2018 STATE OF SUPPLIER DIVERSITY— SUPPLIER DIVERSITY PROGRAMS
CONTENTS
01 Introduction
02 Executive Summary
03 Methodology
04 Maturity
05 Primary Drivers of Supplier Diversity Program
06 Finding Diverse Suppliers
07 Supplier Diversity Program Management
08 Tier 1 Diverse Suppliers
09 Small Businesses
10 Self-Classified Suppliers
11 Diverse Supplier Quality
12 Tier 2 Supplier Spend
2
3
4
6
7
8
9
11
12
14
15
16
13 Effectiveness
14 Program Personnel
15 Biggest Challenges
16 Financial ROI
17 Economic Impact of Supplier Diversity Program
18 Supplier Development
19 Reporting to Executive Leadership
20 Global Supplier Diversity
21 The Joys of Supplier Diversity
22 The Future of Supplier Diversity
Conclusion
17
19
21
23
24
26
28
29
31
33
36
We expanded our survey for 2018 and drew more
participants than last year.
2018 State of Supplier Diversity Report—Supplier Diversity Programs 2
In 2017, CVM Solutions published its groundbreaking State of Supplier Diversity Report—Supplier Diversity Programs. Our inaugural survey identified trends, challenges, triumphs, shortcomings, and other interesting findings about the supplier diversity space from the point of view of the professionals within companies’ supplier diversity programs.
We expanded our survey for 2018 and drew more participants than last year. In one year, much stayed the same … and much changed. Many of the previous challenges remain, but new ones have entered the space. For example, global supplier diversity has become a hot new trend. Also, supplier diversity professionals are still trying to figure out where supplier diversity is headed, given the turbulent political climate in the United States.
What hasn’t changed is our strategy for learning where supplier diversity is headed: asking the professionals who live and breathe supplier diversity every day. Professionals who are striving to expand diverse spend and provide opportunities for businesses that might otherwise be shut out of the procurement process. The result is our 2018 report. Once again, the findings are enlightening, offering an incredible view of the current state of supplier diversity and providing clues to where supplier diversity might be heading.
01 INTRODUCTION
02 EXECUTIVE SUMMARY
Our comprehensive survey covered questions, some multiple-choice and some open-ended, that addressed a variety of supplier diversity topics. Some of the more interesting findings, which are detailed throughout this report, include:
The supplier diversity programs of 42 percent of respondents are at least 10 years old.
72 percent of respondents cited corporate social responsibility as a top driver of supplier diversity.
Certification agencies are the primary way of finding diverse suppliers, with 72 percent of participants saying this is one of the methods they employ.
53 percent of supplier diversity programs count small businesses in their diverse spend.
Almost a third of respondents (32 percent) say their supplier diversity programs are very effective.
68 percent of respondents report that they track Tier 2 spend.
38 percent of respondents do not measure the financial ROI of their programs.
23 percent of respondents have a global supplier diversity program.
72 percent of respondents cited corporate social responsibility as a top driver of supplier diversity.
Almost a third of respondents (32 percent) say their supplier diversity programs are very effective.
53 percent of supplier diversity programs count small businesses in their diverse spend.
72%
32%
53%
32018 State of Supplier Diversity Report—Supplier Diversity Programs
<1,000 employees30
20.7%
22.1%
24.1%
33.1%
How many employees work at your company?
1,000 - 5,000 employees325,000 - 20,000
employees35
20,000+ employees48
We asked supplier diversity professionals across all industries to participate in our survey and received 162 responses in December 2017 and January 2018; 124 participants completed the required portion of the survey in its entirety. Only 52 of the 162 responses were CVM Solutions customers, meaning we received a good sampling of participants from companies of all sizes and program maturity levels.
The following chart details the sizes of the respondents’ companies. Though the largest organizations comprised the most respondents, a good mix of small and big companies contributed to our survey:
Which industry/sector best corresponds to your organization?
Accommodation and Food Services 43.3%
43.3%
Construction 54.1%
Agriculture
64.9%
Educational Services 1411.5%
1814.8%
1915.6%
Finance/Insurance 75.7%
75.7%
75.7%
108.2%
108.2%
Government
Healthcare/Pharma
Information
Manufacturing
Non-profit/Humanitarian
Professional, Scientific, and Technical Services
32.5%
Real Estate, Rental, and Leasing
Retail
Telecommunications/Technology
Transportation and Warehousing
Utilities
Wholesale trade
Administrative and Support Services 21.6%
21.6%
21.6%
10.8%
10.8%
03 METHODOLOGY
42018 State of Supplier Diversity Report—Supplier Diversity Programs
In charts throughout this report, answers of “Unsure/Not Applicable” were removed from the results and total percentages.
Finally, responses to open-ended questions that we’ve highlighted have been edited for grammar, clarity, and length.
Only 52 of the 162 responses were CVM Solutions customers, meaning we received a good
sampling of participants from companies of all sizes and program maturity levels.
How many full-time resources work for your supplier diversity program?
The breakdown of full-time employees in respondents’ supplier diversity programs is detailed below:
<1 17% 27
1 36.8% 56
2 19.7% 30
3-4 16.4% 25
5-10 5.9% 9
11+ 53.3%
5
Here are the same results, broken down by company size:
<1 17.2% 5
1
5-10 1
0
3.4%
11+
27.6% 8
3-4 27.6% 8
2 24.1% 7
<1,000
<1 34.4% 11
1
5-10 1
0
3.1%
11+
46.9% 15
3-4
2 12.5% 4
1,000-5,00013.1%
<1 14.7% 5
1
5-10 12.9%
25.9%11+
3-4 17.6% 6
2 23.5% 8
5,000-20,000
35.5% 12
<1 8.3% 4
1
5-10 36.3%
11+
41.7% 20
3-4
2 18.8% 9
20,000+18.8% 9
36.3%
2018 State of Supplier Diversity Report—Supplier Diversity Programs
How long has your supplier diversity program been in place?
Once again, the results of this question suggest that supplier diversity programs—at least the ones who participated in this survey—are well-established. Forty-two percent of respondents were from programs that are older than a decade, compared to 29 percent of programs aging from 3-10 years old—a drop from 35 percent in 2017. Of the 67 participants whose programs are at least 10 years old, 30 were from organizations of more than 20,000 employees.
Not yet in place5
<1 Year13
1-2 Years28
10+ Years67
3-10 Years45
Results by company size:
Not yet in place<1 year 1-2 years 3-10 years 10+ years
20,000+ employees5,000-20,000 employees
<1,000 employees 1,000-5,000 employees
3.2%
8.2%
28.5%
42.2%
17.7%
18.5%12.9%
29.6%
20% 25%62.5%
41.9%
18.5%
57.1%
25.8%
3.7%
2.1%
6.5%
5.7%
29.6%
10.4%17.1%
12.9%
04 MATURITY
62018 State of Supplier Diversity Report—Supplier Diversity Programs
4 Drivers
1 Driver
2 Drivers
3 Drivers5 Drivers
6 Drivers
7 Drivers
8 Drivers
Number of drivers:
6.5%
55.5% 86
72.3% 112
65.8% 102
38.1% 59
43.2% 67
48.4% 75
49% 76
5.8% 9
Customer requirements
Corporate social responsibility
Alignment with corporate culture and workforce inclusiveness
Mirror customer base
Gain market share/enhance brand image
Supplier development
Government compliance
Drive competition and inclusive supply chain
Other
Choose all that apply
What are the primary drivers of your supplier diversity program?
35.5% 55
For the second consecutive year, corporate social responsibility, alignment with corporate culture and workforce inclusiveness, and customer requirements went 1-2-3 in this question that allowed respondents to choose more than one answer. The percentages for these top three, as well as the rest of the answers, practically mirrored last year’s results, suggesting that the priorities for supplier diversity programs remain constant and universal year over year. Also similar was the number of drivers respondents selected—78 percent picked three or more.
SUPPLIER DIVERSITY PROGRAM MANAGEMENT05
7
1610.3%
2012.9%
3220.6%
2113.5%
1912.3%
138.4%
106.5%
2415.5%
2018 State of Supplier Diversity Report—Supplier Diversity Programs
Perhaps the most significant result from this question, in which more than one option could be selected, is that the percentage of respondents who chose Google search dropped from 41 percent to 31 percent, year over year. All of the other categories saw increases, including a six-point jump for certification agencies. These numbers might mean supplier diversity programs are relying on stronger channels, such as supplier locator platforms, and better credentials from the vendors they seek. The results also reinforce the importance of suppliers earning certification from their respective diversity organizations. All in all, these numbers represent a positive trend for supplier diversity.
The results also reinforce the importance of suppliers earning certification from their respective
diversity organizations.
Number of ways respondents find selectors:
1 Way48
2 Ways44
3 Ways35
4 Ways28
5 Ways7
8
How do you locate diverse suppliers?Choose all that apply
Certification agencies
Third-party provider
Google search
Through other diversesuppliers
72.2% 117
51.9% 84
53.7% 87
31% 52
Other 29.6% 48
29.6%
27.2%
21.6%
17.3%
4.3%
06 FINDING DIVERSE SUPPLIERS
2018 State of Supplier Diversity Report—Supplier Diversity Programs
How do you manage your diverse suppliers?
Excel or other database program
54.2%
Other
9.2%
Supplier diversity software
30.1%
We don't
6.5%
Results by company size:
<1,000 employees
Excel or other database program Other We don’t
Supplier diversity software
66.7%18
18.5%5
7.4%2
7.4%2
40%14
37.1%13
20%7
2.9%1
46.8%2244.7%
21
6.4%3
2.1%1
75%24
6.3%2
3.1%1
15.6%5
1,000-5,000 employees
5,000-20,000 employees 20,000+ employees
9
SUPPLIER DIVERSITY PROGRAM MANAGEMENT07
83
46
14
10
2018 State of Supplier Diversity Report—Supplier Diversity Programs
Results by maturity:
Excel or other database program Other We don’t
Supplier diversity software
15%2
<1 year
22%4
1-2 years
3-10 years 10+ years
How do you manage your diverse suppliers?
Last year, we were a bit surprised to discover that more than half of responding supplier diversity programs still used spreadsheets to manage their efforts. The situation has improved for 2018: The percentage of respondents using dedicated supplier diversity software jumped from 19 percent to 30 percent, and programs using Excel or a similar application dropped to 54 percent (down four percentage points). That said, the larger the company, the more likely it has invested in a supplier diversity solution.
10
50%6
25%3
8.3% 116.7%
2
15%2
64%16
8%28%
2
20%5
15%2
22%4
56.8%25
4.5%26.8%
3
31.8%14 15%
2
49.2%32
12.3%8
38.5%25
2018 State of Supplier Diversity Report—Supplier Diversity Programs
1626.2%
1321.3%
1335.1%
513.5%
14.5%
627.3%
1150%
116.7%
233.3%
418.2%
350%
1329.5%
1329.5%
927.3%
927.3%
313.6%
522.7% 7
31.8%
731.8%
522.7%
1045.5%
29.1%
Results by company size:
Results by program maturity:
0-5% Spend 5-10% Spend 10-15% Spend >15% Spend
0-5% 25.2% 33
30.5% 40
5-10% 27.5% 36
16.8% 2210-15%
>15%
08 TIER 1 DIVERSE SUPPLIERS
522.7%
<1,000 employees
1,000–5,000 employees
515.2%
5,000–20,000 employees
818.2%
1022.7%
20,000+ employees
718.9%
1232.4%
1931.1%
1321.3%
<1 year
1-2 years >10%
3-10 years
11
What percentage of your Tier 1 supplier spend is with diverse suppliers?
For 2018, we expanded this question to include a choice of more than 15 percent (last year’s largest option was >10 percent). Impressively, 31 percent of respondents picked this additional option, and another 17 percent selected 10-15 percent. The combined results for the two categories far outpaced the 36 percent of respondents who chose more than 10 percent in 2017. Just as impressive is that more than two-thirds of respondents whose companies employ fewer than 1,000 people derive at least 10 percent of their Tier 1 spend from diverse suppliers. These findings cement two important ideas: Organizations are increasingly utilizing diverse suppliers, and smaller organizations can still make a splash with their supplier diversity programs.
1030.3%
2018 State of Supplier Diversity Report—Supplier Diversity Programs
09 SMALL BUSINESS
6653.2%
5846.8%
YesNo
12
Does your program count small businesses as diverse suppliers?
This question is new for 2018, and we asked it because small businesses are sometimes the forgotten stepchild in supplier diversity. Our survey found that just over half of supplier diversity programs do consider small businesses as diverse.
Interestingly, when the results are broken down by program size and maturity, the smaller the company (fewer than 1,000 employees) and younger the program, the more likely a small business is considered diverse. Perhaps midsized businesses know the struggles of being overlooked because of size and, therefore, pay closer attention to small businesses. Also, fledgling supplier diversity programs may struggle to find qualified vendors; including small businesses in their scope opens up more opportunities to increase diverse spend.
These results might draw one more important correlation. As some of you may know, government contracts require organizations to subcontract a certain percentage of spend to small businesses. In our question asking respondents to identify the primary drivers behind their program, 48 percent stated they need be compliant with government contracts, which is comparable to the 53 percent who identify small businesses as diverse. As we continue to produce these annual reports, this will be an interesting connection to follow.
2018 State of Supplier Diversity Report—Supplier Diversity Programs
13
Results by company size:
Yes
No
68.2% 15
<1,000 employees
Yes 42.1% 8
No 57.9% 11
1,000 - 5,000 employees
Yes 51.6% 16
No 48.4% 15
48.8% 21
5,000 - 20,000 employees
Yes
51.2% 22No
20,000+ employees
Results by maturity:
Yes 66.7% 4
No 33.3% 2
<1 Year
Yes 68.2% 15
No 31.8% 7
1-2 Years
Yes 53.1% 17
No 46.9% 15
47.5% 28
3-10 Years
Yes
52.5% 31No
10+ Years
31.8% 7
2018 State of Supplier Diversity Report—Supplier Diversity Programs
5946.8%
942.9%
1257.1%
6753.2%
SELF-CLASSIFIED SUPPLIERS10
Does your program count self-classified as diverse suppliers?
Certification continues to be important for supplier diversity programs and the suppliers they contract. This question, new for 2018, shows a relatively even split on whether programs count self-classified suppliers in their spend, with a majority—overall and across most company sizes and all maturity levels—answering no. Spend and documentation requirements aren’t generally flexible, so certification is essential for accurately achieving supplier diversity goals.
YesNo
By company size:
YesNo8
40%12
60%
YesNo
<1,000 employees 1,000-5,000 employees
1648.5%
1751.5%
YesNo22
51.2%21
48.8%
YesNo
5,000-20,000 employees 20,000+ employees
240%
360%
By program maturity
YesNo
1150%
1150%
YesNo
<1 Year 1-2 Years
1545.5%
1854.5%
YesNo30
49.2%31
50.8%
YesNo
3-10 Years 10+ Years
142018 State of Supplier Diversity Report—Supplier Diversity Programs
0-25% 50-75% 75-100%25-50%
Results by company size:
In your estimation, what percentage of diverse suppliers who won a bid met or exceeded expectations of quality, efficiency, and cost savings last year?
This is another new question for this year. Curiously, only 83 respondents chose to answer this optional question. In a way, such apprehension is understandable; admitting that a supplier might not be living up to expectations in terms of quality and efficiency may feel like a step backward for programs working hard to expand diverse spend. Now for the good news: Of the 83 respondents, nearly half said that at least 75 percent of diverse suppliers are exceeding expectations.
DIVERSE SUPPLIER QUALITY11
15
<1,000 employees
211.8%
211.8%
10
17.6% 3
0-25%
25-50%
50-75%
75-100% 58.8%
1,000 - 5,000 employees
525%
11
10% 2
10% 2
10.5% 2
7.4% 2
0-25%
25-50%
50-75%
75-100% 55%
5,000-20,000 employees
5
0
63.2% 12
0-25%
25-50%
50-75%
75-100% 26.3%
11.1% 3
20,000+ employees
14
29.6% 8
0-25%
25-50%
50-75%
75-100% 51.9%
12 Respondents
40 Respondents
7 Respondents
24 Respondents
14.5%
8.4%
28.9%
48.2%
2018 State of Supplier Diversity Report—Supplier Diversity Programs
12 TIER 2 SUPPLIER SPEND
947.4%
1052.6%
By company size:
YesNo15
50%15
50%
YesNo
<1,000 employees 1,000-5,000 employees
2573.5%
926.5%
Yes
No
3984.8%
715.2%
Yes
No
5,000-20,000 employees 20,000+ employees
457.1%
342.9%
By program maturity:
YesNo
1260%
840%
YesNo
<1 Year 1-2 Years
2569.4%
1130.6%
Yes
No
4777%
1423%
Yes
No
3-10 Years 10+ Years
Do you measure Tier 2 supplier spend?
Our Tier 2 question drew almost the exact same result as last year (68 percent in 2018, 69 percent in 2017). Also repeating is the trend that the larger the company and more mature the supplier diversity program, the more likely Tier 2 is measured. That said, these numbers might grow as Tier 2 spend increasingly becomes a smart way to boost supplier diversity program effectiveness.
16
8868.2%
4131.8%
Yes
No
2018 State of Supplier Diversity Report—Supplier Diversity Programs
826.7%Neither effective nor ineffective
313%Somewhat ineffective
0Very ineffective
Results by company size:
<1,000 employees
28.7%Neither effective nor ineffective
52.2% 12Somewhat effective
6Very effective 26.1%
1,000-5,000 employees
516.7%Very ineffective
40% 12Somewhat effective
Somewhat ineffective 0
5Very effective 16.7%
5,000-20,000 employees
13.3%Very ineffective
43.3% 13Somewhat effective
413.3%Neither effective nor ineffective
Somewhat ineffective 310%
9Very effective 30%
20,000+ employees
Very ineffective 0
30.8% 12Somewhat effective
512.8%Neither effective nor ineffective
Somewhat ineffective 37.7%
19Very effective 48.7%
17
How effective would you say your supplier diversity program is?
The big news with this question is a nice jump of respondents saying their programs are very effective—up 7 percentage points to 32 percent in 2018. Another 40 percent of participants feel their programs are somewhat effective; add it up, and that’s almost three-quarters of respondents who are generally satisfied with the results of the efforts. The largest companies reported the most effectiveness, as did more mature programs. The latter finding should be encouraging for newer supplier diversity programs—the hard work and patience they are putting in now can yield benefits in the long term.
Somewhat effective
40.2% 49
13 EFFECTIVENESS
2018 State of Supplier Diversity Report—Supplier Diversity Programs
Very effective
32% 39
4.9% 6
Very ineffective
Somewhat ineffective
7.4% 9
Neither effective nor ineffective
15.6% 19
By program maturity:
<1 Year
220%Neither effective nor ineffective
50% 5Somewhat effective
220%Very ineffective
Somewhat ineffective 0
1Very effective 10%
1-2 Years
211.8%Very ineffective
47.1% 8Somewhat effective
423.5%Neither effective nor ineffective
Somewhat ineffective 211.8%
1Very effective 5.9%
3-10 Years
0Very ineffective
38.2% 13Somewhat effective
617.6%Neither effective nor ineffective
Somewhat ineffective 25.9%
38.2% 13Very effective
10+ Years
Very ineffective 0
39.6% 21Somewhat effective
59.4%Neither effective nor ineffective
Somewhat ineffective 47.5%
23Very effective 43.4%
182018 State of Supplier Diversity Report—Supplier Diversity Programs
<1 Resource 2 Resources 3-4 Resources 5-10 Resources 11+ Resources1 Resource
If it feels like you are going it alone with your company’s supplier diversity efforts, you aren’t, well, alone—37 percent of respondents have just one full-time employee dedicated to supplier diversity, and another 18 percent rely on someone who has other responsibilities, possibly in procurement or HR. Smaller companies and younger programs may have fewer resources, but that doesn’t mean they can’t achieve their supplier diversity goals.
How many full-time resources work for your supplier diversity program?
27 Respondents
30 Respondents
25 Respondents
9 Respondents
5 Respondents
56 Respondents
5.9%3.3%
36.8%19.7%
17.8%
16.4%
Results by company size:
19
<1,000 employees
5,000–20,000 employees
1,000–5,000 employees
20,000+ employees
17.2%5
14.7%5
34.4%11
8.3%4
3.4%1
2.9%1
6.3%3
6.3%3
5.9%2
3.1%1 3.1%
124.1%7
23.5%8
18.8%9
12.9%4
27.6%8
17.6%6
18.8%9
27.6%8
35.3%12
46.9%15
41.7%20
14 PROGRAM PERSONNEL
2018 State of Supplier Diversity Report—Supplier Diversity Programs
Results by program maturity:
<1
2 2
0
0
0
16.7%
433.3%
3-4
650%
5-10
11+
1
<1 year
<1
2 5
0
0
21.7%
14.3%
626.1%
3-4
1147.8%
5-10
11+
1
1-2 years
<1
2 716.7%
614.3%
24.8%
12.4%
921.4%
3-4
1740.5%
5-10
11+
1
3-10 years
<1
2 14
710.6%
21.2%
1725.8%
57.6%
46.1%
3-4
1928.8%
5-10
11+
1
10+ years
202018 State of Supplier Diversity Report—Supplier Diversity Programs
Not enough Hispanic-owned diverse suppliers in our typical categories of spend.
“Having more resources dedicated to supplier diversity.”
“Having the company realize it is a different sales vertical within the prospective supplier base.”
“I wish we had more diverse suppliers submitting proposals.”
“Identifying diverse suppliers that can scale and grow rapidly with us.”
“Large diverse vendors do a great job, but some of the small vendors need a lot of mentoring. Easily determining the economic impact.”
“State rules that require low bid, with very little wiggle room for diverse suppliers to compete.”
“Having the right tools to measure, and effectively communicating to all business units the importance of participating in finding diverse suppliers.”
“Identification of certified diverse firms; convincing self-certified firms to get certified.”
“My biggest challenge is wanting to spread the word about supplier diversity across the whole company and receive a positive response. Getting all business units involved in supplier diversity.”
“Identifying qualified suppliers in specialty spaces.”
21
15 BIGGEST CHALLENGESWhat is your biggest challenge in the supplier diversity space?
Several themes emerged in the answers we received from this open-ended question. First, finding and contracting qualified diverse suppliers, particularly in some niche industries, remains a struggle. Second, executive buy-in was cited as a major challenge; supplier diversity professionals may lack the C-suite support or understanding needed to grow their programs. Here is a sampling of the dozens of great responses survey participants provided to this question:
“Changing the perception that diverse business equals less quality and more risks.”
“Convincing internal stakeholders to move away from ‘brand-name’ suppliers when able.”
“Ensuring MWOBs are consistently included in all competitive contracting opportunities.”
“Finding and maintaining vendors that are diverse.”
“Competing priorities. Lack of commitment at the upper-management level.”
“Developing a pool of MBE, WBE, DBEs to perform the work.”
“Ensuring the supplier’s diversity certification.”
“Finding diverse suppliers in the agencies category (creative agencies/digital agencies). Also, companies acquiring smaller, diverse companies greatly impact our diverse spend as we are technically not spending with a diverse supplier anymore.”
“Finding diverse suppliers that can handle the requirements for our business.”
2018 State of Supplier Diversity Report—Supplier Diversity Programs
22
The belief that supplier diversity is no longer necessary. Additionally, the old model for supplier diversity doesn't fit the new reality. If it's to meet the ever-more diverse customer base, customers are not saying they care. In other words, customers, investors, shareholders, board members need more education to make bolder demands and to do so publicly.
The biggest challenge is having total support of management who understand the value that diverse suppliers bring to the process.
Our procurement mission is, in part, to reduce and consolidate our supply base, negotiating global deals with suppliers that can service us globally and consistently, while giving us the best competitive advantage. This mission can be in conflict with our goal of increasing spend with diverse suppliers—which are often the smaller, more local or regional suppliers.
The biggest challenge in the supplier diversity space is diverse suppliers not taking the necessary steps to identify their weaknesses and then utilizing the right resources to close those gaps. If they want to compete with the bigger companies, they must be better and not rely on the diversity card. … The mentality of they can do everything (e.g., HR, accounting, procurement, IT, and so on) great is a hindrance to their success. … One of the biggest weaknesses I see with a lot of diverse suppliers is their inability to manage their costs, which results in them trying to increase pricing to maintain their margins.
Financial stability.
2018 State of Supplier Diversity Report—Supplier Diversity Programs
16 FINANCIAL ROI
Dollars saved by using diverse suppliers that were less costly
31% 45
Revenue from customers with diverse spend requirements
32.4% 47
Grants received related to having a successful program
Amount of sales to the government
11% 16
2.8% 4
37.9% 55
3.4% 5
Economic impact/of jobs created
20.7% 30
Other
Do not have a measure
Customer revenue and dollars saved from using diverse suppliers were virtually even as the top two ways supplier diversity programs measure ROI. Surprisingly, another option had both beaten: 38 percent of respondents said they do not measure ROI. In a previous section, executive buy-in is mentioned as a challenge for supplier diversity programs. Showing concrete ROI, possibly with the help of dedicated supplier diversity software, can go a long way toward securing that buy-in.
How do you measure the financial ROI of your supplier diversity program? (Choose all that apply)
23
33 Respondents
31 Respondents
13 Respondents
2 Respondents
1 Way 3 Ways 4 Ways2 Ways
After removing the responses of “Do not have a measure,” 58 percent of participants said they measure ROI by more than one method. Gauging the performance of your program is possible, and you don’t need to limit yourself to one strategy to get there.
No 41.8%
39.2%
16.5%
2.5%
2018 State of Supplier Diversity Report—Supplier Diversity Programs
3631.6%
7868.4%
Yes
No
ECONOMIC IMPACT OF SUPPLIER DIVERSITY PROGRAM17
Do you measure the economic impact of your program?
This question delivered a welcome surprise: 32 percent of respondents said yes, as opposed to just 19 percent in 2017. Although we would still like to see this number higher, this increase is encouraging. Furthermore, the jump was evident across company sizes and program maturities.
Respondents who answered “yes” were then asked a sub-question about how they measure the economic impact of their supplier diversity programs. The responses included:
24
“By calculating the amount of jobs created as a result of a partnership with our company.”
“Economic impact study conducted in partnership with local (MBA) business school.”
“Jobs created by diverse suppliers as a result of having business with us.”
“Reporting spend from our diversity suppliers to certain key customers.”
“By revenue.”
Results by company size:
YesNo 38.1%
61.9%
<1,000 employees
YesNo
30.3%
69.7%
5,000-20,000 employees
YesNo 39.5%
60.5%
20,000+ employees
Yes
No
13.6%
86.4%
1,000-5,000 employees
Using a third party to analyze data and create economic impact report.
2018 State of Supplier Diversity Report—Supplier Diversity Programs
By program maturity:
25
<1 Year
Yes
No
12.5%
87.5%
3-10 Years
Yes
No
25.8%
74.2%
1-2 Years
Yes
No27.8%
72.2%
10+ Years
YesNo 41.2%
58.8%
32% of respondents measure the economic impact of their supplier
diversity programs.
2018 State of Supplier Diversity Report—Supplier Diversity Programs
By program maturity:By company size:
Yes, pretty informal
Yes, a formal program
Just getting started/ In discussion
No
18 SUPPLIER DEVELOPMENT
26
Do you have a supplier development program?
The number of respondents with a formal supplier development program plummeted from 35 percent in 2017 to 24 percent this year. Combined, 51 percent of respondents reported at least an informal program, which is down from 59 percent last year. Even large companies, who in theory have the most resources, reported a big drop in formal programs (33 percent, compared with 45 percent in 2017). Is this a statistical quirk (despite the larger sample size), or are companies placing less of an emphasis on supplier development despite its known advantages? This will be an area to watch over the coming years.
Yes, pretty informalJust getting started/in discussion
Yes, a formal programNo
26.8%
26.2%24.2%
22.8%
29.6%
22.2%
29.6%
18.5%
26.7%
13.3%
20%
40%
28.6%
22.9%
25.7%
22.9%
20.8%
33.3%
20.8%
25%
33.3%
8.3%
25%
33.3%
21.7%
8.7%
34.8%
34.8%
32.5%
25%
25%
17.5%
26.2%
35.4%
16.9%
21.5%
<1,000 employees
1,000-5,000 employees
5,000-20,000 employees
20,000+ employees
<1 year
1-2 years
3-10 years
10+ years
2018 State of Supplier Diversity Report—Supplier Diversity Programs
27
Number of full-time employees in supplier diversity program:
Yes, pretty informal
Yes, a formal program
Just getting started/ In discussion
No
< 1 full-time resource
25.9%3.7%
18.5%
51.9%
1 full-time resource
24.5%
18.9%
24.5%
32.1%2 full-time resources
20%
30%
30%
20%
3-4 full-time resources
33.3%
45.8%
20.8%
5-10 full-time resources
33.3%
33.3%
11.1%
22.2%11+ full-time resources
60%
40%
2018 State of Supplier Diversity Report—Supplier Diversity Programs
7% 11
We don't
As needed
12.7% 20
Quarterly or more frequently
57% 90
Once a year or longer
13.9% 22
Semi-annually
9.5% 15
How often do you report to executive leadership on sup-plier diversity?
More than half of respondents (57 percent, up from 48 percent last year) regularly report to executives on the progress and success—or lack thereof—of their supplier diversity programs. Just seven percent said there wasn’t any reporting at all. Again, measuring diverse spend, ROI, and economic impact gives you good news to report to leadership, who in turn might be more enthusiastic about supporting your goals.
REPORTING TO EXECUTIVE LEADERSHIP19
28
Results by company size:
<1,000 employees
We don't 26.9%
As needed 724.1%
Quarterly or more frequently 1655.2%
Once a year or longer 10.3% 3
Semi-annually 13.4%
1,000-5,000 employees
We don't 515.6%
As needed 515.6%
Semi-annually 618.8%
5,000-20,000 employees
We don't 0
As needed 38.6%
Semi-annually 38.6%
Quarterly or more frequently 2262.9%
Once a year or longer 20% 7
20,000+ employees
We don't 4.3% 2
As needed 36.4%
Semi-annually 36.4%
Quarterly or more frequently 3370.2%
Once a year or longer 12.8% 6
Quarterly or more frequently 1134.4%
Once a year or longer 515.6%
2018 State of Supplier Diversity Report—Supplier Diversity Programs
3323.2%
10976.8%
Do you currently have a global supplier diversity program?
Global supplier diversity might be the next big trend, but companies aren’t quite there yet. Just 23 percent of respondents said they have a global program, although companies with more than 20,000 employees are more likely to have answered yes to this question. Furthermore, 28 percent of respondents are planning to go global in the next three years, with not only large companies leading the way toward this goal, but also—and surprisingly—supplier diversity programs less than a year old.
Yes
No
413.8%
2586.2%
By company size:
Yes
No5
20%20
80%
Yes
No
<1,000 employees 1,000-5,000 employees
515.2%
2884.8%
Yes
No
Yes16.1%
83.9%No
1531.9%
3268.1%
Yes
No
5,000-20,000 employees
<20,000 employees
20,000+ employees
GLOBAL SUPPLIERDIVERSITY20
292018 State of Supplier Diversity Report—Supplier Diversity Programs
Does your organization plan to implement a global supplier diversity program in the next three years?
Global supplier diversity might be the next big trend, but companies aren’t
quite there yet.
30
2328.4%
5871.6%
Yes
No
2018 State of Supplier Diversity Report—Supplier Diversity Programs
31
THE JOYS OF SUPPLIER DIVERSITY
Supplier diversity isn’t just a means to an end—for many professionals, it is as important philosophically as it is financially. We again asked survey respondents what they enjoyed most about supplier diversity, and once again, we received some great answers:
What do you enjoy most about supplier diversity?
21
It gives me an opportunity to make a valuable contribution to the hospital’s mission of supporting those who provide the care to our patients.
“Advocating for equity, diversity, and inclusion and seeing the reality of real-time/real-life contracts for all. Making inroads for small business concerns beyond supplier diversity to a competitive culture of equality for all businesses.”
“As the supplier diversity manager, I get to go to a ton of really inspiring and cultured events. I like being able to help small or startup diverse suppliers get a foot in the door or provide them with advice to grow their business. The company I work for is Native American-owned and started in a garage, and now we are very successful, so it is always nice to be able to share our story of struggle and success with other businesses in the same shoes and offer advice and help with certifications and landing business. We believe it is imperative to give back.”
“Being able to support the community and growing economy.”
“Ability to see (while not currently measured) the impact our diverse suppliers have on the community.”
“Being a part of something meaningful that positively impacts our brand and sales.”
“Being able to support the growth and inclusion of diverse companies in our communities.”
“Creating an inclusive supply chain and economic opportunities for historically underutilized suppliers.”
“Growing the economy; building relationships; saving money.”
“I enjoy most working with so many diverse and talented individuals who can help bring unique perspectives and solutions to our needs.”
“Building the program and developing different approaches to sourcing strategies. Expanding the company's social responsibility platform.”
“Giving qualified diverse suppliers an opportunity to compete against larger companies.”
“Helping to support a wide range of businesses.”
“I have been in supplier diversity for almost 12 years and love the opportunities it creates for diverse firms. The history of why supplier diversity was created is the driving power that makes me love the work I do. The fact that we have and monitor workforce within our lower income communities on our projects makes me proud that we are proving workforce development. Supplier diversity it not just a social service action; it creates communities of opportunity, creativity, and jobs—we are helping to build up our communities!”
2018 State of Supplier Diversity Report—Supplier Diversity Programs
32
“It is a terrific way to earn new business.”
“Making a difference.”
“The passion I have, and also being in a position to help suppliers grow and create new jobs that impact the communities we serve.”
“Seeing the gratitude of the successful diverse businesses after contract award.”
“Social and economic benefits it brings to my organization and our community.”
“It's great to know that I work for a company that ensures a diverse supplier base in the procurement of goods and services as a way of providing opportunity for these small/diverse suppliers to survive and/or gain share in the market.”
“Meeting and connecting with those who are willing to do more than just dream but seek and find alignment with those with similar goals to make a difference in the economy, community, and individual lives.”
“Seeing small, minority-, women-, and disadvantaged-owned businesses land opportunities and create jobs for their community.”
“Seeing the success stories and feeling like I actually make an impact on people's lives.”
“Supplier diversity is a mechanism for inclusiveness. It allows for qualified, diverse suppliers to access business opportunities that they may not have otherwise. The field also has far-reaching benefits: It helps companies be more accountable to supplier diversity requirements of their clients, thereby creating more opportunities. These opportunities, in turn, help diverse suppliers grow in capacity, which thereby helps their communities develop economically.”
“The ability to engage with innovative businesses who are very passionate about what they do and possess unlimited potential.”
“The knowledge that comes from a diverse set of viewpoints.”
“Working with entrepreneurs, and knowing that I'm making a difference.”
“Events allow me to meet many interesting and new people. In addition, hitting the goals for our program is a challenge that I take personally.”
“Supporting diverse vendors and connecting them with opportunities. Many are a bit ‘lost’ in the federal space, so fulfilling to help them find their way.”
“The collaboration required to drive change in a positive direction—internally with business partners and stakeholders, externally with suppliers, customers, and advocacy organizations.”
“The inclusion of all.”
“Working with diverse suppliers to get them into the RFP process. Coaching and mentoring the diverse suppliers and seeing them win contracts against corporate entities.”
2018 State of Supplier Diversity Report—Supplier Diversity Programs
“Continued globalization of supplier diversity, and MWBEs having supplier diversity program initiatives.”
“As more suppliers are aware of their options, I believe there will be more certified diverse suppliers.”
“Continued growth and increase.”
“Global, I hope!”
“Afraid it will lose importance.”
“Continued decline.”
“Depending on laws that stay in place regarding tax incentives for using minority businesses, I think this will just keep growing this part of any industry. There is money out there to get, so I think more businesses will start to hone in on getting involved with supplier diversity programs and minority organizations.”
The replies to this question continue to be fascinating. One theme we noticed is that there is a little less optimism than last year from some respondents about the future of supplier diversity. This pessimism wasn’t as pronounced as it was in our companion survey of diverse suppliers, but it is there and is something to keep an eye on as we approach the next decade. Here is a sampling of some of the more interesting answers from our survey participants.
Where do you see supplier diversity going in the next 3-5 years?
THE FUTURE OF SUPPLIER DIVERSITY
33
22
2018 State of Supplier Diversity Report—Supplier Diversity Programs
34
“Greater recognition of Tier 2 reporting.”
“Hard to say. If the current state of human resources remains, I see it creeping along with some small growth/gains.”
“I believe there will be a movement to restrict certification to U.S.-born/based diverse suppliers.”
“I see it continuing to grow with pre-qualifications that eliminate large union companies that do not promote a quality product or integrity.”
“Greater utilization of technology and heightened level of data integrity to support supplier diversity objectives. Further program expansion globally, including focus on social enterprises. Program more fully integrated into the business. Expanded focus on Tier 2 reporting—to customers and by prime suppliers.”
“Hopefully increasing in importance. In the light of all the scandals against women and stories of violence against minorities of all kinds, I feel the pro-grams in corporations are even more important than ever before when there is an administration that does not value diversity in any way.”
“I envision supplier diversity being a core focus across major organizations, with budgets set aside specifically for program expansion, supplier development, and integration with sustainability and social responsibility. I also see staffing for supplier diversity growing with dedicated individuals assigned to the function.”
I see it becoming more of a qualifier from prospective customers—that customers’ clients are becoming more aware consumers.
“I think that the current federal administration is already causing a shift in opinion, and I would not be surprised to see few new supplier diversity programs being initiated, and we might even see the cessation of supplier diversity activities from all but the most established and mature programs.”
“I would hope that we get to the point that we do not need it as much, as corporations, organizations, firms, and so on, will already have built diverse suppliers into their supply chain processes and not treat it as a separate entity or look at it as a negative requirement. To be honest, I think the program has started to focus more on corporate rewards for ‘doing the right thing’ instead of focusing on the real mission: to support our growing diverse businesses within our communities.”
“In the next few years, it appears that there will be increased competitiveness among supplier diversity programs. Companies with supplier diversity programs not only benchmark with other companies, but are also attempting to outperform these companies. As a result, there may be more robust supplier diversity programs as competitors attempt to surpass each other.”
“I truly believe you will see a greater focus on revenue generation for supplier diversity. I also see greater information surfacing to assist supplier diversity professionals with becoming more effective in communicating the importance of the supplier diversity program to their C-suite. And finally, I see a greater influx of supplier diversity professionals who are more business-focused and less HR.”
“If we do our due diligence, supplier diversity will be integrated into organiza-tions’ daily operations.”
Increased visibility. New innovative tools via technology and data analytics.
2018 State of Supplier Diversity Report—Supplier Diversity Programs
35
“Likely not much change.”
“Onwards and upwards! The buy-in and the perceived value is only growing and spreading.”
“Supplier diversity will increase in its presence amongst corporations and municipalities, especially those smaller firms who have never been challenged to think outside of the box and include diverse suppliers as a fundamental concept of their overall business culture.”
“There's no pressure to do supplier diversity—therefore, companies will continue to blow it off.”
“More requirements.”
“I really have no idea about the future of supplier diversity, which is a problem.”
“Increasingly becoming the norm.”
“Moving away from the traditional ways of sourcing diverse suppliers. Using other corporate assets to develop, source, and market our program and diverse supplier base.”
“Supplier diversity can be more impactful in the next 3-5 years if supplier diversity professionals become more honest of their program performance. A lot of programs are ineffective, and instead of fixing the issues, the focus becomes more about looking good instead of being good.”
“The current political environment has the potential to devalue these programs over the next 3-5 years.”
“More formalized.”
“I see the space and the profession under attack socially, politically, and economically.”
2018 State of Supplier Diversity Report—Supplier Diversity Programs
2018 State of Supplier Diversity Report—Supplier Diversity Programs
LEARN MORE
The results of our second supplier diversity professionals survey show that although supplier diversity programs are expanding and finding success, many still face challenges in achieving and surpassing their goals. Your answer to overcoming many of these challenges might present itself in a supplier diversity management solution that helps with analytics, data enrichment, Tier 2 spend, economic impact, and discovering new suppliers. CVM Solutions offers platforms that achieve these goals and unlock your supplier diversity program’s full potential. Visit our website at www.cvmsolutions.com or call us at 708-236-2000 to learn more.
We hope that you enjoyed this report and the insight it provided. A special thanks to all of the amazing respondents who participated; we couldn’t have done it without your thoughtful responses. If you would like to participate in our 2019 survey, let us know here and we’ll notify you when we release it.
CONCLUSION
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