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
- Ivalua provides clients standard diversity classification designations to ensure suppliers are properly designated. As the customer expands its presence or diversity programs, new diversity designations can be easily added by the customer without the need for a lengthy and expensive project. For US-based organizations who are entering new markets like Australia, the Certified Aboriginal Business (CAB) designation can be quickly added to existing designations.
- In addition to designations, Ivalua can store and manage the diversity certifications from the corresponding diversity agencies. For customers that are focused on supporting diverse suppliers as they work to obtain certifications, Ivalua offers suppliers the ability to self-certify and to verify diversity designation requirements. These self-certified suppliers can use the collaboration library where customers can support them in obtaining formal certification through a shared project plan. This is all stored within Ivalua to provide customers the auditability and traceability to demonstrate process rigor and transparency.
- For customers who seek to engage diverse suppliers in sourcing awards or have specific set-aside requirements (as seen in the US and Australia), Ivalua’s Sourcing Decision Center allows customers to apply customer-defined logic and rules to sourcing analyses and award scenarios to ensure these requirements are satisfied efficiently.
- Lastly, to solve the challenge of supplier discovery and accessing all the various directories, Ivalua provides an ecosystem of partners that integrate with Ivalua to support effective discovery and seamless supplier onboarding. As new sources of data arise, our integration toolkit allows these sources to be integrated into the platform quickly and easily. The process of discovering and adding diverse suppliers can be reduced from weeks to minutes.
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.
