Supplier diversity goals have been in existence at federal government agencies for several decades now. There has been a significant and growing interest in encouraging sustainable diverse business development among commercial and government procurement communities to meet those goals. A number of recent studies illustrate some core issues faced by these organizations.
Dr. Dale Young, at Georgia College and State University, conducted two studies (2000 and 2004) to examine how Fortune 500 companies approach supplier diversity content on their websites. In his study, Dr. Young noted four reasons that these large companies have supplier diversity programs:
- Customers: MWBEs are potential customers; diverse suppliers help the firm understand and attract diverse customers.
- Competitive Advantage: MWBE programs provide strategic advantage, make good business sense, are required for government contractors, and support continuous improvement.
- Communities: Supplier diversity programs are a way to invest in and help grow the communities served or operating in; they aid community growth.
- Common Good: Supplier diversity expresses concern for the public good; it’s the right thing to do; a healthy society enables all to share in economic growth.
Dr. Young’s complete 2004 report is available here.
“According to a study facilitated by Fortune magazine and the Society for Human Resource Management, more than 75 percent of surveyed organizations have engaged in some type of diversity activity or initiative (Holmes 2005).”
“But while supplier diversity programs are generally aligned with high-level corporate objectives, most companies use relatively simplistic performance metrics to measure progress, and do little to ensure alignment at an operational level. About 90 percent of all companies in the study rely on metrics such as “Percent Spend with Diverse Suppliers” or “Recognition by Industry”. But less than half of the companies in the study track the percentage of their suppliers that diverse suppliers represent, and only about 10 percent of all companies assess the impact of supplier diversity efforts on revenue or market share.” Government officials, too, care about making sure that disadvantaged subcontractors meet federal and local diversity mandates. It is important to them that subcontractors accurately reflect the diversity of the communities they serve.
Given the discrepency in goals versus reporting, there seems to be a an awakening desire to effectively meaure actual supplier diversity performance. COMSDA software gives organizations reporting metrics in a comprehensive supplier diversity assessment tool.
Tracking or measuring actual use of SDMWVBE suppliers against strategic goals, factoring in the effectiveness of the programs, is likely to increase over the next few years.