Supplier Diversity | 3 Legged Stool

The very mention of the phrase “Supplier Diversity” brings about mixed emotions.  To some, the phrase represents opportunity, while to others it speaks to quotas and affirmative action.  Over the years I’ve come to view Supplier Diversity as a three-legged stool.

The first leg and arguably, the most popular is revenue share.  Most Supplier Diversity programs start here.  This is where most large corporate entities assess a goal to the prime vendors and suppliers to share some percentage of their spend with diverse owned businesses.  I mentioned that this is where most programs start…. unfortunately, it’s also where many stops.

The second leg is often overlooked; Mentor/Protégé.  While we are all excited to receive a portion of the overall spend, we should be equally, if not more so, excited to have the opportunity to learn from firms much larger and/or successful than our own.  This information can include marketing/sales strategy, new business processes, financial controls, emerging technologies, and overall best practices. 

The third leg of the stool is Capacity Building.  The revenue sharing allows for a continued revenue stream, while the mentor/protégé should educate and encourage new practices/processes.  This should create an opportunity for the business to grow.  While this growth may seemingly only benefit the diverse firm, in actuality it will benefit all parties involved.  The diverse firm will experience growth, the prime supplier will have gained a new trusted partner familiar with their business processes, and the client will have demonstrated actions towards their core values while also providing an opportunity to reduce costs; as the diverse supplier may now be able to provide some of the services direct to the client at a reduced price-point.

If both the Prime and Minority Suppliers work together to align with the Clients’ goals, the benefits will be realized by all.