Kathey K. Porter - Supplier Diversity For Dummies

Chapter 3

IN THIS CHAPTER

Understanding the basics of supplier diversity management

Looking at the supplier diversity management Process

Breaking down the SDM model

Asking yourself important questions as you launch SDM

From organizations to entrepreneurs, supplier diversity is on everyone’s minds. For entrepreneurs, it’s knowing how to leverage supplier diversity to create business relationships, win contracts, and grow a sustainable business. For organizations, it’s developing an impactful program that brings value to the organization and the community. As each group tries to gain that understanding, supplier diversity has grown from a cursory academic construct to a viable management and entrepreneurship strategy and worthwhile organizational pursuit.

Whenever I begin working with a new client, I always like to get a sense of their current supplier diversity operation. Often, they explain their desire for a program. They have available opportunities and are performing the requisite activities, but they’re still not getting the results they want. After I hear about their challenges, I can always tell they’re still looking at supplier diversity as an initiative rather than as a process. They usually have one, maybe two aspects, but they’re missing another phase of the model that’s necessary to make their efforts work. When I begin to explain this component, I love it when the “a-ha” moment occurs. It’s like you can see the light bulb come on as their eyes light up.

In this chapter, I define and explain supplier diversity management, discuss supplier diversity management as a process, and introduce the supplier diversity management (SDM) model.

People often think of supplier diversity as an endless number of luncheons, breakfasts, and dinners (the chicken dinner circuit) with a few workshops thrown in. It’s easy to disparage these “chicken dinners,” but historically, prior to organizations like the National Minority Supplier Development Council, diverse business owners never had the opportunity to socialize with nondiverse business leaders. In the South, it was not only illegal — it could be deadly.

Yes, as part of the entrepreneurial ecosystem, supplier diversity professionals are very visible at community events such as these, and informational workshops make up a large part of supplier diversity programming, but those are just snapshots of everything involved in supplier diversity. Looking at the field collectively rather than the individual events provides a fuller picture of what it really entails.

Depending on the leadership, some view supplier diversity as an optional initiative and not a true management function. When you actually think about the myriad of activities involved in supplier diversity, it really is a system or process, one I call supplier diversity management (SDM).

Supplier diversity management is a new way of thinking about supplier diversity. It comprises the planning and coordination of all the people, policies, processes, procedures, and stakeholders working together to connect small and diverse businesses to opportunities while creating value for the organization. It requires aligning your internal efforts and external resources to focus on value creation and on driving results for the small and diverse business community.

Supplier diversity management involves many interconnected functions that are difficult to manage separately and expect worthwhile outcomes, such as the following:

Supplier development

Contract compliance

Creation of the 4 P’s (people, policies, processes, and procedures; see Chapter 6)

Project management

Stakeholder engagement and collaboration

Community relations

As organizations shift to build programs that are impactful and focus on adding value, they have to ensure that these functions are aligned and working together.

Think of SDM like a car. A car needs all its internal parts (battery, engine, electrical systems, and so on) and its external parts (wheels, doors, windows) in order for it to work properly. Some of the items are required for it to work at all. It may still technically function without some of the others, but if it doesn’t work the way you’d hoped, it’s nothing more than a useless heap of scrap metal which has no value to you. The same goes for a supplier diversity program; sure, you can technically run it without all the pieces, but it isn’t as effective.

In the chapter introduction, I mention clients’ a-ha moments when they first hear about supplier diversity management as a process. Well, here’s what happens after the light bulb comes on: We usually have a conversation about the gaps in their programs and whether the gaps are intentional or unintentional. If they’re unintentional, it may be because the organizations weren’t aware that this process was something they needed. If the gaps are intentional, it’s usually because the supplier diversity people haven’t been able to get buy-in from the top to incorporate all the phases into their program. Either way, whether it’s increasing knowledge or developing tactics to secure buy-in, there’s a solution.

As supplier diversity has evolved over the years, the outcomes organizations have required to justify their programs have also shifted. During each phase, they adopted new tactics or measures in response to what was important to the organization at that time. (You can read more about the phases of supplier diversity history in Chapter 2.) Today, supplier diversity is a management strategy, and the outcome is delivering value to the organization.

Organizations that evolved successfully became synonymous with best practices. They’re often comprehensive programs, incorporating activities (whether that’s internal policies and in-reach or external outreach, accountability, and supplier development) in each step of the process. As I discuss in the preceding section, that comprehensiveness is a hallmark of SDM.

Conversely, programs that aren’t so successful usually include only one aspect of the process. For example, they may have an internal policy but no external outreach, communication, or supplier development plan. This setup may limit the number of small and diverse businesses that engage in their program or their contract readiness for contract opportunities with the organization. Another company may have a heavy focus on supplier development and conducting workshops but not have policies strong enough to be impactful or inclusive or a clear process to connect businesses to opportunities.

A process is a series of actions or steps taken to achieve a particular end. Consider the process involved in running a bakery. It’s made up of a group of functions represented in a tiered plan, starting at the top. These tiers include all the functions needed to operate a bakery, such as production, marketing, HR, supply chain, and so on. You can break down the high-level processes that make up each function into more granular tasks.