Supplier Diversity Business

Mar 07 2022

Supplier Diversity Business

Businesses and organizations rely on the supply chain to stay afloat and run their daily operations. Supplier diversity business is a proactive business strategy that comes in when corporations procure their products or services from diverse suppliers. That mode of operation emphasizes the creation of a network of a diverse supply chain that focuses and advocates for the inclusion of minority businesses in the procurement plans of non-profit organizations, governments, and private profit organizations. The big questions you might have in mind are what is a diverse supplier? Do I qualify as a diverse supplier? What is supplier diversity and why is it important? Here are some insights that can shed some light.

A diversity supplier is a business owned and operated by an individual or members who are part of a proportion of the population that has traditionally been underserved and underrepresented. People from these groups must own and operate 51% or more of the business in question. You may qualify as a diverse supplier if you have a small business enterprise (SBE), women-owned business enterprise (WBE), minority-owned business enterprise (MBEs), veteran-owned business enterprise, LGBTQ-owned business enterprise, or an enterprise owned by a person with a disability. Most businesses that record and report their diverse supplier spend typically verify that the minority suppliers they engage are certified through the designated third-party certification agencies.

One vital component of supplier diversity is the supplier diversity policy. The supplier diversity policy embodies what a company's supplier diversity program is, its general and specific goals, and how it will achieve the set goals. The policy is also fundamental in providing internal guidelines, guiding the supplier diversity team, building public awareness about its supplier diversity programs, attracting investors and buy-ins from stakeholders, and playing a role in establishing exceptions for suppliers.

Each company has its own unique supplier diversity policy template. At the same time, the supplier diversity policy is paramount in crafting the template. Here's what businesses ought to do as they develop the supplier diversity policy template:

  • State the purpose or the reasons for investing in supplier diversity and what the company wants to achieve through the supplier diversity program.
  • Provide information regarding the supplier diversity categories they recognize to give suppliers and stakeholders a feel of what to expect. It's also wise to state the requirements of third-party certification for suppliers.
  • Express the business goals. They should ensure they're relevant, specific, measurable, time-bound, and attainable.
  • State the initiatives and programs that are the guiding factors to achieving the goals that can guide the supplier diversity team or provide insight into available opportunities for potential suppliers.

Supplier diversity is beneficial to both the suppliers and the businesses or organizations seeking procurement services. Companies seeking diverse suppliers can promote innovation by introducing new services, products, and solutions. They can also have various channels to seek their procurement needs and get products at reasonable prices without much effort. As for the diverse supplier, supplier diversity business generates economic opportunities for disadvantaged groups through commerce and employment opportunities. That ultimately reflects on the country's economic growth as there'll be an increased contribution to the gross domestic product.

Supplier Diversity Certification

Before becoming a diverse supplier, you'll need to become certified to verify authenticity. And so you may wonder what is a diversity certification or how to get diversity certification for business. Here's where third-party certification agencies come in as they handle the certification process. These are usually organizations driven by the goal of promoting the development and growth of businesses owned and run by minority groups. The supplier diversity certification process involves documentation, screening, and interviews. There'll also be site visits to confirm that the business indeed qualifies as a minority-owned entity. The process usually takes about 90 days. Once you get your small business diversity certification, you instantly become a suitable and attractive candidate for supplier diversity programs. You could even join the diversity certification Amazon team by claiming the vendor's recognized certifications, after which the certification can appear on consumer searches if it matches the preferences of an Amazon Business customer.

Businesses often enjoy the economic benefits of having a supplier diversity program. However, they first have to start a diversity program. Here are five crucial pointers on how to craft a supplier diversity program for a business:

  • The organization's leadership is a fundamental determinant of the success of a supplier diversity program. The entire leadership team should support the goals of the program.
  • Once the company's leadership and management are on board, it's time to create a diversity supply policy. Now is also the ideal time to develop a plan on moving forward and define the roles of the diversity supply team members.
  • With the plan at hand, it's vital to establish diversity supply program goals and best practices.
  • Next, create a baseline spend for the program to help track its progress. With an established estimated cost of beginning the project, it's easier to move forward and invest in the program.
  • It's also crucial to develop a performance monitoring tool for the supplier diversity program. One way to go about it is to put a tracking mechanism to assess development. Later, compare the performance against baselines or other established supplier programs.

Supplier Diversity Program Template

The best supplier diversity programs often involve an accessible supplier diversity program template. The crucial document outlines an organization's supplier diversity policies and the details about the supplier diversity program. Moreover, the template is a vital engagement avenue between the minority group suppliers and a business's supplier diversity team. It's also possible to incorporate an online supplier diversity program PDF on a company's webpage to showcase the supplier diversity program template. That makes it seamless to access the template in a heartbeat.

There are some fundamental aspects to capture in the supplier diversity program PDF. One of them is the company's supplier diversity program best practices. Here are some main best practices to bring on board:

  • Improving the supply chain transparency.
  • Having a well-defined program and creating a supplier diversity policy.
  • Ensuring that the entire organization commits to and supports the diversity program.
  • Integrating supplier diversity into the procurement functions of the entire organization.
  • Providing training opportunities for minority businesses on qualifying for the diversity supplier roster.
  • Benchmarking and setting SMART goals; specific, measurable, attainable, relevant, and time-bound.
  • Continuously and consistently tracking the program's performance.

It is also imperative to adopt or develop holistic pillars for the diversity program. Transparency, collaboration, accountability, and performance tracking are among the ideal pillars of supplier diversity program. The pillars a business chooses should be at par with its goals and guiding principles or philosophies. Incorporating the above measures will see the organization rank high among companies with supplier diversity programs. And in some cases, other companies may request benchmarking opportunities in the organization with a thriving supplier diversity program.

Federal Supplier Diversity Requirements

Businesses registered and certified as minority business enterprises usually get the opportunity of engaging in commerce activities with federal entities. However, there are several federal supplier diversity requirements that such businesses must meet to be eligible. For one, the business owner must be a US citizen and member of the minority proportion of the population, controlling 51% or more shares of the organization. The owner can also be a person living with a disability, a member of the LGBTQ community, or a veteran. Additionally, the business must have a good credit record and no criminal or illegal activity record. The business owner will have to provide a federal tax ID, meet bonding and insurance requirements, and implement quality processes.

It's also critical to be certified by a third-party certification organization or body. That will automatically put your business into the supplier diversity checklist and improve your chances of participating in the bidding of federal contracts. Remember that corporations under federal contracts must comply with federal acquisitions regulations or small business subcontracting requirements with specified reporting guidelines. It's wise to keep a supplier diversity report on all the supplier diversity procurement contracts you get to have a hassle-free reporting process.

The best source for data to use when preparing a supplier diversity report is a supplier diversity questionnaire. As minority businesses fill in questionnaires to get supply contracts from large organizations, they can collect and analyze the data to generate valuable information. That information may be vital in creating supplier diversity reports for different times of the year or whole year reports. The information from the data on the supplier diversity questionnaire can also help with supplier diversity training. If an organization has seminars whereby it trains minority businesses on supplier diversity, it can develop data-based courses and programs that enable minority businesses to thrive and grow.

Supplier diversity statistics collected in the past few years indicate that supplier diversity is on the rise. That shows that businesses are starting to value the concept of diversity and inclusion in their workforce and how they engage other entities as they go about their daily operations. It's also a step in the right direction to achieve sustainability in the field of commerce. Here, businesses owned by people identifying with minorities get a chance to succeed. In the end, members of the underserved and underrepresented populations better their economic situations and directly contribute to the rise of the nation's economy.