, track metrics related to the program, and serve as the contact point for suppliers and vendors.

5. Establish an oversight committee.
To support the supplier diversity director and the program as a whole, establish a supplier diversity oversight committee made up of senior representatives from purchasing, sales, marketing and other relevant departments. This committee will be charged with developing the program, creating internal processes, establishing goals, solving problems, and keeping the CEO in the loop.

6. Set up a mentoring program.
Invite vendors to special educational sessions to let them know about the opportunities within your program and how to do business with your company. Consider providing individual volunteer �consultants,� corporate teams of experts in certain fields, loaned executives or fully sponsored, full-time experts to help vendors participating in your program.

7. Set goals.
Before you implement your program, take time to establish clear and measurable performance goals. For example, you might say that you�d like to �achieve 20 percent or higher in aggregated annual spending on contracting with minority-owned and women-owned enterprises.� Invest in technology to track results.

8. Measure progress.
Once goals are established, they should be monitored at least quarterly to ensure progress is being made and to identify and resolve problem areas. Recognize and support superior performance by purchasing personnel and by vendors.

9. Reach out.
A successful supplier diversity program can improve community relations and spark positive publicity. It also can attract new vendors and generate loyalty among members of the groups your program targets. Consider working a public-relations strategy into your policy to report your program�s results to the public. Attend trade fairs to meet potential vendors.

If you plan well and follow these steps, your supplier diversity program is likely to benefit your company in innumerable ways � including, of course, by boosting your bottom line.

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