Public Procurement: Building Business Cases and Driving Momentum
For the Government, supplier diversity programs are something procurement professionals in the United States (US) have accepted as a key element to their procurement success. Since their inception more than 50 years ago, supplier diversity programs have spread beyond public procurements. Today, many US businesses proudly maintain robust supplier diversity programs.
The shift in the way supplier diversity is viewed in the US is promising, but it is more encouraging to see how supplier diversity has grown and expanded beyond the US. In 2021, The Hackett Group found in their Supplier Diversity Study that 69% of respondents had global supplier diversity programs with intentions to expand that program over the next several years. This demonstrates that businesses increasingly recognize diversity as a global issue and these programs provide an “ethical” mechanism to connect with customers through community engagement. However, the ethical justification is no longer the totality of the value proposition as leaders now see the overall value for their business.
Building Business Cases and Momentum
As discussed in earlier blogs, supplier diversity has evolved from “token gestures” or a “cost of doing business” with the US Government, to an expectation of investors, customers, and employees. However, marginalizing these programs is a mistake leaders can’t afford to make. The reward for leaders who embrace these programs is obvious and measurable. The value proposition starts with a clear retelling of the societal benefits as demanded by investors and customers;now there is a pronounced pivot to the substantial commercial advantages that accompany the societal benefits. These behaviors are commercially advantageous, increasing competition to directly improve quality, drive down costs, and improve project ROI. In addition, diverse suppliers can improve their own supplier resilience, proving they are agile and can “turn on a dime” when it comes to responsiveness. This is crucial as businesses continue to be faced with supply chain and business challenges.
A competitive and nimble supply base can assist organizations as they rapidly respond to challenges in cost and supply. These commercial benefits can’t be ignored–and when they are paired with the benefits for communities and marginalized groups, the business case becomes extremely compelling.
Supplier Diversity on the World Stage
The US has been the blueprint for supplier diversity, but there are other countries and regions gaining momentum and making great strides. Governments and dedicated organizations across the globe are acting to mandate, encourage, and support diversity. Although many companies are taking a leadership position, accelerating the successful adoption and implementation of a diversity program greatly benefits from regulatory support and agency partnerships. This support and partnership can come in the form of regulatory action, guidelines and targets, or nongovernment organizations (NGO). The following are just a few examples of some notable supplier diversity efforts across the globe.
Agile Procurement in Canada
Since 2004, the Canadian Aboriginal and Minority Supplier Council (CAMSC) has worked to ”facilitate business relationships with Canadian corporations and supplier organizations owned by Aboriginals and minorities.” More than $5 billion has been allocated to certified Aboriginal and minority-owned businesses by member corporations. Buoyed by action from the Canadian government, they launched a new agile procurement initiative in 2018 with the stated purpose of simplifying its procurement process e for small and diverse businesses.
Social Procurement Framework in European Union
In 2014, the European Union (EU) took steps to encourage supplier diversity by implementing a social procurement policy. This has caused many enterprises to focus on buying with social impact, including promoting work opportunities, improving working conditions, and social inclusion and accessibility. They have even gone as far as publishing 71 good practice cases on socially responsible procurement to promote these ideals.
Raising the Bar in Supplier Diversity Down Under
While EU and Canadian initiatives are generating benefits, they fall short of meeting the policy mandate to allocate funds to diverse suppliers. The mandate hasn’t been widely embraced outside of the US, only changing after Australia implemented the Indigenous Procurement Policy. This policy required the inclusion of Indigenous businesses in public opportunities without requiring an overly burdensome and costly tender process. Additionally, the implementation of this policy has been aided by Supply Nation, certifying Indigenous businesses and maintaining a comprehensive directory to connect these suppliers with buyers in all sectors, public and private. The success of these policies are particularly noteworthy as they have demonstrated both a clear commitment and great progress. While they have not been doing this as long as the US, their relative progress over the shorter span of time is impressive.
Can Organizations Keep Pace?
The growth of supplier diversity initiatives in these regions (and globally) provides unique opportunities and challenges for multinational corporations. The opportunity is around being able to leverage these regional initiatives and organizations to improve the corporation’s overall image, community engagement, and ethical spending as well as strengthening their global supply chain. The challenge is how can organizations understand all the different certifications and access all the different information repositories for these diverse suppliers effectively and efficiently. As more and more organizations, countries, and cultures embrace diversity programs, unique certifications and data sources will increase exponentially. However, these changes will place a strain on diversity and supplier management teams within these organizations.
Is these cases, organizations need to be able to turn to their partners to scale these processes. Specifically, Source-to-Pay solution providers are critical supplier diversity partners and customers should trust these partners to support their diversity initiatives.
Ethical Spend Toolset
At Ivalua, we have the capacity and responsibility to support, implement, manage, and scale your organization’s diversity initiatives The Ivalua platform serves as the core Source-to-Pay solution, connecting to a wide ecosystem of data providers. Among some of the features and tools, we are equipped to support the following initiatives
As more global businesses and governments embrace supplier diversity, they will be looking to technology to also embrace and enable the programs and work closely with diverse business communities. Ivalua is proud to work with some of the most respected brands in the world and is committed to supporting these brands as they elevate their global supplier diversity program.
If you would like to discuss how Ivalua’s Source-to-Pay solutions can mobilize your organization to implement a supplier diversity program, or elevate and expand your program globally, contact Ivalua our sales team HERE.
Jarrod McAdoo brings over 26 years of procurement experience to Ivalua as a product expert for the Analytics & Insights, Supplier Management, Spend Analysis, and Environmental Impact Center Solutions. A frequent thought leadership contributor for the Ivalua Blog, Jarrod has worked across multiple industries, including higher education, public sector, retail, manufacturing, and engineered products. Prior to his time at Ivalua, Jarrod held various roles in category and supplier management—including strategic sourcing and procurement team management where he led teams to implement shared service procurement models and Source-to-Pay systems. Jarrod holds a Masters in Business Administration (MBA) from Duquesne University and a Bachelor of Science degree from Carnegie Mellon University.