Most companies are struggling to identify diverse suppliers
In early October, a global survey conducted by Jaggaer and Tealbook found that 70% of organisations are prioritising supplier diversity, but most of them are struggling to find diverse suppliers.
According to the report, collated from responses of around 90 attendees of their 2021 supply chain webinars, 70% of the procurement and supply management leaders and the stakeholders that took part in the survey globally answered that supplier diversity is now a priority within their organisations, but only 23% of them said that they already had a diverse supplier portfolio and are on their way to implement “progressive and impactful supplier diversity initiatives”.
But one thing was unanimous between the respondents globally: the main obstacles to making their supplier portfolio more diverse was the “difficulty identifying diverse suppliers that also meet procurement criteria” while others agreed that the “lack of supplier diversity data and insights” was their organisation’s biggest challenges in increasing spend with diverse suppliers
The rest of the respondents replied that they have no tools to verify whether a supplier is diverse or not and that they “don’t know where to start”.
According to the report: "Clearly, the biggest challenges that procurement professionals face relate to lack of data on supplier diversity in their current systems, even if they otherwise have good reporting capabilities and someone in the organisation is taking ownership of the issue."
How companies are planning on spending on supplier diversity
The report also asked the procurement and supply chain leaders how they intend to increase their spending on diverse suppliers to overcome the obstacles, and 42% of them stated that their existing supplier relationships will help them expand their diverse supplier network.
The action list also included: conducting regular audits of supplier diversity spend (31%), leveraging technology to find diverse suppliers (31%), asking suppliers to report on their own supplier diversity spend (30%) and partnering with certifying organisations (28%).
For those that took part in the survey, different approaches are being taken to face their biggest challenges with supplier diversity, which can mean a lack of consensus within procurement leaders or just a different momentum in each company.
Still, 38% stated that their organisations will have an action plan in place to ensure that the data regarding diverse suppliers will be reliable, while 37% said that the weight given to supplier diversity in sourcing decisions will increase.
Benefits of increasing supplier diversity efforts
For the past few years, researchers have shown that diversity and inclusiveness are becoming important aspects for consumers, and those two things can directly impact company reputations, and the report found that 52% of the respondents agreed that supplier diversity can bring “positive reputational impacts”.
The other benefits listed were improved internal culture” at 44% and direct economic benefits such as supplier innovation (46%), bigger supply base competition (44%) and organisational agility (38%). And 26% agreed that diverse suppliers will definitely help to exert downward pressure on their costs.
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