Supplier Diversity Programs are commonplace amongst large corporations in the United States. Several companies have had an active program for years, and some companies have even utilized these programs for decades.The Federal Reserve System includes race and ethnic minorities, women, veterans, and service disabled-veteran in their Business Classification Definitions for diverse suppliers.The reasons for having such a program are manyfold, and some companies differ slightly in their strategic approach to their program, but the widely acknowledged benefits of having a Supplier Diversity Program can be boiled down to two main arguments:
- Companies seek cognitive diversity in their supply chain to drive innovation. By tapping into businesses whose owner(s) belongs to a traditionally underrepresented group with a different background, the company increases their chances of acquiring cognitive diversity.
- Companies seek to maximize their social impact through their supply chain. Not only to make an impact for their diverse suppliers but in the communities that their diverse suppliers serve.
As many corporations have reported, tangible business results often arise from having diverse suppliers, but is the current approach of having ownership as the only indicator for the classification as a ‘diverse’ supplier restricting businesses from maximizing innovation and social impact?Northern Trust, a large Financial Services company based in Chicago, adopted a complementary approach to measuring supplier diversity in May 2021.
In their Supplier Diversity360 Program, they not only consider the certified ownership status of a supplier, but they also evaluate a supplier's commitment to diversity through their leadership team, employee diversity, community engagement, and their tier 2 supplier diversity (a supplier’s consideration of doing business with other diverse suppliers).Northern Trust’s Chief Financial Officer, Jason Tyler, believes that ownership is just one way of measuring diversity and that ownership status says nothing about other factors that can have an equal or even larger impact, such as the factors that their Supplier Diversity Program focuses on.Going beyond ownership also has the added benefit of expanding supplier diversity programs internationally as ownership-based certifications are a process only used within the United States.
Denominator enables companies to maximize their cognitive diversity and social impact by providing Diversity, Equity, & Inclusion (DEI) transparency to supplier diversity assessments. Our global database of 1.5 million companies spanning all countries and industries allows companies to assess supplier diversity on over 15 dimensions of DEI such as gender, race, education, family, health, disability, etc.
Denominator’s supplier diversity services include:
- Provide insight into portfolio DEI performance on up to 15 dimensions compared to global, regional or local benchmarks.
- Identify at-risk suppliers to implement initiatives for improvement
- Conduct automatic data updates to track DEI performance periodically
- Implement data portal for seamless data collection for diverse suppliers
To find out more about how Denominator can help Supplier Diversity Programs in assessing diversity beyond ownership status, send us an email at info@denominator.one.
