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Editorial: Supplier diversity’s ROI

By definition, procurement people tend to be numbers people. They work every day with dollar figures, product quantities, and so forth. As they report more and more to their organizations’ C-suites, producing figures to support the business case for what they do will remain important.


April 25, 2011
by Michael Power

PURCHASINGB2B MAGAZINE: MARCH/APRIL 2011

By definition, procurement people tend to be numbers people. They work every day with dollar figures, product quantities, and so forth. As they report more and more to their organizations’ C-suites, producing figures to support the business case for what they do will remain important.

Supplier diversity is one area where some purchasing managers may find a challenge in selling the benefits to senior management. We discuss those challenges in our feature article.

The panel of experts we assembled for a roundtable discussion on supplier diversity raise excellent points about the return on investment it offers. As they point out, having a diverse supplier base helps push innovation, expansion into new markets, offers networking opportunities and benefits diverse communities.

Of course, the group also lists cost savings as an advantage for organizations that start supplier diversity programs. This is what purchasing managers should keep top-of-mind when presenting a business case to their executive teams. Every rationale for supplier diversity can be used to support such programs. But the more dollar figures and cost savings appear in the business case, the more likely senior management is to take notice.

For its part, the C-suite should ensure the focus doesn’t stay entirely on the next quarter’s bottom line. Executives should look further into the future (a few years, perhaps?) to ensure their organizations reap all benefits offered by such policies.

I recently attended the Global Business Travel Association’s (GBTA) Canada Conference in Toronto and listened to an education session on sustainable travel procurement. Among other areas, the session outlined how procurement managers can get corporate buy-in for sustainable procurement policies.

I was struck by how similar the benefits can be between supplier diversity and sustainable procurement. Enhanced reputation, competitive advantage, morale boosting, innovation and improved stakeholder relationships all accrue from both. But the similarities also extend to the challenges of convincing top management of these and other benefits. To truly take flight, both endeavours also need to show cost savings companies can hope for if they pursue such policies.

As well, procurement managers can work to ensure everyone at their organizations remain on the same page in terms of goals. If everyone knows how supplier diversity relates to the organization—as well as what the benefits are—there’s a better chance such programs will be successful.