Tracking and increasing corporate-wide spend with diverse suppliers is imperative for building strong and successful supplier diversity programs. Including these imperatives in planning creates a tactical opportunity for driving success in supplier diversity initiatives and measuring progress. Supplier diversity programs with a cadre of top-notch diverse suppliers are recognized internally as a value to the organization’s business and externally as leaders in the field.
Launching a supplier diversity program or growing a current program starts with this simple premise: Suppliers thrive and evolve through business opportunities. For diverse suppliers, business engagement within corporate supply chains is critical.
Corporate supplier diversity programs must push above and beyond spend metrics. While on the surface a supplier diversity program may be established and operating well, in an era of continuous improvement, the question arises as to what is next in the evolution of a program.
The answer? Drive even more robust and sustainable economic growth through supplier development.
What Is Supplier Development?
Supplier development is defined by the Chartered Institute of Procurement & Supply as “the process of working with certain suppliers on a one-to-one basis to improve their performance and expand capabilities for the benefit of the buying organization.” Supplier development can come in many different forms, from informal initiatives to a formally structured program. There are numerous examples, use cases, and best practices that show a broad spectrum of supplier development initiatives to fit any size organization or supplier diversity program.
In reality, most supplier diversity programs already have some form of supplier development activities occurring within their procurement organizations. As supplier diversity and procurement professionals interact with diverse suppliers, they are often teaching, guiding, and offering mentoring and development as well as other resources to help foster growth. The idea of supplier development is to help diverse suppliers become more sustainable in service to corporations and the marketplace as a whole.
Why Invest in a Supplier Development Program?
The supplier diversity industry offers many success stories of why investing in supplier development is essential for supplier diversity programs. Through focusing on supplier development, organizations are able to generate many mutually beneficial opportunities, including:
- Expanding the competitive landscape (pricing, service levels, and offerings) between the organization’s existing and potential vendors
- Promoting innovation and “out-of-the-box” thought leadership through the entrance of new products, services, and solutions in the business
- Growing the sources and channels from which to procure products and services
- Creating a collaborative environment between suppliers that may see themselves as competitors, when in fact their solutions may be complementary, allowing them to team up on business opportunities on which they could not normally bid
- Showcasing the organization’s commitment to the economic growth of the communities in which they operate
- Driving job creation
- Building the capacity of diverse businesses to not only serve the organization more effectively but also increasing their sustainability in the entire marketplace
- Increasing the organization’s customer satisfaction, whether it be B2B or B2C
- Integrating supplier diversity into the strategic sourcing process, which will drive corporate-supplier-diversity goal achievement
- Increasing visibility and awareness of executive management to key diverse suppliers
- Fostering engagement of management executives across all parts of the organization, not just Procurement
Supplier development affords corporations an opportunity to bring together teams of suppliers to work in harmony for the benefit of the company, improving the bottom line in the long run. Additionally, these approaches can showcase the organization’s commitment to the economic growth of local communities, while building the capacity of diverse businesses to serve the organization more effectively.
Ultimately, supplier development in conjunction witha robust diversity initiative makes good business sense. A company committed to both efforts builds for the future and, perhaps most importantly, becomes a better, stronger company that consumers, workers, and business leaders will seek out and admire.