Supplier Diversity – opportunities for practical procurement action

In our articles last year (most recently here) around the topic of supplier diversity, we talked about the drivers for organisations following that strategy.  We argued that the most convincing reason for pursuing supplier diversity was that seeking the best, most innovative and appropriate suppliers is simply an absolutely core part of the procurement role. Hence being proactive and open to as wide a range of suppliers as possible should be an inherent part of the job. Put simply, if you use the same (probably large) suppliers that everyone else is using, the chances of obtaining competitive advantage for your organisation is slim.

There is also the angle of relating to your customers or clients, which can be a driver.  So if your brand sells mainly to young female customers, being encouraging of potential suppliers who happen to be owned by young woman may give you a marketing edge. But we’d come back to the fundamental point  - every procurement person should be seeking out those dynamic suppliers who can bring an edge to your organisation.

Those drivers seem more powerful and sustainable than simply pursuing supplier diversity because it is a ‘nice thing to do’ or because it makes the Board feel good about themselves.  And, as we said last time, “if you believe that there is something strategically fundamental about opening up your supply base to firms who might actually provide competitive advantage, then that requires a different set of actions and behaviours..”

So this year, we’ll look in more detail at those actions and behaviours. What can be done practically to encourage a diverse (but appropriate) supplier base?  And when you get into the detail, it is surprising just how much there is that can be done, much of it relatively easily.

We’ll take a look at it through three phases of the procurement process:

1. The pre-procurement stage, so covering how you might identify the type of suppliers with whom you want to engage, how to find diverse suppliers, etc. This is also where the organisations who promote diversity in different sectors and groups can be particularly useful.

2. The actual procurement process – whatever process you use, whether PQQ and ITT, RFQ, auction, direct negotiation... How can you ensure that smaller or ‘different’ suppliers are not disadvantaged and get a fair chance to win your business?

3. Through the delivery and contract management phase – interacting with the suppliers through the entire contractual period. Again, that means not disadvantaging the smaller supplier, but also more positively it covers how best to capture ideas and innovation.

More to come shortly.

Voices (2)

  1. Max Clapsa:

    Peter, I thoroughly agree. From my narrow point of view of government IT purchasing decisions, I blogged about this today. Rationalizing suppliers is necessary to reduce costs, but eliminating all diversity can negatively impact public sector departments’ and agencies’ service innovation.
    (Here is the blog Max refers to)

  2. Justin Lambert:

    Peter it is great to see you continue with this subject and the business case you outline should be compelling for any company in the UK no matter their size. To make Supplier Diversity part and parcel of good Inclusive Sourcing then understanding your customer is a great starting point, looking forward to more on this subject.

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