By: Manpreet Kaur
Enhancing procurement success through supplier diversity is a strategy that organizations can adopt to achieve various business goals while promoting social responsibility and inclusion. Supplier diversity involves proactively seeking out and doing business with suppliers that are owned by individuals from underrepresented groups, such as women, minorities, veterans, LGBTQ+ individuals, and individuals with disabilities. To effectively execute this strategy, organizations should develop and implement a comprehensive supplier diversity program. This program should include clear goals, policies, and metrics for tracking progress. Supplier diversity is not only a socially responsible practice but also a strategy that can benefit organizations in various ways. By fostering a diverse supplier base, companies can achieve procurement success while contributing to a more inclusive and equitable business environment.
Challenges/Problems faced in the procurement process
Supplier Identification and Development:
Identifying and developing a diverse supplier base that can meet the organization’s needs can be a significant hurdle. Sourcing diverse suppliers in industries where they may be underrepresented can be time-consuming and require additional effort. Moreover, some diverse suppliers might lack the scale or capacity to initially meet the organization’s demand. Addressing this challenge often involves supplier development initiatives, mentoring, and providing access to capital and resources to help these businesses grow.
Ensuring Competitive Pricing and Quality:
Balancing the goals of supplier diversity with the need for competitive pricing and high-quality products or services can be a significant challenge. Some diverse suppliers may face obstacles that impact their ability to compete on cost or quality, which can create tension in supplier selection decisions. Companies must carefully assess the capabilities of diverse suppliers to ensure they can meet the same standards as non-diverse suppliers.
Supplier Development and Capacity Building:
Many diverse suppliers, particularly small businesses, may require additional support and resources to meet the demands of larger contracts. Companies often need to invest in supplier development programs to help diverse suppliers improve their capabilities, including financial stability, technical skills, and scalability. This investment can be time-consuming and costly.
How SpendEdge can help the industry in overcoming the challenge
We at SpendEdge can help identify diverse suppliers, including minority-owned, women-owned, veteran-owned, and other underrepresented businesses. By leveraging our market intelligence and supplier databases, organizations can discover new potential partners that align with their diversity goals. In addition to supplier identification, we can also conduct detailed capability assessments on suppliers to help companies get visibility on suppliers that match their exact criteria and can best fit their needs.
Diverse suppliers can bring a variety of benefits to a company, including innovation, increased market reach, and improved corporate social responsibility. However, there are also risks associated with working with diverse suppliers. These risks would cover supply chain disruptions, financial instability, or legal issues among key suppliers, reputation risk, operational risk etc. We help companies identify these risks and also provide recommendations on mitigation strategies.
Industry Best Practices Benchmarking:
Benchmarking analysis typically involves comparing your organization’s supplier diversity efforts to those of other companies to assess performance, identify areas for improvement, and set targets for progress. Regularly reviewing and adjusting your program based on benchmarking insights will help you achieve and maintain success in supplier diversity. We have capabilities in conducting deep-dive benchmarking analysis which would cover identification of organizations with supplier diversity programs that are considered best-in-class and these organizations can be from your industry or from others, as long as their practices are relevant, identifying key performance indicators and metrics that can be used to evaluate supplier diversity programs such as spend with diverse suppliers, the number of diverse suppliers in the program, supplier performance, and the impact on communities, identifying best practices followed by the identified companies in setting up supplier diversity programs and managing them successfully, developing case studies/success stories etc.
The success story of how SpendEdge was helpful to one of its clients
One of the leading Pharma company was looking for a partner who could support in conducting a supplier intelligence study to identify diverse suppliers (such as minority owned, women owned, and Small Business Administration (SBA) organizations) for R&D services in North America.
The client wanted to conduct this assessment for specific R&D services such as regulatory services, environmental safety, and digital farming in North America. And they also wanted to identify suppliers who have capabilities in laboratory equipment manufacturing.
To support the client requirements, we conducted a detailed study which involved the identification of suppliers based on the criteria shared by the client. For the identified suppliers we captured detailed information such as their headquarters, years of experience, employee strength, total revenue, geographical service capability, services offered, key certifications, regulatory compliance etc. We also conducted risk assessment on suppliers to understand if there are any red flags that our client needs to be aware of and how are the suppliers positioned in the market. Based on our analysis we provided recommendations on the best fit suppliers.
This study helped the client in identifying diverse suppliers that matched their criteria and could support in fulfilling their organizational goals. They were also more aware of the type of risks that they might face while engaging with suppliers.
Contact us now to solve your procurement problems!
Assistant Manager Presales – Sourcing and Procurement Intelligence
Manpreet is a presales specialist at Infiniti Research and has expertise in sales, business strategy execution, and innovative solution design. She is actively involved in supporting clients from F&B, CPG, Healthcare, Pharma, Chemicals, BFSI, Oil & Gas and Automotive sectors.