Supplier Diversity – Making the Core Procurement Process Accessible

Last week, as part of our series on supplier diversity, we looked at how the early stages of the procurement process could disadvantage small or otherwise diverse suppliers. This is usually done accidentally; the procurement executive is not trying to make life difficult for such suppliers, but that is the end result.

The same applies once we’re into the actual core supplier selection process; tendering, RFX or whatever. It is easy to tilt the playing field away from ‘different’ suppliers and favour incumbents, larger or more established firms, without meaning to do so. We talked last time about aggregation – bundling contracts together across geographies or across different spend areas – as being the enemy of supplier diversity. But here are just a few of the other ways in which this perhaps unconscious discrimination makes life difficult for our potential supply base.

  • Pre-qualification processes can rule out suppliers based on size, or lack of financial strength. Of course this can be important to assess, but in many cases, firms can take on what appear to be large contracts without major investment or other problems (particularly services contacts).
  • Focusing the selection process very much on suppliers who have done exactly this sort of work previously. The best way of making sure the incumbent wins is to stipulate that bidders need experience exactly like your current contract! Now no-one is suggesting you award a legal services contract to a widget manufacturer, but a little flexibility in terms of asking for relevant (not identical) experience can open up the field of potential suppliers.
  • Asking for multiple accreditations, standards, qualifications, and similar. Again, to some extent this can be sensible and indeed legally required in certain markets. But the more you insist that your suppliers jump through many hoops, the fewer will succeed and this tends again to favour the large and well-established businesses.
  • Running generally onerous selection processes. Smaller firms have less resource available to drop everything and respond within days to your 100 page tender document, with the 75 questions to be answered, draft contract to annotate, supplier open days to attend ... be proportionate in your process and remember that firms do make conscious decisions about whether it is worth trying to become your supplier. Don’t make the decision for them by designing the exercise to be overly costly and difficult for them.
  • Having said that, supplier briefings and similar can be very valuable, perhaps particularly for small or new potential suppliers, so they get the chance to ask questions, and start to develop some sort of personal relationship with you and the firm. Ultimately, they help you get better proposals back from the market too.

There are other points of course as you go through the selection process. To generalise though, just be conscious and aware of what your process looks like to a smaller or inexperienced firm, or one that hasn’t worked with you before. It is in everyone’s interest that the process looks user-friendly, and attracts suppliers to say, ‘yes, I think I’d really like to supply this organisation.’

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Voices (2)

  1. Chris Chant:

    This was one of the most important key deliverables for the UK G_Cloud programme and is succeeding

  2. Justin Lambert:

    Peter makes great points around highlighting barriers to the inclusion of Small and Diverse business in our supply chain, as procurement professionals we have it within our remit to make a difference. We all believe that the performance of our suppliers has a direct impact on the quality of our products and services that we supply, as such, we select suppliers based on quality, service and value.
    Working with small, diverse and under-represented businesses (Diverse Suppliers) builds stronger communities and local economies and also enhances our companies supply chain, maintaining both economic and social benefits (key criteria in the new revamped EU Directives published in January). We know it is important that our supplier base reflects the diversity of our customer base, and represents the communities in which we live and work and the economies in which we trade.
    At my company want to provide equal opportunities within our procurement process and ensure that Diverse Suppliers have access to our procurement opportunities throughout the supply chain of the company. To this end, we implemented a formalized Supplier Diversity Program in 2005 expanding Globally during the past two years and have adopted Supplier Diversity & Inclusion Guidelines globally, both of which are aligned with our guiding principles of Inclusion, Development, Compliance and Continuous Improvement.
    While still abiding by and upholding both the wider procurement principles we will strive for a supply chain that is diverse, inclusive and reflective of the markets we serve, and which is accessible and efficient for all of the suppliers we work with, what can you do within your supply chain?

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