IBM, Partners Launch Supplier Connection — Diversity Lip Service or Something More? (Part 2)

In the first post in this series, we provided background on IBM's latest Supplier Connection scheme, a program that is launching in tandem with other large companies including supplier diversity heavyweight Bank of America, probably the one organization that really stands out from a well-managed diversity program. In this post, we'll share more details on the news and offer up some thoughts on why we think the program is a good idea, but also why we're not entirely sure it will work as planned -- even if well executed. With that, let's begin.

The concept of Supplier Connection is relatively straightforward. It's designed to "enable access by qualified firms to connect for opportunities where the participating companies conduct business." As a result, these companies will theoretically "more easily have the opportunity to reach not only the U.S. markets, but potentially nearly 200 countries -- the number of places worldwide where the participating companies operate." In addition, as Supplier Connection matures, it will provide additional services to suppliers (in what sounds like an attempt to turn the IBM Beehive social networking tool external, combined with a former Commerce One/Tradex-like marketplace).

In this regard, the "web site will enable small suppliers to learn from, collaborate with, and sell to each other so that they can become more competitive and successful. It will offer the participating companies a mechanism for sharing valuable business information with these prospective small and mid-sized suppliers. Large companies will also have easier access to small, innovative companies that generate new products and services."

Wow. When I read dreamy visions like this I almost feel like ringing up my friends at the largest companies I know and inviting them to collectively pull out the s'mores (and a bottle of Jack) to come sing peace songs around the spend campfire to celebrate what, if successful, will clearly represent marketplace, market feedback and market access nirvana. And all of this will be fueled by non-profit good will, mind you!

Perhaps I shouldn't be so skeptical of the broader vision. When you leave things to marketing types who don't know how procurement groups operate as, you get situations like this. But for a number of reasons, I think the core vision of Supplier Connect is slightly flawed as well. After all, large companies are (and have been) strategically undertaking supplier rationalization programs for the past decade: reducing, not increasing, the number of suppliers. This results in better prices, better quality and better supplier management/development and often times, when done right, risk reduction. Moreover, most of the successful supplier diversity programs often punt 90% of the way on diversity initiatives by forcing tier one vendors to work with diverse suppliers rather than assuming direct responsibility for increasing diversity spend themselves.

But Supplier Connection could, in theory, work. Stay tuned for the final post in this series, where we'll examine the types of services for procurement groups that would make them actually want to use what the lone -- or tiny -- diversity team members aim to shove down their throats with this program.

In the meantime, if you want to learn more about how the right platform can help you manage a range of supplier/vendor management initiatives (e.g., diversity, risk, performance, etc.), please download our latest free Spend Matters Compass research on the subject: Leveraging Supplier Management Platforms for Multiple Goals: Risk Reduction, Supplier Diversity and CSR. I'd also recommend (and this goes for the IBM team on this initiative as well) checking out the model behind services/solution provider specialist in the field, Achilles, which has carved out a surprisingly large (and growing) niche, managing supplier communities focused on on-boarding, performance, quality, auditing and related vendor management areas. As Achilles will attest to, software is only one of the enablers in this area.

Jason Busch

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