Supplier Diversity

The Hackett Group’s Senior Procurement Advisor Vicky Kavan discusses the results of our new supplier diversity study with Senior Procurement Advisor Elizabeth Zucker and Senior Research Director Amy Hillcox.

Show Notes

Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week, we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. In today’s episode, The Hackett Group’s Senior Procurement Advisor Vicky Kavan discusses the results of the organization’s new supplier diversity study with Senior Procurement Advisor Elizabeth Zucker and Senior Research Director Amy Hillcox.

Both Elizabeth and Amy bring to the table at least 25 years of experience in procurement, supply chain, procure-to-pay (P2P) and working capital. Most recently, they have worked closely with The Hackett Group’s 2022 Supplier Diversity Survey, having joined Vicky to spearhead a member webinar on the study and its results. They begin the conversation today by diving into the context of the study. The Hackett Group usually runs a supplier diversity study every two to three years, but as the organization saw growing European interest in increasing supplier diversity, it decided to run a study in 2022 despite having run one in 2021. The 2022 study allowed both a global look at supplier diversity and regional deep dives, and resulted in a compilation of top performer/peer categories and insights to help companies as they move forward.

One significant takeaway from the study pertains to geography: supplier diversity is expanding on a global scale. Most companies involved with the study (all top performers and most of their peers) have supplier diversity programs in North America, which makes sense given the beginnings of supplier diversity in the 1950s/60s U.S. In Europe, 75% of top performers have supplier diversity programs, which indicate that supplier diversity is becoming a higher priority in the region. In the Asia-Pacific (APAC) region and Latin America, 50% of top performers have programs, and that number is trending upward. At the same time, the fact that peer companies in APAC and Latin America are lagging behind is a reminder that there is still a long way to go! The greatest room for growth is in Africa and the Middle East – only 38% of top performers have supplier diversity programs.

Overall, these results are exciting! They demonstrate that at least 38% of top performing companies can say they have a truly global supplier diversity program, and that 75% can say their programs are at least international. We have every reason to expect more growth and anticipate that the U.S./North America will remain the standard bearer.

There are, of course, challenges to expansion. Taking Europe as an example, stark differences between countries and language divisions are just the beginning of the challenges to expansion within the market. Getting into details of challenges that participants noted, the group considers the top three and one other interesting one. The top three include the ability to find quality diverse suppliers in some spend categories (88% of participants flagged this as a moderate or significant challenge), difficulty in collecting and managing certifications on an ongoing basis (noted by 69%), and limited resources that have expertise in supplier diversity programs.

Another highly ranked challenge was the difficulty of getting one’s organization to adhere to its supplier diversity program policy. This challenge highlights an important point: supplier diversity is so much more than policy! In order to grow in this area, we need to think about what else we need to put in place to enable the program. One important thing to have in place is a broad, organizationwide culture of diversity and inclusion. The Hackett Group found it to be a trend that top performers were also companies that had adopted a much wider range of diversity and inclusion initiatives to support both corporate culture and the diversity of the workforce.

Moving forward, Vicky, Amy, and Elizabeth discuss specific benefits that surveyed companies indicated they were able to achieve through their supplier diversity programs. Most reported a higher level of diverse supplier spend, and other commonly reported benefits included positive community impact, positive external economic impact, positive impact on the company’s brand image (both among those outside and within the company), and growth in collaboration with small new suppliers (often leading to creative solutions and innovation). Some companies even enjoyed cost reductions.

Ultimately, all the benefits point to the overarching lesson that supplier diversity programs can have the ability to drive far greater advantages for both the company and community, and should be a priority for all companies. In view of the trends highlighted in The Hackett Group’s study, the group offers takeaways for listeners looking to grow in the area of supplier diversity. First, supplier diversity program success and benefits are the result of investments. It is also important for companies to pursue growth in ways that take their context into account. For those in North America, it would be worthwhile to look for further spend categories within the region. For those in other regions, developing or advancing a program will likely look different. In any region, though, companies should take advantage of whatever help is directly available.

Timestamps:

• 0:52 – Welcome to this episode hosted by Vicky Kavan.
• 1:38 – The Hackett Group’s most recent supplier diversity study and its context.
• 4:55 – Geographical expansion of supplier diversity programs.
• 6:47 – Why have companies expanding into Europe started with the UK?
• 8:11 – Challenges that participants flagged, and the value of a culture of diversity and inclusion.
• 11:15 – What did companies say about benefits they were able to achieve?
• 13:31 – An ultimate conclusion about the priority of supplier diversity programs.
• 14:22 – Key takeaways for companies as they move forward.
• 20:12 – Take advantage of the help available, and thanks for listening!