that achieves results and delivers value to the organization.
When you build a program that is in alignment with your organization’s goals and focuses — not just conducting activities or going through the motions but also adding value to the organization — guiding your actions toward meaningful activities becomes easier. The SDM model ensures that your internal and external activities and supplier development converge (see Figure 3-2), allowing you to deliver on this promise.
FIGURE 3-2: Supplier diversity interconnectivity.
Figure 3-3 illustrates how the SDM model works and how each aspect works together and complements the other.
FIGURE 3-3: Supplier diversity management model.
The internal process
Everything starts here. This part focuses on all your internal activities, your 4 P’s, your in-reach efforts, and your programs and determines the robustness of your program. It’s the heart of your supplier diversity efforts, but, like a human, your program needs more than a heart to function healthy and strong.
Many organizations have an “if we build it, they will come” approach, in that they think businesses will line up to do business with them if they create a program. In reality, the most qualified and capable firms are in high demand, especially in industries that don’t have many small or diverse businesses. These companies have the luxury of being very selective about who their partners are. They aren’t interested in processes that are cumbersome and unwelcoming, no matter who you are or how big your organization is. But entrepreneurship is alive and well. Every day, more people are deciding to pursue their dreams of owning a business. This boom creates many opportunities to show would-be entrepreneurs why you’re a good partner and that their next client is you.
The external process
This part may be two-fold:
External stakeholders: Whether they’re consumers, community leaders, business partners, or the small and diverse businesses themselves, external stakeholders can provide the motivation and push that organizations sometimes need in order to take action. As I discuss in Chapter 2, supplier diversity started in response to the social and economic inequality of the 1960s. Over the years, as it entered different phases, the shift was usually in response to some kind of external force. In fact, even the resurgence supplier diversity experienced in 2021 was a result of the racial and social unrest of 2020.External stakeholders are also resource partners in that they team up with an organization to deliver programs to small and diverse businesses, especially if the organization doesn’t have enough resources to fully devote to this function. Further, they’re prime partners (suppliers with a direct contract with the organization) that may provide subcontracting or other businesses partnering opportunities to small and diverse businesses.
Community outreach:Community outreach involves actively engaging in the community to scout and recruit companies to do business with your organization. The supplier diversity industry has done a great job of creating opportunities to connect small and diverse businesses to decision makers. Before the COVID-19 pandemic, on any given day in any city, there was no shortage of events in which small and diverse businesses participated.
The supplier development process
Through external collaborations (see the preceding section), organizations realized that they could provide additional support in a way that was cost effective yet still impactful. It also engaged their prime partners and encouraged them to adopt their own supplier diversity efforts providing additional opportunities for small and diverse businesses. This relationship gave rise to the importance of supplier development.
As the name indicates, the focus is on development — proactively creating a pipeline of small and diverse businesses ready to work with your organization. As organizations become more intentional about supplier diversity and allocate more time and professional resources to their programs, they have to look beyond just spend analytics. Supplier development allows you to do that and has become one of the most important facets of the model. Investing in small and diverse businesses not only prepares them for the rigors of doing business with your organization, but it also primes them for contract opportunities with other institutions. This boost helps build their capacity, which is vital for long-term growth and entrepreneurial sustainability.
Supplier development is probably the process that’s missing from most supplier development programs. Supplier development comes in many forms, from informal efforts such as workshops and networking events to more structured programs including mentoring programs, accelerators, and matchmaking. What you decide to do depends on the stage of your program, your budget and resources, your organization’s goals, and what makes sense for your organization.
Supplier development is also an important step in the strategic sourcing and the supplier relationship management (SRM) processes. With strategic sourcing, supplier discovery and engagement allow the organization to identify and work with the best suppliers to create win-win situations. Strategic sourcing looks beyond just price as the basis for making decisions to award.
Supplier relationship management is an intentional and system-wide assessment of suppliers’ strengths and capabilities and how they match to opportunities within your organization. It’s the planning and execution of all interactions with suppliers, in a coordinated fashion throughout the relationship life cycle, to maximize the value of the relationships.
Because of the strategic focus of both strategic sourcing and SRM, they’re great complements to supplier development activities and provide the perfect springboard to transition small and diverse businesses into actual suppliers. Supplier development doesn’t focus solely on developing the professional capacity of these businesses. It focuses on building relationships, which is the foundation for every successful procurement transaction, to deliver greater levels of innovation and competitive advantage than can be achieved otherwise. Further, it moves the relationship beyond just a traditional, transactional purchasing arrangement. It’s like that old proverb: If you give someone a fish, you feed them for a day; if you teach someone to fish, you feed them for a lifetime.
