Top 10: Supplier Diversity Best Practices

Supplier diversity is no longer a nice-to-have initiative, but a crucial element of any successful procurement operation. 

The leaders in the industry have found out that a diverse supplier base not only gives strength to the supply chain resilience but also drives innovation and creates meaningful social impact. But, creating an effective supplier diversity programme requires strategic planning, dedication and a comprehensive approach. 

Drawing from best practices of industry leaders like Walmart, Johnson & Johnson, and IBM, Procurement Magazine looks at the top ten essential strategies that procurement teams can implement to develop and maintain successful supplier diversity initiatives that deliver lasting value to both the organisation and its communities.

10. Regularly review and refine supplier diversity strategies

Continuous evaluation and refinement of supplier diversity strategies ensure that efforts remain effective and aligned with organisational goals. Regular reviews allow procurement teams to adapt to changing business needs, market conditions and emerging opportunities, maintaining the relevance and impact of supplier diversity initiatives over time.

General Motors (GM) regularly reviews its supplier diversity programme through annual verification surveys.

9. Participate in supplier diversity events and organisations

Engagement in industry events and organisations allows procurement teams to network with potential suppliers, learn from peers and stay informed about best practices. This participation demonstrates commitment to diversity, expands the supplier network and keeps the organisation at the forefront of supplier diversity trends and innovations.

Companies host in-person and online events to promote supplier diversity, such as Capital One and its Supplier Diversity Summit. This provides an opportunity for diverse business owners, Capital One leaders, corporate and community partners and non-diverse business owners to network.

8. Leverage technology for supplier discovery and management

Advanced procurement technology platforms streamline the process of identifying, evaluating and managing diverse suppliers. These tools enhance efficiency, provide better visibility into the diverse supplier base and enable more effective tracking of diversity spend, ultimately supporting data-driven decision-making in supplier diversity efforts.

Microsoft Procurement encourages buyers to consider using diverse suppliers whenever possible and tracks diverse spend as one of the company's top metrics.

7. Implement tier 2 supplier diversity programmes

Tier 2 programmes extend the impact of supplier diversity efforts beyond direct spend by encouraging primary suppliers to engage diverse subcontractors. This practice creates a multiplier effect, influencing the entire supply chain and potentially leading to a more significant economic impact on diverse communities.

Ford's Tier 2 supplier diversity programme requires suppliers to submit quarterly performance reports on their purchasing data. The reports must include data on spend.

6. Collaborate with internal stakeholders

Cross-functional collaboration ensures that supplier diversity efforts are aligned with broader business objectives and have support across the organisation. By engaging various departments, procurement teams can identify new opportunities for diverse suppliers, gain valuable insights and increase the overall impact of supplier diversity initiatives.

Coca-Cola's procurement team works closely with other departments, such as marketing and product development, to identify opportunities for diverse suppliers.

5. Develop mentorship and capacity building programmes

Mentorship and capacity building initiatives go beyond simply sourcing from diverse suppliers; they focus on nurturing long-term relationships and helping these suppliers grow. This approach strengthens the diverse supplier base, potentially leading to more innovative and competitive offerings, while also demonstrating a commitment to supplier development and community impact.

Unilever sponsors a programme that helps diverse businesses prepare to become supply chain partners by providing training, mentorship and access to networks.

4. Utilise supplier diversity databases and certification bodies

By using databases and certification, companies can find qualified diverse suppliers, expanding the pool of potential suppliers, ensuring compliance with diversity requirements and streamlining the process of verifying supplier credentials.

At the heart of Procter & Gamble is supplier diversity, but as part of this, they require diverse suppliers to be third-party certified to ensure they are meeting the spirit and intent of their programme.

3. Implement supplier diversity training programmes

By training staff in supplier diversity, procurement teams gain the knowledge and skills needed to effectively engage diverse suppliers. Through this, they build a culture of inclusion within the procurement function, enhance understanding of diversity's importance and provide the tools to uncover and nurture relationships with diverse suppliers.

IBM's Be Equal is the new face of IBM Diversity & Inclusion. Launched initially to promote and support gender equality, the Be Equal brand is being expanded to include and represent every dimension of equality. In the spirit of being equal, IBM is building an open brand platform for all to participate—individuals and organisations—to promote equality, partner together and become Be Equal Allies and advocates.

2. Integrate diversity into the overall procurement strategy

Supplier diversity should be at the core of the procurement strategy. Organisations should ensure it's not separate from overall sourcing decisions. Making diversity considerations a standard practice in everyday procurement processes leads to more consistent and impactful results across all categories.

All Johnson & Johnson supplier selections are made based on merit, helping suppliers qualify for its Global Supplier Diversity & Inclusion programme or helping them grow to meet Johnson & Johnson's needs through mentoring programmes and by connecting suppliers to external resources.

Additionally, Johnson & Johnson supports and partners with more than 30 advocacy organisations to identify and support the development of small and diverse suppliers and social enterprises around the globe.

1. Establish clear diversity goals and metrics

Procurement teams need to set clear and measurable goals for their supplier diversity to make sure everyone is moving in the same direction. This gives teams the opportunity to track progress, demonstrate impact and set the tone for the whole organisation's diversity efforts. These clear targets can also be assessed to find areas where improvements can be made – thus keeping it a priority for the procurement team.

In the 2023 financial year, Walmart spent over US$13bn with diverse-, women-, and veteran-owned businesses in the US. They brought intentionality to these relationships, working to include and help grow these suppliers and entrepreneurs, and in the process help their customers and members save money and live better lives.

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