An Example of Success
Prior to implementing a best-in-class eProcurement system with supplier diversity management capabilities, a public New York construction agency had a six-month average processing time for qualifying new suppliers. There were separate, redundant paper applications for qualification and certification, and re-qualification required an entirely new submission.
The agency relied on paper-based communications with contractors and between divisions, primarily via forms and form letters that were difficult to coordinate and did not provide a comprehensive record. This cumbersome process was time-consuming and led to lapsed applications that negatively impacted suppliers’ ability to bid on contracts and the agency’s ability to create sourcing events. The agency also relied on separate supplier data systems that contained multiple supplier files and offered limited data validation. In addition, the agency struggled with paper-based historical records that were located off-site, which delayed access and limited the ability to search efficiently for supplier data.
After implementing a supplier information management solution to integrate the procurement functions with supplier communications, the agency was able to increase efficiency and improve communications. The agency established an automated workflow that eliminated duplications and allowed for faster qualification of suppliers. Suppliers are now able to register and qualify themselves online, which has reduced errors and freed procurement specialists from a lot of data entry. The process is now user-friendly for both suppliers and procurement professionals and can be easily modified.
Did you notice that I completely skipped the topic of price and quality? There is a perception that diversity, local and green spending costs more because smaller suppliers simply cannot possibly offer the same scale. In drawing this conclusion, however, many people are mistaking price for total cost.
Smaller or niche suppliers often are able to offer the kinds of services not available from big suppliers. Local companies typically are able to respond to needs quickly and offer specialized knowledge about their products or services. I am a firm believer that people are smart enough to understand these differences. Since procurement professionals shop for a living, I am an even bigger believer that they know what constitutes a good buy and what does not.
In the end, you need to give the people involved in the procurement process time to evaluate the products and the services. This means taking very little time worrying about the administration of a diversity program, and lots of time for regular shopping.