How Procurement Professionals Can Measure Supplier Diversity

Procurement professionals measuring supplier diversity

In the realms of supply chain and procurement, it has been well established that measuring supplier diversity is an incredibly important, and impactful, part of the process for any organization. According to Harvard Business Review, a diverse supplier is “a business that is at least 51% owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group”. This includes, but is not limited to:

  • Minority-owned enterprises (MBEs)
  • Woman-owned enterprises (WBEs)
  • Small business enterprises (SBEs)
  • Veteran-owned
  • LGBTQ+ owned
  • Businesses owned by proprietors with disabilities

Supplier diversity programs can trace their roots back to the 1960s, during the civil rights era. Since then, they’ve become an important, trackable metric for procurement departments in organizations across industries, both in public institutions like state and local governments or universities, as well as privately-owned companies. We have published an article detailing the importance supplier diversity, and how it is not only the right thing to do from a moral standpoint, but how tracking these metrics can create financial advantages for your organization, including strengthening your supply chain by introducing healthy competition and supporting your community economically.

In this article, we will go in depth about how these metrics can be tracked and visualized. Many organizations know that they could be doing a better job of diversifying their spend among underrepresented suppliers, but are unsure of how to start measuring supplier diversity. In addition, some organizations know that they are doing significant business with diverse suppliers, but have trouble organizing and reporting hard data to leadership proving this to be so. Luckily, measuring supplier diversity doesn’t have to be difficult.

Measuring Supplier Diversity

There are several ways to visualize supplier diversity data. Generally, the data sets to consider are:

  • Categories
  • Suppliers
  • Transactions

It’s also important to consider by which standard you are measuring supplier diversity. In the United States, the standard programs are HUB (historically underutilized businesses) and DBE (disadvantaged business enterprise). We have an article going more in-depth on the distinctions between the two, but the basic distinction, with a few exceptions, is that HUB programs are state regulated and DBE programs are federally regulated.

Categorizing and Visualizing the Data

So, let’s say you’ve compiled the data sets and have it ready to go in an Excel sheet or .csv file. That’s the hard part done! It’s all there, but you’re looking for some graphs and visualization so that you can present it. What are the most useful ways to measure and chart the data out? What would you compare it to? And how can you make it look nice and easy to understand, so that somebody who isn’t knee-deep in procurement data every day can easily make sense of it? Well, we have some ideas and suggestions. Here are just a few of them:

  • Spend trends month over month
  • Fiscal spend by diverse supplier type (e.g., minority owned, women owned, etc.)
  • Period spend by diverse supplier type
DBE spend trends dummy data

An example of how spend trends can be categorized month over month to measure supplier diversity. This data is illustrational only and not representative of any real client. Source: Card Integrity

See It in Action

Card Integrity has a host of clients for which we measure supplier diversity to ensure that they are meeting their goals. Our reports are fully customizable and can include any of the above parameters, and they are just a few of the many measurables and parameters we are capable of setting up. We offer supplier diversity spend monitoring services at no additional cost to our DataWISE expense monitoring service. Want to see these reports in action and get the full breadth of our capabilities? Schedule a free demo below! Just mention supplier diversity in the “questions to address during demo” text box. It costs nothing and can be a learning experience! We’d be happy to show you the service.

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