A supplier diversity program’s intent is to build a pipeline of potentials that includes diverse businesses, individuals and groups.
From the caterers who make your working lunches a delight to the architects redesigning your corporate headquarters, your credit union works with multiple suppliers daily. But when was the last time you assessed your current vendor pool to ensure it is diverse and inclusive? If you are ready to take steps toward greater equity amongst your service providers, a supplier diversity program is a great place to start.
What Is Supplier Diversity?
Supplier diversity is the idea of creating an equitable playing field in the procurement of goods and services for businesses and organizations. A diverse supplier is a business that is at least 51% owned and operated by an individual or group of people of a designated diverse background, including women, minorities, members of the LGBTQIA community and veterans. A supplier diversity program’s intent is to maintain a supply chain inclusive of these diverse businesses, individuals or groups.
Why Should Credit Unions Consider Establishing Their Own Supplier Diversity Programs?
Supplier diversity upholds credit union values! CUs are known for their work in the community and seeking out “the right thing to do.” Whether “the right thing to do” is creating financial education programs, volunteering for nonprofits or even providing essential services like paper shredding days, CUs are always seeking out new ways to give back to their communities. Supplier diversity certainly falls into the category of “the right thing to do” and upholds CU values and expectations.
Supplier diversity is a win/win for your CU and your community! Supplier diversity offers a wide array of benefits to your organization. First and foremost, it will widen your pool of local qualified suppliers and promote competition in the supply base. Greater competition leads to an improvement in the quality of work. Many diverse suppliers are small businesses, which means they can often be nimbler and enact changes more quickly than larger companies that may be dealing with internal “red tape.” This ability to quickly adapt and change should seem familiar as CUs can be more creative and expeditious with products and services due to their smaller size.
A supplier diversity program can help your bottom line! This is because such a program will often encourage a reorganization of your procurement opportunities and current practices. Paul Pendergast of Pendergast Consulting Group, a San Francisco Bay-area consultancy that helps transit agencies develop equitable programming, advises that “a deep dive into your vendor/supplier list may lead to a realization that, for instance, your organization is procuring paper from five different vendors when there may be a vendor(s) in your diverse supplier network that could source all your paper product needs at once. This awareness can help you streamline your process and save money by not only getting a better bid from a diverse supplier but also ridding your CU of the administrative inefficiency of dealing with multiple vendors.”
Supplier diversity can also help establish your reputation as an equity-based organization! This can be a very attractive point to job seekers and future members. Potential employees, especially millennials and members of Generation Z, want to work for organizations that are making a difference and working to uplift communities. Having external-facing programs that aim for equity will speak volumes about your organizational culture. It will help attract quality candidates committed to upholding CU values. Notably, potential members also want to belong to institutions with inclusive practices. Consumers particularly feel empowered when patronizing institutions that were built by their own community members.
Hiring local, diverse small businesses for your projects benefits the community! Just as supplier diversity encourages competition, it can also inspire people to start their own businesses. It gives potential entrepreneurs the ability to see multiple opportunities are available to them and, possibly, it will be that last bit of encouragement they need to take the leap into business ownership.
Having a reputation as an equitable organization in your community can also lead to exciting business development opportunities! This could include increasing your pool of select employee groups and even establishing educational components to your program that could open the door to partnerships with local and/or national business organizations.
Getting Started On Your Program
- Before all else, look within! A truly equitable, inclusive supplier diversity program can only be realized by an organization that is itself equitable and inclusive. Before you begin any external program, one that will be subject to public scrutiny, you need to look at your organization internally and ask yourself some tough questions. If you have a community-charter, is your membership a representation of the diversity of your community? Is your leadership team representative of the diversity of your community? Do you have an established diversity and inclusion program for internal hiring and career growth? These aren’t just data-driven questions. These are questions that may necessitate a deep dive into your culture, both internally with your staff and externally with your members.
- Crunch those numbers and set goals! Financial service providers are really great at crunching numbers and getting micro with their metrics. The more analytical your organization can be to identify greater efficiencies and opportunities in your procurement process, the better you will be positioned to launch a supplier diversity program. This includes not only a holistic review of your current administrative processes with vendors and suppliers but also tangible goal-setting for your program. Goal-setting is perhaps the most relevant way to stay on track and be consistent with your values. For instance, if you are building a new branch, your project planners may set a goal of 30% diverse-owned small business participation. You can formally verify a business’ eligibility through certifications. Some of the more well-known certifications are MBE (minority-owned business enterprise), WBE (women-owned business enterprise), LGBTBE (LGBT business enterprise) and (in California) DVBE (disabled-veteran business enterprise). These certificates are vetted and distributed through several government agencies.
- Get the word out! One of the simplest and most effective ways to establish an equitable supplier diversity program is through your outreach and advertising of upcoming contract opportunities. How will you advertise your requests for proposals to attract diverse respondents? What resources will you use? Who can you partner with to help get the word out? Often, many of the agencies that administer small business certifications have extensive databases that are available for public consumption. Mine these databases to create a greater network of diverse suppliers you can reach out to directly.
- Consider establishing a technical assistance/mentoring program that can help SBs prepare to bid on your projects! As Pendergast says, “Once you do identify a firm, it’s important to provide as much technical assistance as possible. Groom and develop your vendor pool as well!” Team up with your local chamber of commerce or a non-profit business organization that can help provide guidance, such as marketing and branding assistance, certification assistance, and fostering new relationships through networking opportunities and matchmaking sessions. The better-prepared businesses are to bid on your contract opportunities, the better for everyone involved.
Starting a supplier diversity program is no easy task and may at times seem overwhelming, but the benefits for your organization and local community will make all the hard work worth it. Plus, doing so upholds the values of your credit union.
A professional consultant specializing in program development and project execution in the areas of business development, community relations, supplier diversity, and employee engagement, Lara Brecher is founder and president of Brecher Consulting. She lives in the San Francisco Bay area with her husband, two little girls and a couple of very energetic kittens.