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Diverse supplier programs are implemented by companies to ensure that they are contracting with suppliers owned by women, veterans, minorities, and people in other categories. These programs offer financial and human capital benefits to businesses while aiming to enhance the diversification of a firm’s supply chain. They have grown in popularity in recent years, becoming commonplace in many companies and industries.
North American Van Lines commissioned a third-party firm to conduct research via a survey of 300 pan-industry diversity professionals to understand what specific drivers were acting as catalysts for companies that were all adopting and growing diverse supplier programs. Beyond what motivated their adoption, we wanted to find out the attitudes, outcomes, efficacy, and processes associated with how companies pursue and manage these programs. In the process, we also uncovered how mobility and relocation may play a significant role in diverse supplier programs and their growth.
Drivers, Growth, Cultural Shifts
In our preliminary research, we found that there were numerous financial benefits to implementing and maintaining diverse supplier programs such as tax incentives, potential increases in government business, increased revenue from clients with diversity spend requirements, and grants. We also discovered that there were significant, proven, intangible benefits, namely the well-documented correlative benefit of diversity translating into innovation.
The diversity professionals we surveyed reported that their top three drivers for implementing diverse supplier programs were corporate social responsibility, customer requirements, and alignment with corporate, cultural, and workforce inclusion. Millennials’ ascension into more senior positions within companies likely has much to do with these drivers. They are, of course, the generation well known for prioritizing corporate social responsibility, inclusion, and the creation of a favorable corporate culture.
The diversity professionals’ top three drivers for implementing diverse supplier programs were corporate social responsibility, customer requirements, and alignment with corporate, cultural, and workforce inclusion.
Challenges With Diverse Supplier Programs
Respondents reported specific challenges with their diverse supplier programs regardless of industry or company size. It was clear that, firstly, sourcing diverse suppliers is difficult—it was one of the foremost challenges reported by our diversity professionals. We discovered that the majority of diversity professionals rely on certification or third-party agencies to find qualified vendors, and a surprising 40% stated that they use search engines to locate diverse suppliers.
With nearly 70% of respondents indicating that they had 10 or fewer suppliers in their program, it became apparent that sourcing vendors is a time-consuming and disjointed process that is not providing firms with ample supplier choices and leaving many diverse suppliers undiscovered, at least in the short term. Over time, however, this changes. While it seems the process of acquiring suppliers is challenging, when the retention of suppliers was paired with time and continued sourcing, it produced a greater stock of providers for firms.
Beyond sourcing, companies measuring and reporting the success of their diverse supplier programs is another significant challenge for diversity professionals. Measurement ambiguities may explain why 15% of our respondents said they were either unsure of how they measure the ROI of their programs or that they do not measure ROI at all. While some measurement is better than none, it was still clear that other sources of financial and nonfinancial ROI are probably not being tracked and reported in relation to these types of programs. Most companies with diverse supplier programs, then, may not be getting the full picture of the return they are receiving on their investment.
Connecting Mobility with Diverse Supplier Programs
Despite the mobility industry’s wealth of professionally certified women-, minority-, and veteran-owned companies that can meet the needs of large firms, fewer than 35% of companies took advantage of the opportunity to include companies in the mobility and affiliate spaces in their programs. Specifically, moving, real estate, storage facilities, commercial moving, household goods moving, and services related to employee relocation were an overlooked space from which the 68% of companies seeking to expand their diverse supplier programs should be sourcing contracts
Looking forward, we hope that more companies will think to include mobility, relocation, and their related services in their diverse supplier portfolio. The wide range of professionals who make up the mobility and relocation industry create a prime alignment for a symbiotic working relationship. Not only will firms encounter companies suited to tackle large-scale contracts, but they will also find that they can simultaneously grow their diverse supplier programs.
Our research shows that these programs are gaining in popularity and favorability, as they largely deliver positive outcomes to the companies that implement them. The challenges many respondents reported in finding diverse suppliers signal that those in mobility who are certified women-, minority-, or veteran-owned businesses may not want to shy away from making that known to potential clients. M
Bobbi Maniglia is vice president of corporate sales and moving for North American Van Lines. She can be reached at +1 440 476 0970.
The above information is excerpted from an article that appears in the November 2019 issue of Mobility magazine.
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