Is Supplier Diversity Still Relevant and Valuable in a Global Marketplace?

Spend Matters welcomes a guest post from The Hackett Group's Pierre Mitchell.

I was reading about P&G's supplier diversity focus, and it's pretty typical stuff in terms of spelling out a high-level global context ("Our consumers, customers, and suppliers become more diverse every day. As a result, our success depends on an ability to understand their changing needs and work effectively with customers and suppliers around the world. Supplier Diversity is one important way we achieve our goal of touching lives and improving life"), but then getting very narrow with regards to implementation (i.e., US-based women/minority focus).

Given the increasing focus on supply chain localization as a differentiator in terms of customer branding and supply chain responsiveness, it is clear that aligning supplier demographics (including both geographic proximity as well as gender/race/culture affinity) would be a no-brainer for organizations selling into consumer markets and government entities alike. But how will traditional supplier diversity programs, metrics, non-profit entities, etc. evolve alongside the changing global requirements?

For example, we have large clients who set up large facilities in remote parts of the world and they have a major focus on supporting the local communities and cultures not only because of governmental concerns, but also from a resource development standpoint and from a brand management standpoint. And it requires a lot of coordination with internal departments, existing suppliers, new suppliers, government groups, NGOs, etc.

When looking at supplier diversity in this context, the traditional metrics and approaches seem largely inadequate and ill-fitting. So the question becomes: when will supplier diversity transcend its legacy context and become integrated alongside other critical supply base criteria seamlessly integrated into sourcing and supplier management processes? How far off do you think this will be?

We are launching the third installment of our supplier diversity study, and in this most recent edition, our focus is two-fold: 1) how to better understand how supplier diversity is being implemented in a global context, and 2) gaining more insight on how firms are defining and measuring its value beyond the traditional scope.

I'd love to hear your thoughts on this. And until then, if you'd like to forward the study link to your supplier diversity leadership, we'd very much appreciate their insights and participation in gaining the above insights.

Study participants will learn:

  • How other firms are broadening their supplier diversity programs to meet emerging globalization/localization needs
  • The ranking of critical enterprise objectives of supplier diversity (beyond just government regulations and consumer demographic affinity) and understand the implications to program design
  • How organizations organize and govern their supplier diversity programs looking at staffing, governance model, and budget.
  • The key performance metrics and values (as well as gain greater insight into their calculation methods) for spend with diverse suppliers – as well as inclusion of tier 2 suppliers
  • How to get better diversity information visibility (and associated sources of information) that organizations leverage

If you have any questions on the study, please let me know in the comments section.

Pierre Mitchell leads Procurement research and IP development at The Hackett Group.

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