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good, it would be nothing more than an informative article. If the results weren’t so good, it usually created a firestorm in the community resulting in meetings with community leaders pushing for reforms for increased opportunities, an overhaul of the program, or even the removal of the supplier diversity leader. These stakeholders hold organizations accountable to their commitment to create opportunities for small and diverse businesses and push them when they feel their actions aren’t enough or results aren’t being achieved.

      That’s how external stakeholders can drive change. Sometimes public outcry is needed before the organization takes action. Also, this interaction forms the basis for a long-term collaborative relationship. External stakeholders know what businesses in the community need. Internal stakeholders know what resources are available and how to navigate internally to get it done.

Recognizing Why Organizations Are Recommitting to Supplier Diversity

      As the new law of the land, the diversity-related executive orders of the late 1960s and early 1970s were based on the government’s desire to do something to address systemic economic disparities within the Black community. (See Chapter 2 for more on these orders.) Arguably, supplier diversity didn’t always live up to its expectations for any number of reasons, whether it was lack of total commitment by the organization; little or no compliance, oversight, and enforcement; or just the vagueness regarding exactly what to do. Today, society is still facing calls for change to address the same economic disparities.

      But companies have a chance to get it right. Many organizations are doubling down on supplier diversity efforts and strengthening the commitment to developing impactful programs that focus on the whole system of supplier diversity management (SDM) and deliver on the promise of economic inclusion. The following sections explore a few of the internal reasons organizations are recommitting to supplier diversity.

      Complex business challenges/strategic advantage

      If there was a mantra for running a business, it would be “stay prepared for the unexpected.” So many elements are involved, and things can change at the drop of a hat. As markets move faster and grow increasingly complex, organizations are looking for efficiency and innovation in every aspect of the business, including their supply chain.

      

Organizations are realizing that having a diverse supplier pool makes good business sense. The gains they can receive — whether through price competitiveness or access to industry expertise and know-how, not to mention the intrinsic value in community goodwill — are all things that provide organizations with the strategic advantage needed in order to remain competitive in the 21st century. Supplier diversity isn’t just the right thing to do but an economic imperative.

      Increased focus on collaboration in the supply chain

As interest increases in the supply chain, so does the interest in supplier diversity. Expanding market reach, greater customer focus, and increasing market and cost pressures are forcing many organizations to reevaluate the effectiveness of their supply chains. The disruption caused by the COVID-19 pandemic has also required supply chains to become more flexible and responsive than ever before. As many industries experience challenging transitions, supply chain partners are increasingly important to improve supply chain capabilities, efficiencies, and impact to the bottom line. As organizations become more dependent on their suppliers, collaborative planning becomes more central.

      Compliance with the law

      Although simply staying out of trouble was the prevailing reason for diversity measures in the beginning, it’s still a relevant goal today. The government remains the only entity that can mandate the utilization of a business based on its socioeconomic status. Though many supplier diversity practitioners’ focus is on small businesses, corporations and other public entities (local governments, higher education institutions, hospitals, and so on) have relationships with the federal government. Corporations make up a large portion of government contractors, and many smaller public institutions receive federal funding in the form of grants. Thus, each of them is required to comply with the mandate that a portion of their project be set aside for small and diverse businesses.

      Accountability to primary stakeholders

      Primary stakeholders have a vested interest in how the organization performs and the activities it engages in to achieve results. In short, they drive supplier diversity inside the organization. Primary stakeholders benefit when organizations are doing well, but their actions can also directly impact the organization’s success and failure.

      

Even with a push or outcry from secondary (external) stakeholders, nothing gets done internally without the efforts of the primary stakeholders, whether it’s the supplier diversity leader, senior leadership, or employees advocating for change. I’ve even seen organizations where supplier diversity was a personal purpose for members of the board, and they felt the organization could do more to support small and diverse businesses. Many organizations create supplier diversity councils consisting of a cross-section of internal and external stakeholders and use public input to help them shape and conceive their supplier diversity efforts. I know this may sound a bit reactive, but that’s okay.

      Corporate social responsibility/stewardship

      Corporate social responsibility is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they’re having on all aspects of society, including economic, social, and environmental.

      As more and more organizations evaluate the impact they have on their communities and the world, businesses are taking this responsibility one step further by seeking out ways to address challenges, ultimately making the communities they’re part of better.

Chapter 2

      Understanding the Foundation of Supplier Diversity

      IN THIS CHAPTER

      

Considering a brief history of employment discrimination legislation

      

Tracking the phases of supplier diversity

      

Projecting some important factors in supplier diversity’s next step

      When compared to other areas within your organization, supplier diversity is relatively young as a department or even a strategic initiative. Despite its auspicious start during the 1960s, it languished for many years and wasn’t always embraced or welcomed. Not until the 1970s did organizations and communities across the country begin to get intentional about their commitment and create programs that can have a lasting impact on their communities.

      In this chapter, I look at the foundation of supplier diversity — where it began, its evolution, and some trends shaping its future. I haven’t designed this chapter to be a big history lesson. It’s here to provide more context to why supplier diversity programs were started, how they’ve evolved, and how certain elements became part of the structure you know today. This

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