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Supply Chain News: Companies Could Get Much More Out of Supplier Diversity Programs, Hackett Research Finds


Programs too Focused on Just Meeting Target Numbers to Driving Innovation, Increasing Market Share

Feb. 21, 2017
SCDigest Editorial Staff

Many companies have programs related to supplier diversity, but more are focused on reaching set goals for the number of such suppliers or amount of spend with them, missing other opportunities to improve company results, new research from Hackett Group finds.

In general, respondents to Hackett's 2016 Supplier Diversity Study say their companies emphasize only a narrow set of supplier diversity objectives: improving the corporate image in the marketplace; supporting corporate culture around diversity and social responsibility; and complying with regulatory requirements.

Supply Chain Digest Says...

Supplier diversity programs are generally a good thing, but most companies have a limited view of how they can deliver value to the enterprise.

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Now, Hackett says, "More companies are beginning to realize that they cannot maximize benefits from supplier diversity programs if their objectives stop there. By expanding the goals and activities of supplier diversity programs, they can gain access to new markets and more beneficial supplier partnerships."

While many companies have supplier diversity programs, Hackett notes that there are high hurdles to obtaining the necessary support to invest in them at many companies. Often, Hackett, says, business leaders worry that dedicating resources in this area means sacrificing procurement savings or even quality.

"However, our research suggests that not only do procurement organizations with top-performing supplier diversity programs experience no loss in efficiency, but they extract even more benefits from the program," Hackett says in its new report on the subject, written by the firm's Patrick Connaughton and Laura Gibbons.

Hackett says its research shows that 99% of all diverse suppliers meet or exceed expectations, which should dispel any notion that quality and overall performance suffers from procurement diversity programs.

For procurement leaders, "Supplier diversity is evolving from a check-the-box, corporate social-responsibility requirement to a strategic enabler providing access to new and innovative products and increased market share," Hackett says.

Hackett's research showed a strong relationship between high levels of diversity spend and increased market share. For example, companies that allocate 20% or more of their spend to diverse suppliers attribute 10%-15% of their annual sales to supplier diversity programs, much higher than the less than 5% of sales companies that direct less than 20% of spend to diverse suppliers identified.

Key to these higher level benefits is partnering with diverse suppliers, Hackett says, identifying three recommended practices:

Developing and mentoring local suppliers: Knowledge-sharing (the most common supplier development practice) and mentorship programs are commonly used due to their advantages for both buyers and suppliers. Use of workshops to share knowledgewith suppliers is a common technique.

Join forces with suppliers on product innovations: Hackett says supplier-buyer innovation is frequently the most immature area of supplier diversity programs, with few companies integrating supplier partnering and innovation into their relationship management goals.

However, Hackett says small business suppliers can be particularly successful partners due to their interest in innovation as a strategy for successfully competing with larger firms.

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Sharing experiences with other companies: A lot can be gained from meeting with other companies that have supplier diversity programs and sharing notes, Hackett says.

If You're Doing It, Market It

To gain maximum advantage from diversity programs, companies need to let the world know what they are doing, Hackett says. As usual these days, social media is a good place to start in communications relative to what a company is doing in terms of its efforts in this area.

That applies to internal company communication channels as well as external communications, Hackett says, noting that "Spreading the message of diversity and inclusion can also help bring in new talent and retain top performers already working in the organization."

It adds that "Developing a strong reputation for dedication to supplier diversity can result in increased market share and talent retention. There are multiple channels available to facilitate a clear and positive message regarding supplier diversity, including both internally and externally facing activities."

One challenge to such programs is finding suppliers to participate, such as by responding to requests for proposals. Hackett suggests engaging third parties that specialize in connecting buying organizations with diverse suppliers, such as WBENC and WEConnect International, which are partnering-certification providers for woman-owned businesses.

The Bottom Line: Supplier diversity programs are generally a good thing, but most companies have a limited view of how they can deliver value to the enterprise. Procurement leaders are taking their programs to the next level with more strategic approaches to their initiatives.

What are your thoughts on cognitive systems? Have you seen anything in supply chain or procurement specifically? Let us know your thoughts at the Feedback section below.


Your Comments/Feedback


Senior Consultant, Infosys
Posted on: May, 22 2016
Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.

Mike O'Brien

Senior editor, Access Intelligence
Posted on: May, 26 2016
Surprised to see Home Depot fall off the list; thought they were winning with Sync?

Julie Leonard

Marketing Director, Inovity
Posted on: Jun, 27 2016
Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.

Carsten Baumann

Strategic Alliance Manager, Schneider Electric
Posted on: Aug, 19 2016

The IoT Platform in this year's (2016) Hype Cycle is on the ascending side, entering the "Peak of Inflated Expectation" area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn't this contradicting in itself?

Editor's Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.



Jo Ann Tudtud-Navalta

Materials Management Manager, Chong Hua Hospital, Cebu City, Philippines
Posted on: Aug, 21 2016

I agree totally with Mr. Schneider.

I have always lived by "put it in writing" all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This "putting in writing" can also be used for almost anything else.  Here are some general benefits (only some) of "putting in writing":

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  "Learn from the past" it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to "put it in writing".

Sandy Montalbano

Consultant, Reshoring Initiative
Posted on: Aug, 24 2016
U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of "Made in USA".

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring.


Transportation Manager, N/A
Posted on: Aug, 30 2016
 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!

Ian Jansen

Posted on: Sep, 14 2016
SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I've worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many "picks" per day.

I've learned that one doesn't have to remind Germany about your EDI orders.

Don Benson

Partner, Warehouse Coach
Posted on: Sep, 15 2016
Challenge - to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 


Admin, Fulfillment Logistics UK Ltd
Posted on: Oct, 02 2016
Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.

Mike Dargis

President of asset-based carrier based in the Midwest, Zip Xpress Inc. (at
Posted on: Oct, 03 2016
Thanks for the article, but I know there's a lot more to this issue than just the pay rates. Please check out my blogs on the subject at


Inventory Specialist, Syncron
Posted on: Nov, 16 2016
Lora, great article! I agree that companies choose the 'safe' solution more often than not. My solution is a bolt-on for legacy ERP's and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.


Bob McIntyre

National Account Executive, DBK Concepts LLC
Posted on: Nov, 21 2016
This is a game changer in GE's production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 



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