Procurement managers in the public and the private sector are tasked with developing diversity, local or “green” procurement programs for a variety of reasons. Many states have legal requirements regarding the amount of budget that must go to minority- and women-owned businesses, local businesses and/or green businesses. The same is true of many major corporations, especially those with government contracts. Current budget conditions in particular in the public sector actually have led to an increased focus on local and diversity spending to keep government dollars and jobs in the local area.
These legal requirements, combined with steep budget cuts in both the public and the private sector, present a significant challenge for procurement managers. To marry fiscal leadership and diversity success, procurement managers need the right level of organizational support and smart processes.
I’m part of an organization (SciQuest) that develops and provides procurement technology, so I am naturally biased towards seeing technology as a solution. In the case of diversity programs, using technology in a smart way has two enormous benefits. First, technology can level the playing field for all suppliers involved; and second, technology can reduce the costs of managing the program.
Most organizations set up a diversity policy that starts with something like this: “If all things are equal, then we will select a diversity vendor to do business with.” Of course, that is exactly the problem. All things aren’t always equal. For the most part, it’s never an “apples to apples” comparison when you evaluate a local contractor versus a national chain.
Simply posting a Web-based registration form to recruit diversity suppliers to participate is therefore never enough. Yet that is often where most effort is expended. To support a successful program throughout an organization, procurement professionals need to offer support for suppliers and buyers that guides everyone through the entire process. This is where technology can come into play. You need to pass the hurdle of registration and qualification as fast and as accurately as possible to get to the actual value of the program: comparing apples to apples.
Best-in-class supplier diversity management systems guide a potential supplier interested in doing business with the organization through a process that asks the right questions and that asks for the right documents to certify the classification. Once registered, the supplier must be classified accurately as a minority-owned business, a woman-owned business or as a small or local business. Automated methods for receiving signed classification forms can accelerate this process. After a supplier has been successfully registered, classified and certified, e-mail confirmations notify the supplier and internal users. This helps create the first visibility into diverse suppliers. Classifying and certifying suppliers in this way also provides an audit trail.
Now that you have cleared the hurdle of registration and certification, the real work can start.
Once registered and certified, the supplier must be included in sourcing events. Again, this is where technology offers an opportunity – not in terms of efficiency, but in recognizing qualified suppliers. Typically, most organizations only invite suppliers that are formally registered through the supplier portal to participate in bidding events.
How often, though, do you source for products or services and find no diversity supplier registered with these capabilities? Do they even exist? Again, this is where technology can help. The database you used to verify the certification should be able to tell you what these suppliers sell. And then to take it one step further, you should be able to include that into your sourcing process to ensure that any time you do an event, you can search and, if you can find unregistered suppliers that are diversity classified, you can ask them to participate.