What is supplier diversity?
Supplier diversity refers to vendors that are at least 51% owned and operated by people from groups that are underrepresented in business. Women, people of color, disabled persons, veterans and the LGBTQ community are a few common examples.
The “set-aside provisions” of Public Law 95-507 enacted in 1978, amended the Small Business Acts of twenty years earlier. This law established the US Government policy to provide maximum practicable opportunities in its acquisitions to businesses that have been historically underrepresented. These groups are often referred to as Small-business enterprises (SBEs), minority-owned enterprises (MBEs), and woman-owned enterprises (WBEs), to name a few.
In additional to the requirements established by the Government, there have been numerous studies demonstrating the business benefits of a more diverse supply base, including but not limited to the following:
- Wider pool of suppliers with innovative ideas and diverse capabilities
- Better business outcomes due to higher competition among suppliers
- A more flexible, agile and resilient supply base
- Improved branding to attract a wider customer base
Given this background and the benefits above, many organizations have been trying to diversify their supply base. We have been building a knowledge base of proven approaches and methods which have resulted in successful supplier diversity programs. These are summarized in the below seven best practices.
Supplier diversity best practices
- Get leadership buy-in. Procurement/purchasing affects every part of an organization. This includes capital purchases all the way down to office supplies. If senior leadership does not support the supplier diversity program, it will not succeed.
- Set goals. The goals should be attainable and measurable. For example, a starting point could be to add two diverse suppliers a year and making sure that a requirement for diverse supplier bids is included in every Request for Proposal (RFP). These goals should then be conveyed throughout the organization so that everyone knows they are a priority. Finally, the goals should be monitored throughout the year so that the organization is able to see its progress towards reaching the goals.
- Establish accountability. Designate people within the organization to be held accountable for meeting the targets. The designated personnel should be responsible for strategic planning and evaluation as well as the month-to-month monitoring of the program and goals. Additionally, there should be a strong emphasis on continuous improvement.
- Expand your search. The organization will likely need to look outside its traditional network to locate diverse suppliers. Some of the best prospects are most likely below the organization’s top tier. (See few helpful resources provided below)
- Outreach. Locate diverse suppliers through active involvement with small business and minority development organizations and participation in various trade shows and procurement events.
- Offer assistance. Sometimes new suppliers have difficulty engaging with new partners. They may not be familiar with the RFP process, they might not realize they lack portions of your selection criteria, or the onboarding/utilization process could be complicated. Please work with them. Provide guidance and resources to help diverse suppliers engage with you.
- Measure results. The success of the program cannot be demonstrated if it cannot be quantified. It’s important that progress is measured so that obstacles and shortcomings can be identified. We recommend that statistical reports and documentation be prepared and provided to leadership and stakeholders on a quarterly basis, or at least on an annual basis.
Implementing a supplier diversity program takes a significant amount of effort. However, with buy-in from leadership, the right sourcing methods and metrics that hold the organization accountable the program can be successful and provide many benefits to the organization as a whole.
If you are planning to start a supplier diversity program, or already have one that needs improvements to deliver the outcomes you need, feel free to reach out to us. We look forward to hearing from you at DEIintheWorkplace@ouroffice.io.
The System for Award Management, or SAM, is a government-wide portal that consolidates the capabilities of multiple systems and information sources used by the Federal government. There is no fee to register in SAM. This site can be helpful in locating size standards and representations of organizations who have registered.
The Dynamic Small Business Search (DSBS) Tool is maintained by the Small Business Administration (SBA) as a tool used to identify potential small businesses. Additionally, there is also information on representation.
VetBiz is the online web portal maintained by the U.S. Department of Veterans Affairs that hosts the Vendor Information Pages (VIP) database – the searchable list of veteran-owned businesses. Veteran-owned business enterprises can be verified by the U.S. Department of Veterans Affairs to compete for veteran-related set-asides. In addition, these businesses can be certified as veteran-owned by either (or both) the National Veteran Business Development Council (NVBDC) or the National Veteran-Owned Business Association (NaVOBA).
Thomas.net is a website that allows users to find diverse suppliers. There is no fee to register.
The National Minority Supplier Development Council (NMSDC) certifies Minority-owned business enterprises (MBEs) and can be used as a resource to locate MBE businesses.
The Women’s Business Enterprise National Council (WBENC) certifies Woman-owned business enterprises (WBEs) and can be a resource for locating women-owned businesses.
National LGBT (Lesbian, Gay, Bisexual, and Transgender Chamber of Commerce (NGLCC) certifies LGBTQ-owned business enterprises and can be used as a resource.
Disability:IN certifies business enterprises owned by disabled individuals and can be used as a resource.
Businesses operating in historically underutilized business zones (HUBZONES) can also apply for certification through the SBA.
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