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Supplier Diversity For Dummies
Kathey K. Porter
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Supplier Diversity For Dummies
Kathey K. Porter
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About This Book
Extend the principles of diversity and inclusion to your company's suppliers
Many people are familiar with the importance of ensuring and advancing inclusion, equity, and diversity amongst their employees and managers. But do your efforts include supplier diversityāan equally as important and essential part of any holistic diversity effort?
In Supplier Diversity For Dummies, nationally recognized small business strategist and economic inclusion and supplier diversity expert Kathey Porter delivers an empowering and informative guide to implementing this integral part of any robust inclusion initiative: supplier diversity. You'll understand the relevance of supplier diversity and why it's important to encourage equal opportunity for diverse suppliers and businesses owned and managed by underrepresented groups.
In this book, you'll also find:
- The answers to your most pressing questions about how to build a coherent and sustainable supplier diversity program
- Ways to contribute more fully to your company's diversity and inclusion functions
- Strategies to position supplier diversity as a central function in your organization
Perfect for company buyers, purchasing and procurement professionals, material management executives, strategic souring professionals and supplier diversity practitioners, Supplier Diversity For Dummies is a must-read resource for supply chain professionals, diversity and inclusion leaders and anyone looking to increase their proficiency in supplier diversity, improve supply chain inclusivity and increase their social impact.
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Part 1
Getting Started with Supplier Diversity
IN THIS PART ā¦
Examine the growing demand for supplier diversity.
Discover the basis and history of supplier diversity.
Explain supplier diversity management (SDM).
Recognize the differences between supplier diversity and diversity, equity, and inclusion (DEI).
Understand the supplier diversity structure within your organization.
Chapter 1
Understanding the Growing Demand for Supplier Diversity
IN THIS CHAPTER
Supplier diversity is a proactive business strategy that encourages buying from businesses that identify as belonging to a specific socioeconomic, historically disadvantaged, or underutilized demographic as suppliers, vendors, and contractors. The Small Business Administration, commonly called the SBA, classifies businesses in a number of categories. The most common are minority-owned or disadvantaged, women-owned, veteran-owned, and service-disabled-veteran owned. Corporations have expanded their definitions to also include LGBTQ to be more reflective of their local communities.
Supplier diversity has continued to progress from legislation to stabilize social unrest during the late 1960s to an economic imperative and a bona-fide management strategy. Supplier diversity programs recognize that when an organization buys products and services from suppliers that have been historically underutilized, it helps nurture and transform its own supply chain. Supplier diversity also gives organizations access to agile businesses with timely business solutions that allow them to gain a competitive advantage in the marketplace.
In this chapter, I cover what supplier diversity is (and isnāt) and why itās still needed. I also identify some of the factors redefining supplier diversity and why organizations are recommitting to it.
Breaking Down What Supplier Diversity Is and Isnāt
Throughout my career as a supplier diversity professional, Iāve worked in a number of industries and have been housed in a variety of departments: economic development, procurement, business operations, and community relations. Iāve had a range of supervisors, including those who knew nothing about supplier diversity, which gave me the freedom and flexibility to do a number of things. Iāve had supervisors who thought they knew supplier diversity, which created an epic battle to execute anything. Then I had those who understood and embraced the mission, which led to a real group effort.
Organizations have any number of reasons why departments end up where they do on the org chart. Sometimes they make perfect sense, and sometimes ā well, Iāll just say they donāt ask me for my input. Inevitably, where supplier diversity ends up says a lot about the value the organization places on it and determines how youāre able to behave in the role. Ultimately, this positioning affects what youāre doing and the results youāre able to deliver. For example, Iāve found myself involved in things that were really outside my scope, some that expanded my view of supplier diversity and how it touches the community.
What it is
So, what exactly is supplier diversity? Itās
- A procurement function: Supplier diversity ensures that any business has an opportunity to do business with the organization regardless of race, gender, sexual orientation, and so on. It does so by developing policies, processes, and procedures that make the procurement process inclusive, fair, and equitable.
- A business and management strategy: Supplier diversity is a strategy that supports the economic development of diverse communities who are customers and consumers by giving them opportunities to sell to the organization. Itās a management strategy that allows organizations to progressively transform a companyās supply chain and gain a competitive advantage by doing business with diverse businesses.
- An economic driver and entrepreneurial resource: Supplier diversity provides support, education, and mentorship to small and diverse businesses. When an economic gap exists, whether through lack of work prospects or access to business opportunities, the entire community suffers. This scenario creates a drag on social services and leads to the overuse of other community resources. Organizations, especially those that are large economic engines in the community, have a duty to look at their resources, step in, and create solutions. The access to resources supplier diversity gives entrepreneurs helps drive business growth and create economic stability for the entire community.
What itās not
Hereās what supplier diversity isnāt:
- A diversity and inclusion/HR function: Supplier diversity doesnāt focus on hiring and retaining a diverse workforce, creating employee resource groups, or cultivating an inclusive work culture (I discuss this difference in greater detail in Chapter 4).
- A philanthropic function: As a procurement and business function, supplier diversity doesnāt award contracts or enter into contractual agreements with businesses based on need or hardship. It involves a competitive process that businesses must be qualified for and able to perform.
- An external community relations or PR function: Yes, supplier diversity is community-facing thanks to its close relationship with the small and diverse business community, but itās not a āvoiceā of the entire organization, nor does it act as a general spokesperson for all things happening.
- A set-aside or affirmative action program: Supplier diversity creates a pathway for small and diverse businesses to get a foot in the door. It encourages the utilization of small and diverse vendors but doesnāt āset asideā contracts for one particular group or advocate that contracts be awarded based solely on how businesses may identify. Remember: This distinction is especially relevant in the public sector, where public dollars are being spent. In fact, the federal government is the only entity that can legally set aside contracts for vendors based on their identification as part of a specific socioeconomic demographic.
- A catchall for other functions: Supplier diversity isnāt a job description that captures multiple, traditionally stand-alone functions into one position, and itās not an add-on āget to it when you have timeā job.
Investigating Whether Supplier Diversity Is Still Necessary
Every few years, this question pops up for debate as society (and a few detractors) try to move beyond the conversation of race- and gender-based initiatives and quotas and focus solely on qualifications, merit, and so on. The assumption is that the legislation, hours of training, and countless programs people have endured over the years have done their jobs. Now, everyone has equal access to anything they choose: jobs, housing, healthcare, business, you name it. This argument implies that the playing field is now equal and fair and assumes that humans no longer harbor implicit biases, prejudices, or favoritisms. If this description sounds like your organization, congratulations ā you did it! If not, keep reading.
As Chapter 2 explains, the motives behind supplier diversity have shifted from complying with federal law (we have to) to doing the right thing (we want to) to creating a business case (we need to). Arguably, these shifts likely came because someone brought up the question of whether it was still necessary.
One argument in favor of the ongoing need for supplier diversity is the continued economic disparity that exists between diverse business owners and non-diverse business owners, whether itās lack of access to capital or networks, lack of resources, or any other number of issues that derail business growth.
Take, for example, the impact the COVID-19 pandemic has had on diverse businesses. Of course, entrepreneurs across the board took a tremendous beating, but COVID-19ās effect on minority-owned small businesses in the United States was much more ...