These systems enable users to expand beyond registered suppliers to reach a larger universe of vendors exist and are worth checking out.
Does Size Matter?
What about the problem of size and the skill set to participate in all these difficult procurement processes? I could just brush it off and tell the world that there are no longer any people that do not know how to use the Internet or how to create a Word or Excel document. So everybody should just be able to go online and work with us, right?
But we all know that this is simply not true. What is interesting is that size and tech smarts are often not the right criteria to use when evaluating whether suppliers are able and willing to participate. Even a larger supplier is often not interested in loading its product catalogs to an eProcurement system if the process to do so is onerous. The supplier doesn’t want to set a precedent for their considerable customer base and create a new cost component if they can avoid it. A small supplier will often not even participate in a bid if the documentation burden is too large.
Simply put, what really turns vendors off from participating in sourcing or other procurement processes is the effort it takes to participate.
This is where vendor support services come into play. If you are serious about creating a level playing field for diversity-based suppliers, you need to make sure you have a full-time support staff to help suppliers understand the process and answer questions. This piece is just as important for the large suppliers as it is for small suppliers.
Guide the People that Buy the Most
Did you know that most daily purchases are not done by Procurement? So here you are with a great diversity or local policy, cool registration and classification processes, great technology for sourcing and.... Oops! The people in your organization that are actually buying goods and services have no idea how to identify diversity suppliers.
This is where marketplace technology comes into play. The basic idea of the marketplace is to create a one-stop shop for all signed contracts and catalogs for your internal organization. The marketplace acts like a simple e-commerce site. Besides contract compliance and ease-of-use for end-user shoppers, marketplaces offer the ability to promote the diversity supplier community to all those people that today just shop with their p-card wherever they want.
Simply put, the marketplace allows diversity suppliers to function and compete with bigger suppliers, who try to dazzle us with punch-out or premier Web sites that, conveniently, exclude their other competitors.
Report, Measure and Analyze
The last best practice on my list is probably the most important: reporting. As the saying goes, if you do not know where you are, you do not know where you are going either – and this certainly applies to supplier diversity.
The process of capturing and accurately classifying supplier spend has long challenged purchasing professionals. However, this visibility is essential to a successful diversity program. The capacity to report and analyze diversity suppliers and related spend creates visibility and accountability throughout the organization.
Most procurement solutions offer a variety of reporting options that allow procurement managers to analyze spend using various parameters. Procurement managers can identify how much spend is going to diversity suppliers, who the top suppliers are, which business unit purchased what product and so on. With these types of reporting functions in place, procurement managers can flag diversity spend, spot trends and plan accordingly.
Some of the reporting challenges go beyond just recording transactions. A lot of purchases happen on the spot or involve a p-card without supplier classification. In these cases, you need to qualify suppliers after the fact for reporting purposes as well. Other challenges include reporting second-tier spend for subcontracted diversity suppliers. Classification upfront by the first-tier supplier or classification after the fact is a key to success. A good reporting solution, whether it is a simple spreadsheet or a full-blown data warehouse, is a necessity.