If you have just started reading our supplier diversity research coverage on Spend Matters PRO, this is not the first piece to look at. First, you should go through our subscription content on the basic and intermediate stages of supplier diversity here:
- Long-term vision and ROI (in 2 parts)
- Tactics to get started (in 4 parts) – practical advice around data analysis and other core issues
- Capacity building – intermediate program challenges often revolve around capacity constraints
Once you’ve covered these fundamentals and when your program is ready for it, there are other areas to look at – we’ll go into those here.
Know what you don’t know – in supplier diversity, most firms make attempts to connect the SMWBEs (small, minority, woman-owned business enterprises) they know of with the procurement opportunities they are aware of. There are many ifs and buts along that path, and even if there is a good fit with the supplier in question, the timing might be completely off. This area is well covered under standard strategic and even tactical sourcing processes. The main challenge for supplier diversity is to stay close enough and early enough to the activity to be effective. Even then, it is still an introspective approach, since the opportunity usually goes to already known vendors.
Expand your reach – to be more impactful, supplier diversity needs to go beyond the known pool of suppliers. To some degree, informal networking between supplier diversity professionals around finding suitable suppliers for new opportunities can help – but ultimately even this touches only a small fraction of all SMWBEs in the USA. The long-term goal should be to expand this pool; reference the “Long-term vision and ROI” article series above. Programs need a broader reach to move outside your comfort zone and build a long-term platform of success.
A broader reach can be hard. Many SMWBEs are run by those who are first generation entrepreneurs and/or are small, undercapitalized, and with management that is not as sophisticated as what you would find in non-SMWBE (aka “majority”) firms.
One large underlying reason can be clinically described as cultural sedimentation – a concept I was introduced to in Econ class years ago. Conceptually, it is the layers and layers that society, families, and individuals stack on top of each other over the years and generations. In this case, the business culture, innovation mindset, attitude toward entrepreneurship, access to funding, common work standards, etc. is hard to instill in one generation. It takes a long time to take hold. Within supplier diversity, recognizing this challenge is fundamental to effective programs – and many programs have a long way to go.
This post continues on Spend Matters PRO, where we delve into key takeaways. If you’re already a Spend Matters PRO member, click here to keep reading. If you’d like to become a member, please subscribe. If you’re not ready to subscribe or wonder why you should, we’ve answered some FAQs here or you can email a Spend Matters team member directly. If you’re not into paying for content, we get that too. Thanks for reading!