While 81% of respondents indicated corporate culture and inclusiveness as the primary driver of their supplier diversity program, 32% of businesses do not have clearly defined supplier diversity goals, according to the 2022 State of Supplier Diversity Report.
Diverse suppliers are organizations that are at least 51% owned and operated by a diverse category, which includes being woman-owned, minority-owned, veteran-owned, disability-owned, or LGBTQ+-owned.
Senior Executive DEI spoke with four leaders in supplier diversity to share strategies to help you improve supplier diversity at your organization.
1. Join a national council to network.
When it comes to working with diverse vendors, one of the challenges is sourcing. There are a multitude of suppliers, so knowing who to trust can feel overwhelming. Joining a network or council connects you with your peers so you can learn which vendors are trusted within the industry.
Jennifer Good, senior manager for supplier relations, compliance, and diversity at American Axle and Manufacturing, notes that the first thing she did after joining the company was to become a part of the Infuse mentorship program through the Michigan Minority Supplier Development Council. The program matched Good as a mentee with another corporate member to serve as her mentor.
“Even though I’ve been in the supplier diversity world for well over a decade, I’ll be the first to say I don’t know everything… I think that’s the beauty of the industry that we’re in — we’re able to share all these best practices and it might look differently at a utilities company than it does at an automotive company, but the principles are still there and you can find a way to apply it to your company,” adds Good.
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Debra Quade, manager of supplier diversity at Kellogg Company, shares that the organization regularly partners with the National Minority Supplier Development Council (NMSDC), which acts as a hub for finding new suppliers. Kellogg Company participates in a program called Corporate Plus, sharing their list of supplier recommendations with the group.
“It’s a vote of confidence. It’s very prestigious for minority companies to be selected or to be nominated because it’s a vote of assurance,” says Quade.
Kellogg Company’s commitment to supplier diversity can be seen in their spending. According to Quade, the company allocated over $400 million to diverse suppliers in North America in 2021. For context, Kellogg relies on over 20,000 ingredient, packaging, indirect services and co-manufacturing suppliers from around the world.
In the healthcare space, Michelle Wimes, chief diversity officer at Children’s Mercy Kansas City, notes that the Civic Council of Greater Kansas City has played a significant role in their supplier diversity strategy. A few years ago, the council approached the hospital with a CEO pledge and a pilot program to support companies’ supplier diversity.
“We were one of the first institutions to participate in this pilot program,” says Wimes. “We were asked, first of all, to identify diverse suppliers that we were currently doing business with, to identify folks who we might want to do business with who we just hadn’t had previous interactions with, to develop a dashboard to track our spend, to develop some goals, and then to increase our year-over-year spend with diverse suppliers and vendors.”
During the pilot program, Children’s Mercy Kansas City tracked annual spending in three departments: environmental services, construction and facilities, and the information systems department. The goal was to increase each department’s spending with diverse suppliers in the following year, and create a database to track spending.
“As a result of participating in that cohort with the Civic Council, we were able to learn about diverse suppliers and vendors that we previously hadn’t done business with, because in meeting with the folks in the cohort, they shared suppliers and vendors that they had success with,” adds Wimes. “We initially set a goal of spending at least 2% of our overall spend with diverse suppliers and vendors, and at the end of the fiscal year, we saw that we were able to exceed our goal by $7 million, so we actually spent 2.96% of our overall spend instead of just 2%. It doesn’t sound like a lot, but when you look, that was $15 million, and that was way more than we have spent in the prior year.”
2. Offer quote sessions with minority-owned suppliers to level the playing field.
According to Travis Spencer, head of supplier diversity and inclusion at Ford Motor Company, one of the biggest challenges minority-owned suppliers face is quoting for larger suppliers for the first time. When vendors sell their goods or services, they have to provide the potential client with a list of proposed prices. A lack of understanding around this process can mean the supplier misses requirements.
Fortunately, as a business, you can offer quote sessions with minority suppliers to help support them. For example, Ford Motor Company is currently developing a program with the trade association Blacks and Electric Vehicle Infrastructure (BEVI) to help minority suppliers who need to catch up in the battery and electric vehicle technology space. These suppliers can bring their quotes in for a design review, without penalization, to ask questions about requirements, statements of work, and who they need to connect with to get certification standards.
From her time working at Kellogg Company, Quade also shares the value of supporting minority suppliers through quoting sessions. “What we’re really trying to do is make sure that we’re leveling the playing field and… there are opportunities to quote business, and then… that those suppliers have the support in order to successfully quote the business.”
Good feels similarly about working with suppliers at American Axle and Manufacturing. She notes, “Trying to work and develop those suppliers is going to be really key because it’s one thing to just offer a list of suppliers, but if they’re truly not going to meet the criteria of what we’re looking for, then it doesn’t serve anybody.”
3. Pair established businesses with emerging suppliers.
Another key to supporting minority-owned suppliers is to pair them with established businesses that can provide mentorship. There are many ways to do this, including creating a cohort to train emerging suppliers.
As director of supplier diversity at Walgreens Boots Alliance, Tony Billinger shares two programs the company has developed. “Walgreens has become a major participant and sponsor of diverse supplier capacity, building cohorts such as the Top Shelf program and the Retail Ready program, where we help train and guide selected groups of diverse suppliers on how to do business with large retailers both in the arenas of retail products and professional service.”
Businesses can also serve as corporate coaches for emerging suppliers. According to Good, American Axle Manufacturing is currently serving as a corporate coach through the NMSDC’s Certificate of Excellence Program by offering suppliers assistance in developing their business strategy and key targets. “In the future, we would like to have our own mentoring program. We’re not quite there yet, but that is something that we’re going to be striving to do probably within the next three to five years.”
Wimes elaborates on the importance of coaching and helping diverse suppliers forecast your future needs. “There may be minority suppliers and vendors that just can’t meet the capacity needs that you have for your organization, but that doesn’t mean that you can just say well, you’ll never be able to do business with us. There’s a coaching component — explaining what kinds of things they may need to do to put themselves in a better position to be able to do business with you.”
Another avenue to pair businesses is through a conference or event. “We annually hold both a Supplier Diversity Summit and a Localization Summit, where we match new diverse and small retail product suppliers virtually with our Walgreens category managers to have their products considered for our retail assortment(s). Our next Localization Summit takes place on February 22,” adds Billinger.
These initiatives are implemented through Walgreens Boots Alliance’s strategic partnerships with councils and organizations including the NMSDC, the National Gay-Lesbian Chamber of Commerce, and the National Veteran Owned Business Association. Additionally, the company has a Supplier Diversity Ambassador Program, a group of procurement and merchandising volunteers who assist in advancing the supplier diversity message to their colleagues and provide counsel on moving initiatives forward.
“Our most obvious measure of our success has been the large increase in our diversity spend over the last two years,” Billinger says. “We have had $100 million increases year over year. We are now looking into economic impact metrics that go beyond spend, such as diverse supplier jobs supported (by industry and state), hiring by state, diverse supplier impact on the tax base, et cetera.”
4. Create a seat at the table for diverse suppliers.
You can also create opportunities for diverse suppliers to participate in company-wide events to give them a proverbial seat at the table.
For example, Kellogg Company hosts an annual supplier diversity event where the company connects their buyers with high-potential diverse suppliers. One of their long standing suppliers of 20+ years is Baldwin Richardson Foods, one of the largest Black family-owned and operated businesses in the food industry. Their fruit fillings are used in iconic Kellogg foods such as Nutri-Grain®, Kashi® and Pop-Tarts®.
“We’ve ensured that Baldwin is included when we have Supplier Day and that they’ve met pertinent Kellogg leadership. They’ve accompanied us to various events where we can help make introductions, and again exposing them not only within Kellogg, but even externally, to best practices or some of the contacts that we might have,” adds Quade.
Kellogg Company also organizes and supports monthly Michigan Diversity Connection (MiDiCo) meetings, introducing diverse suppliers to West Michigan corporations and sharing best practices. The meetings include minority, women, veteran, LGBTQ, and disability-owned businesses. Every month a different company hosts the meeting.
“It’s really a mixture of allowing certified diverse companies to present to corporate buyers from a variety of different categories: we have healthcare, we have office furniture, food manufacturing, we have retail,” says Quade.
American Axle Manufacturing also advises companies to bring their buyers and managers to trade shows to meet diverse suppliers. Good is on the board for the Michigan Hispanic Chamber of Commerce, and notes how bringing buyers to their trade show allowed the organization to meet Hispanic-owned businesses.
“It’s important for the buyers to understand the role that supplier diversity plays within our company and give them the chance to have these one-on-one conversations with potential suppliers or even with current suppliers,” adds Good.
Additionally, Wimes advises attending local supplier diversity fairs so that you can learn more about the capabilities and the resources of minority suppliers and vendors in your area. “Think about pooling your resources and… learning from each other and developing a cohort where you can learn from each other. To the extent that somebody has already had and developed a great relationship with a minority supplier and vendor, you don’t necessarily need to reinvent the wheel if they’ve already done all of the vetting and speak highly of that supplier vendor.”
5. Incentivize employees to promote supplier diversity.
Last but not least, in order to get your entire team aligned with supplier diversity efforts, consider incorporating supplier diversity into compensation. For Walgreens Boots Alliance, this relates to employee bonuses.
“Our annual supplier diversity spend goal is tied to our employee bonus structure. This not only motivates our teams to consider diverse suppliers in their sourcing engagements but also keeps the initiative top of mind as we monitor our process toward attaining our goal on a monthly basis,” says Billinger.
National Minority Supplier Development Council (NMSDC)
Women’s Business Enterprise Council
Great Lakes Women’s Business Council
National Veteran Owned Business Association
Women’s Business Development Center
National Gay-Lesbian Chamber of Commerce