Building a Business Case for Supplier Diversity
By Hugo Britt | February 22, 2022
In a recent episode of The Sourcing Hero podcast, host Kelly Barner spoke with Lamont Robinson, Director of Supplier Diversity at AmerisourceBergen – a global healthcare company.
Supplier diversity is a true passion project for Lamont, who has experienced the impact it can have when marginalized people and communities are both better represented and given more opportunities to succeed.
Raised on the West side of Chicago in an under-served community, Lamont recalls how he rarely saw a business owner that looked like him. “I didn’t think that it was possible for an African American male to own his own company until I saw the TV show, The Jeffersons,” he says. “For a television show to change the dynamic of how I viewed business, and more importantly business ownership, says a lot about the lack of exposure that kids in underserved communities have.”
Lamont spent several years working in procurement before he realized that pursuing a career in supplier diversity would not only be a good way to develop businesses in under-served communities, but it would bring his own experiences back full circle. “I had the chance to help these businesses grow while at the same time providing some kind of exposure to the kids in these areas.”
Making the business case for supplier diversity
The concept of a supplier diversity program is to encourage corporations to purchase products and services from diverse businesses. Diverse businesses are defined by being 51% owned, operated, and controlled by women, minorities, veterans, members of the LGBTQ+ community, or people with disabilities.
The concept is simple but, as Lamont points out, if professionals can’t effectively communicate the purpose of (and value in) supplier diversity programs, it can be extremely difficult to gain traction to support the building of such schemes. “I hadn’t heard any supplier diversity professionals explain the business case for [supplier diversity] – and that’s critical,” he explains.
In a bid to create something visually appealing, simple to articulate, and easy to remember, Lamont created The Six C’s of Supplier Diversity.
These are designed to provide the case for supplier diversity, regardless of the company or industry you are part of:
A lot of organizations build supplier diversity programs because of a customer mandate or because their customers are heavily influencing them to develop a program.
Organizations may be operating in an under-served area. Communities in these areas want corporations to engage more with the local and diverse businesses. As Lamont knows, this can have a huge impact on young people, especially in terms of how they perceive themselves, their potential, and their long-term career goals.
Organizations with government contracts will be mandated to support diverse businesses. However, private-sector companies are increasingly putting mandates in their contracts as well.
Diverse businesses are often relatively small, which means they can operate with greater agility and better drive innovation than their larger counterparts. This includes being able to deliver customized solutions for their customers.
Organizations are sometimes motivated to establish supplier diversity programs so they can tap into these capabilities and work more closely with their suppliers to establish improved supply chain resilience. “The more you develop these businesses and make them into true partners, the more you can integrate them with your supply chain,” says Lamont.
Organizations have long been wary that driving supplier diversity comes with increased business costs. But, in most cases, the opposite is in fact true. In the past 18 years, Lamont has observed supplier diversity programs driving major cost savings, which is in part because they don’t have significant overheads.
When it comes to measuring success in this area, Lamont notes the importance of looking at the total cost of ownership. “Every time I build a supplier diversity program, I try to incorporate a developmental piece that allows us to educate diverse businesses on the total cost of ownership,” he explains. “It’s not just about the initial cost but the cost over the lifetime of the product.”
Many companies are being driven to implement supplier diversity programs to keep up with their competitors. Failure to do so could result in organizations struggling to obtain or retain business, since customers would rather partner with companies that share their values and priorities.
If, however, competitors are not yet in the process of developing or implementing supplier diversity programs, doing so can be a great way for an organization to differentiate itself from its rivals.
What does procurement need to know about being good customers to minority companies?
Lamont urges organizations with a supplier diversity program to stay informed about the main diversity advocates out there, because these are responsible for creating the platforms via which diverse businesses can come together and vouch for themselves.
Organizations including The National Minority Supplier Development Council, Women’s Business Enterprise National Council, and The National Gay and Lesbian Chamber of Commerce are trying to find ways to elevate and expose diverse businesses.
Looking ahead, Lamont is already looking into expanding his framework to include a seventh element – change management. “Supplier diversity and procurement is more about change management than anything else,” he says.
Indeed, Lamont’s personal experiences have taught him that even the simplest of tasks can prove controversial and expensive.
For more insight into the six C’s of supplier diversity, listen to Lamont’s full episode of The Sourcing Hero here:
The Sourcing Hero podcast features epic stories of beating the odds and rising up in procurement. Listen to more episodes here.