define supplier diversity program

Defining your company’s supplier diversity program is a crucial early step in getting a supplier diversity program started. Establishing guidelines early on creates a clear and concise pathway for stakeholders to follow while letting suppliers and the public know about the scope of your program.

1. Determine which groups your supplier diversity program will include

Choosing which supplier groups your program will include is entirely up to your organization, but needs to adhere to any local laws and ordinances. In the US, it is common best practice to recognize diverse suppliers as organizations that are owned and operated by at least 51 percent of any of the following groups:

  • Women
  • Persons with disabilities
  • Minorities (US, or where a minority group is recognized by a country’s government) including:
    • Native American
    • African American
    • Asian American
    • Hispanic American
  • Veterans and military-service-disabled veterans
  • People who are lesbian, gay, bisexual, or transgender

2. Determine what certification types your program will accept

There are several third party organizations that certify diversity status and maintain databases for member companies to access. Below is a current list of organizations that certify diverse suppliers and small businesses:

Third-Party Supplier Diversity Certificates

For more information on supplier diversity certifications, check out this article.

3. Determine what metrics your supplier diversity program will measure.

There are several different ways to measure supplier diversity success within your organization, and the most common are by identifying increases in spend with diverse Tier 1 and Tier 2 suppliers. 

Tier 1 suppliers are those suppliers, diverse or not, that your company has awarded direct contracts to. 

Tier 2 suppliers are those suppliers, diverse or not, who are awarded contracts from Tier 1 suppliers.

Asking your Tier 1 suppliers to source inclusively from diverse Tier 2 suppliers offers diverse companies the chance to participate in your company’s supply chain. It also increases the reach of your company’s supplier diversity program, creating more opportunities for diverse suppliers.

Other metrics that are commonly measured include economic impact (number of local jobs created), brand enhancement metrics, number of diverse suppliers invited to RFPs, number of new, diverse suppliers that have been onboarded, dollar savings due to utilizing diverse suppliers, and increase in customer satisfaction. 

4. Identify the organizations and industry groups that your company will join

Joining certification organizations and other industry groups  as a company grants your company access to peer networking, matchmaking opportunities, databases of diverse suppliers, communication platforms, and supplier development opportunities. 

There are international, national, and local organizations that your company can join:

Most states and municipalities also have smaller, local groups that are specific to a particular diverse population. Joining your local chamber of commerce can help steer your company in regards to engaging local diverse suppliers and other businesses. 

5. Identify key employees that will be responsible for developing and maintaining the program.

According to a paper published by the University of Washington in partnership with the Northwest Mountain Minority Supplier Development Council, it is imperative that a full-time employee or employees be authorized to oversee the supplier diversity program. Supplier Diversity should also reside within the procurement department within a “Center of Excellence” (COE) framework. The supplier diversity program, while separate, must be integrated into all existing business functions. In order to do this, supplier diversity needs to be positioned high enough within the company’s structure so that it can influence decision-making cross-functionally across all organization departments.

Aside from a specific person/department dedicated to supplier diversity, all levels of management and leadership must be held accountable to the supplier diversity program. Each department manager should be ensuring that supplier diversity is incorporated into their respective departments. To ensure that each department is adhering to the policy, a supplier diversity advisory board should be formed and this board should meet quarterly. 

Now that you’ve defined your program’s scope and identified key responsible players, it’s time to draft your supplier diversity program’s policy.