Ensuring that your company’s portfolio of supplier spending is sufficiently diverse is a requirement facing almost all large companies and most smaller businesses as well. The easiest way to ensure such diversity is through careful planning.
Here are some key planning concepts that can help satisfy the diversity goals for supplier spending.
- Update diversity certificates for all suppliers. A critical mistake commonly made by procurement managers is the failure to track the expiration of certification for all members of the company’s diverse-supplier portfolio. The solution: maintain an easy-to-access database of new and old diversity suppliers, including information like supplier details, expected spend, and expiration date. Then add alerts to notify you when certification-expiration dates are approaching (at least one month in advance is best).
- Conduct a monthly review. In order to plan for the long term, conduct a monthly review of your company’s entire diversity portfolio. Not only will this step keep you abreast of upcoming certification expirations, but it also will allow you to highlight and repair gaps in your diversity portfolio before they become serious problems.
- Make diversity a part of the qualification process. If you establish diversity as an important part of your RFQ and/or RFP processes, you can ensure a steady flow of diverse businesses into your supplier portfolio. Diversity does not need to be the main factor in awarding contracts or purchase orders, but if you at least take diversity into consideration, the chances of securing a highly diverse supplier portfolio is much greater than it otherwise would be.
- Target all diversity categories. It has become second nature for many companies to actively recruit women-owned and minority-owned businesses into their supplier portfolios. But the companies that are most successful in building truly diverse supplier catalogs don’t stop there. Instead, they target all diversity categories for inclusion, including businesses owned by LGBTQ individuals, people with disabilities, and military veterans.
- Include a “Tier 2 diversity spend” clause in all contracts. As you increase the diversity of your supplier base, you will be able to report this diversity as a “Tier 2 diversity spend.” In order to assist in this process, make sure that a “Tier 2 diversity spend” clause is included in all supplier contracts.
- Make suppliers accountable. In order to ensure that your diversity information is always accurate and up-to-date, make all of your suppliers accountable for reporting their relevant diversity metrics to you on a regular basis.