Making the business case for supplier diversity
Theresa Harrison, ESG & Enablement Leader, Supply Chain Services, EY
Why is commitment to supplier diversity a business imperative?
Supplier diversity has evolved over time from an era of compliance to one of strategic business importance and competitive advantage. Our clients are increasingly looking to us to provide our services from a total business ecosystem perspective, and not just from what we offer from within. Companies that are committed to supplier diversity help diverse-owned businesses generate increased revenue and developmental opportunities, as well as drive a mutually beneficial ROI, innovation and societal impact.
Supplier diversity also allows companies to create a distinctive experience for suppliers by enabling companies and suppliers to better collaborate to develop innovative business strategies for their customers and communities. Diverse-owned businesses are the growth engine of our economy. Investing in them is an investment in the overall economic empowerment for businesses and communities across the globe.
What makes EY a good customer to DBEs?
EY has been accelerating, supporting and celebrating diverse-owned businesses for many years. Aside from transactional sourcing of goods and services, EY offers a variety of platforms to help diverse suppliers grow their businesses. For example, the EY Entrepreneur Access Network and EY Entrepreneurial Winning Women programs support the growth of diverse- and women-owned businesses by providing them with greater access to our clients, supply chain and capital. These programs also help create a diverse business pipeline that allows clients and others in the supply chain to grow their diverse supplier utilization.
How can supplier diversity programs enhance a company’s competitive advantage?
At EY, within the Supply Chain Services function, we are continually looking for suppliers that can provide innovative, inclusive and sustainable solutions, as well as actively support supplier diversity initiatives. As a result, having a sustainable and inclusive supply chain is becoming a market differentiator for suppliers during our selection process.
Additionally, supplier diversity programs allow companies to better showcase their end-to-end environmental, social and governance (ESG) impact, including their demonstrated investment in the communities they serve.
What changes or enhancements did EY make to its diversity supplier program as a result of pandemic-related supply chain disruption?
EY transitioned to a virtual training platform that provided nearly 6,000 diverse businesses with over 35,000 training hours on a variety of topics, including ESG, effective growth drivers and access to capital. We also evaluated many of our internal processes, including payment terms and insurance requirements, to expedite our payment process and provide conditional requirements based on products and services being purchased from small and diverse suppliers. As a result of changes to policies and processes, EY had a 25% increase over FY 22 spend with diverse-owned businesses.
What are the key elements to implementing a successful supplier diversity program?
These steps will assist you in achieving a successful relationship to support your supplier diversity program.
- Determine a business case by performing a gap analysis to gauge the company’s supplier diversity program against both best-in-class and competitors.
- Integrate processes by implementing a global supplier diversity policy applicable to all spend.
- Deploy robust (P2P) technology or assess existing technologies for supplier diversity capabilities to capture information and provide vigorous reporting.
- Align people within the organization to shift the company’s strategic focus and embed diverse suppliers that meet or exceed business expectations.
Also, the importance of advocacy organizations, such as Western Regional Minority Supplier Development Council (WRMSDC), in the journey to implement a supplier diversity program cannot be understated. Whether you’re building a program from the ground up, or you already have one in place, advocacy organizations can provide tremendous value to your company.
Do your due diligence and meet with advocacy organizations to see how they can provide: research and data you need to support the business case for supplier diversity; a supplier pipeline that supports your sourcing activity; and programs to support your overall goals to build a successful teaming relationship.