There’s no doubt that building a successful supplier diversity program benefits an organization in many ways, such as driving innovation, improving the bottom line, and enhancing brand image.

A supplier diversity program has been considered one of the best business practices for maintaining high moral and ethical standards. To boost effectiveness, procurement professionals are expected to not only build but aggressively grow and expand their pool of diverse suppliers to maximize the diversity spend.

One of the most powerful ways to scale your supplier diversity program is to analyze, track, and manage multi-tier diversity spend and turn it into insights. Yet, it’s easier said than done. 

According to the Deloitte annual Global Chief Procurement Offer (CPO) survey, supply chain transparency is poor, with 65% of procurement leaders having limited or no visibility beyond their tier-one suppliers.

This article will dive deeper into increased Tier-1 & Tier-2 diversity spend visibility and why you need to make it a priority.

What is Multi-Tier Diverse Spend Reporting?

Diverse spend, also known as diverse supplier spend, is the dollar amount spent solely with diverse suppliers. It can be measured by a dollar amount or percentage of total procurement spend.

Multi-tier goes beyond your first tier of diverse suppliers and allows you to gain a complete picture of diverse spend in the supplier network within your supply chain. In other words, it collects data on both direct and indirect spend at Tier 2, Tier 3, and beyond.

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Tier-1 & Tier-2 Supplier Diversity Spend

When it comes to supplier diversity spend, there are typically two main supplier categories: Tier-1 and Tier-2. Both of them are critical for supply chain success.

Tier-1 suppliers, also known as prime suppliers, are those businesses that directly sell products and services to a buyer, while Tier-2 provide Tier-1 suppliers with the products and/or services that are sold to that buyer.

The Importance of Increased Tier-1 Tier-2 Diversity Spend Reporting Visibility

Let’s look at a few examples of competitive advantages an organization can gain by implementing transparent multi-tier diverse spend data into their procurement process.

Scale Your Supplier Diversity Program

Tracking beyond your Tier-1 diverse spend is critical for scaling your diversity program. With full visibility and control, procurement teams not only save a lot of time and money to expand their program but can also see their impact more broadly.

Commonly, many small and diverse businesses may not have direct partnerships with major organizations. Instead, they are likely to work with your Tier-1 suppliers. With full visibility and control, you can see your whole supplier network beyond Tier-1, and track and measure how much you indirectly spend and contribute toward supplier diversity.

Champion Small Businesses and Diverse Suppliers

“Without big data analytics, companies are blind and deaf, wandering out onto the web like deer on a freeway.” – Geoffrey Moore

With a clear view of your all-tier diversity spend, you gain deep insight into your Tier-1 suppliers’ performance, success, and spend activities. From there, you can make more strategic decisions to partner with those Tier-1 suppliers that have subcontractors with diverse businesses. In short, you indirectly support growth and job creation for the community.

Align Branding with Organizational Goals

As you expand your diverse spend reporting to Tier-2 and beyond, your program will create a more significant impact on your diverse suppliers and the community. A strong supplier diversity program will demonstrate your commitment to making the world a better place and meeting sustainability and diversity goals, rather than focusing on the bottom line.

Demonstrating a commitment to supplier diversity is not only good branding and marketing practice, but it’s also a key selling point when attracting top talent to your organization.

Streamline Your Tier-1 Tier-2 Diversity Spend Reporting

Measuring and tracking multi-tier diverse suppliers comes with multiple challenges. Because you don’t directly purchase products or services from Tier-2 suppliers, there is some complexity to tracking this data. The traditional solution has been to engage and coordinate with Tier-1 suppliers to collect and organize this data for every project.

Insights, analysis, and reporting in one streamlined dashboard.

As an organization with thousands of Tier-1 suppliers and hundreds of ongoing projects, automating the process is a must. SupplierGateway provides one-stop-shop solutions to streamline your multi-tier diverse spend management and simple, intuitive reports to demonstrate your diversity impact.

About SupplierGateway Economic Impact Reporting and Supplier Diversity Management Software

SupplierGateway’s supplier diversity management software provides a big picture view of your diverse supplier data. 

Get transparency into which business categories create the most impact, which geographic regions are positively affected, and how many jobs your inclusive activities support. 

Economic Impact overview in the SupplierGateway platform. 

Our system leverages the BEA RIMS II model to analyze and summarize the Economic Impact of your spend in a comprehensive and user-friendly dashboard. With SupplierGateway, you can:

• Boost Your Diversity Spend: Quickly elevate your spending with local diverse suppliers by identifying those you already engage with and establishing a baseline for your program. 

• Monitor, Analyze, and Report: Effortlessly track the growth of your diversity spend over time. Break down data by spend category, business type, certifications, and more for detailed insights.

• Understand Economic Impact: Gain insights into how your business operations contribute to economic development through comprehensive economic impact reports.

• Partner with Diverse and Local Suppliers: Effortlessly source local and diverse suppliers that meet your procurement needs within the same platform, enhancing your supplier diversity initiatives.