Supplier Diversity: Here We Go Again

There are few topics that engender as much debate and controversy as supplier diversity. After talking to dozens of CPOs and supplier diversity heads about the issue over the past couple of years, I've come to the conclusion that private sector supplier diversity programs focused on both serving the needs of targeted groups and developing smaller, entrepreneurial suppliers can make sense. But I've also come to believe that government mandated supplier diversity reporting -- including set-asides -- are a remnant of the past and will hopefully disappear sooner rather than later.

But don't take my view as gospel. It seems everyone has an opinion on supplier diversity. Over on The Purchasing Certification Blog, Charles Dominick recently shared some ideas on what Obama's inauguration will mean for supplier diversity. Charles asks the question; now that a member of a "disadvantaged" group -- for whom such programs were intended -- has "risen to become the President of the United States of America...should that group still be considered 'disadvantaged' for procurement purposes?" Personally, I think the question is irrelevant when it comes to supplier diversity. While President Obama's status as the first African American to be elected President of the United States is an enormous and welcome indication of how far the US has progressed in terms of racial attitudes, it is not indicative of our having solved the extensive racial disparities that continue to plague our society.

Even though I'm probably in the minority here -- which should qualify me for my very own spending program -- I continue to believe the government has no business mandating costly reporting or set-asides when its agencies and departments should be focused on best value procurement (which may include allocating a certain percentage of spend to smaller suppliers based on the need to introduce competition). The private sector, on the other hand, is different. Companies should have the ability to make purchasing decisions based on any criteria they deem appropriate. And as important, shareholders should hold them accountable if the strategy does not result in the financial returns they've forecast from such initiatives.

- Jason Busch

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