Promoting Supplier Diversity in 2022 and Beyond
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In 2022, supplier diversity will be more important than ever. With the COVID-19 pandemic causing businesses to scramble for alternate suppliers, minority-owned businesses are expected to rise up and meet the demand. Corporate procurement leaders will need to give more effort to supporting these suppliers in order to ensure a smooth transition during this time of crisis.
Here, we'll explore how procurement leaders can support minority-owned suppliers and why incorporating diversity into the corporate supplier strategy can benefit the business.
Re-Evaluating Contract Terms Based on Diversity
Procurement leaders can support minority-owned suppliers by re-evaluating contract terms. It's important to make sure that supplier diversity is taken into account when negotiating contracts so that minority-owned businesses have a fair chance of being awarded the contract.
One way to do this is by setting a minimum percentage of work that must be subcontracted to minority-owned businesses. This ensures that supplier diversity is taken into account when awarding the contract and helps to level the playing field for minority-owned businesses.
Companies can also set aside a certain percentage of the work they need for minority-owned businesses. This can be done in addition to the other measures that are taken to promote supplier diversity.
Expedited or advance payments can also help minority-owned businesses by giving them the capital they need. This can help these businesses obtain much-needed equipment, technology, and labor, so they can maintain business continuity.
Implementing Preferred Supplier Programs
Preferred supplier programs are designed to help businesses work with suppliers who can provide them with a competitive advantage. These programs can help businesses save money, improve quality, and increase efficiency.
In order to qualify for preferred supplier status, suppliers must meet certain criteria. This can include things like having a certain level of experience, being certified by a third party, or having a certain level of financial stability.
Minority-owned businesses can benefit from preferred supplier programs because the programs can help these businesses get their foot in the door with larger companies. Once a minority-owned business has established itself as a preferred supplier, it can be in a better position to negotiate contracts and obtain work.
Collaborating with Vendors to Promote D&I
Finally, procurement teams can also collaborate with vendors to develop their own supplier diversity policies. These policies can help businesses ensure that they are taking supplier diversity into account when making purchasing decisions up the supply chain.
Businesses should also work with their diverse suppliers to help them engage in risk assessment programs. This is especially important for new businesses or those in developing countries that don't have the same types of resources available in other markets.
For example, procurement teams can onboard their vendors onto their reporting and analytics technologies to give them access to new risk assessment capabilities. This can help suppliers obtain intelligence about their own vendors, so they can make better decisions and safeguard their business continuity.
Establishing this type of ecosystem is better for every party involved. It improves visibility and enables companies to draw insights from their data. Those insights are paramount to making decisions about supplier diversity.
Conclusion: Supporting Minority-Owned Suppliers
The COVID-19 pandemic has disproportionately impacted minority-owned businesses. These businesses have faced challenges in accessing capital, obtaining work, and maintaining business continuity.
In order to support these businesses, procurement leaders and their companies must take measures to promote supplier diversity. By engaging in the above activities, procurement teams can create a broader and more equitable supplier base for the future.
To learn more about promoting supplier diversity, don't miss the next ProcureCon Indirect East event. It will occur from September 12th to 14th, 2022, at the Omni Orlando Resort at ChampionsGate in Florida.
Download the agenda today.