the 2018 state of supplier diversity - supplier diversity...

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


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%


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


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%


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


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%


<1,000 employees

Excel or other database program Other We don’t


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


Results by maturity:

Excel or other database program Other We don’t


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


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 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%


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%


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.


13


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


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


1648.5%

1751.5%

YesNo22

51.2%21

48.8%

YesNo


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


0-25% 50-75% 75-100%25-50%


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

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%


12 TIER 2 SUPPLIER SPEND

947.4%

1052.6%

By company size:

YesNo15

50%15

50%

YesNo


2573.5%

926.5%

Yes

No

3984.8%

715.2%

Yes

No


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


826.7%Neither effective nor ineffective

313%Somewhat ineffective

0Very ineffective


<1,000 employees


52.2% 12Somewhat effective

6Very effective 26.1%


516.7%Very ineffective

40% 12Somewhat effective

Somewhat ineffective 0






Somewhat ineffective 310%

9Very effective 30%

20,000+ employees

Very ineffective 0



Somewhat ineffective 37.7%


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


Very effective

32% 39

4.9% 6

Very ineffective

Somewhat ineffective

7.4% 9

Neither effective nor ineffective

15.6% 19


<1 Year

220%Neither effective nor ineffective

50% 5Somewhat effective

220%Very ineffective

Somewhat ineffective 0

1Very effective 10%

1-2 Years






3-10 Years

0Very ineffective




38.2% 13Very effective

10+ Years

Very ineffective 0






<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%


19

<1,000 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


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


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.”


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.


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%


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.”


YesNo 38.1%

61.9%

<1,000 employees

YesNo

30.3%

69.7%


YesNo 39.5%

60.5%

20,000+ employees

Yes

No

13.6%

86.4%


Using a third party to analyze data and create economic impact report.



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.


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



20,000+ employees

<1 year

1-2 years

3-10 years

10+ years


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%


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


<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%


We don't 515.6%

As needed 515.6%

Semi-annually 618.8%


We don't 0

As needed 38.6%

Semi-annually 38.6%


Once a year or longer 20% 7

20,000+ employees

We don't 4.3% 2

As needed 36.4%

Semi-annually 36.4%


Once a year or longer 12.8% 6


Once a year or longer 515.6%


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


515.2%

2884.8%

Yes

No

Yes16.1%

83.9%No

1531.9%

3268.1%

Yes

No


<20,000 employees

20,000+ employees

GLOBAL SUPPLIERDIVERSITY20


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


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!”


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.”


“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


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.


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.”



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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