Between 2007 and 2016, members of the Billion Dollar Roundtable increased their Tier 1 MWBE spend by 140 percent, from $30 billion to $72 billion. The jump is impressive, but it didn’t occur without hard work, due diligence, and an investment in the process.
One of the ways organizations of all sizes, from Billion Dollar Roundtable corporations to smaller companies just beginning to establish their supplier diversity programs, invest in and support their initiatives is to use supplier management software. Such a path comes with a cost, but ultimately, the decision leads to benefits that far outweigh those costs.
The promise of ROI doesn’t mean you should ignore costs altogether when investigating a solution. Here are some things to keep in mind on how much to spend on supplier management software:
No Set Price, But …
Prices for supplier management software naturally will vary by platform, the scope of features, number of employees using the solution, and so on. Each platform comes with its own unique costs and considerations, and what may seem like a luxury to one supplier diversity program may be viewed as a great value to another. The most important consideration during the comparison phase is ensuring the solution you investigate offers the features and functionality you require to maintain and strengthen your program. Some of the advantages of supplier management software are both crucial and outstanding, so don’t let the price tag necessarily disqualify your goal of adopting a solution.
What Are You Getting for Your Money?
Instead of looking at supplier management software in terms of “What will this cost me?”, take an approach of “What features does this solution offer that I didn’t have before?” Some of the features you should be looking for—and you will find are well worth the money—include:
- Robust supplier discovery capabilities: Enable users to find diverse suppliers—complete with continually updated company and contact data—and provide automated processes to eliminate administrative workload (e.g., ensuring a supplier is certified).
- Data enrichment and analysis: Takes raw data and transforms it into useful, relevant information. These tools provide detailed reports on spend, suppliers, certifications, record count, geographical data, trends, program success, and more.
- Tier 2 reporting: Provides customizable tracking of Tier 2 spend—the diverse spending that your supply chain engages in—and identifies opportunities to add Tier 2 suppliers to the database.
- Strategic services: Additional support and capabilities from the solution provider enhance your supplier diversity efforts.
Software to Suit Your Needs
Research has shown that companies that devote at least 20 percent of their spend with diverse suppliers can attribute 10-15 percent of annual sales to their supplier diversity programs (as opposed to 5 percent of sales for organizations that allocate less). Supplier management software allows supplier diversity programs to help increase that spend, which in turn can help increase sales.
Furthermore, ROI can be realized in just the way programs perform their everyday operations. If a solution is saving you from hours of busywork, that time can be applied to networking, developing stronger relationships with diverse suppliers, charting future strategy, and more. All those efforts, potentially not possible without good software, increase spend and further boost the bottom line. When approached this way, supplier management software costs can pale in comparison to the value being realized. Any debate on how much to spend on a solution must keep this philosophy in mind: The best software—with the features that can help your program soar—will cost money but will also make money. That appeal to the bottom line is a benefit that both supplier diversity professionals and key stakeholders outside of a company’s program can fully support.