Diversity in the supply chain is an increasingly important topic for large buyers. While we looked at ways to promote supplier diversity and overcome related obstacles in previous posts, we want to address how to measure the impact of your various initiatives. Using key performance indicators (KPIs) is not just a way to help you track your progress, they also identify areas for improvement and highlight the positives associated with steps you’ve taken.
In order for KPIs to be effective, it’s important that they are clearly defined and associated with the goals of a particular project. An easy way to ensure this is by keeping in mind the acronym SMART. This represents having specific, measurable, achievable, relevant and time-bound indicators. By specific, we mean precise and clear criteria. They also need to be quantifiable and you need to be able to verify the results. Other elements of this acronym signify having realistic and attainable criteria that are aligned with strategic objectives and have defined deadlines.
The first KPI may seem evident, but companies sometimes overlook it, and that is simply the percentage spent on diverse suppliers. Related to this is the annual growth in this spending. This could also be measured in the number of diverse suppliers engaged with during a certain period of time. Satisfaction can be tracked for internal stakeholders as well as within suppliers or customers.
More advanced KPIs, often used by businesses that have progressed to later stages of supplier diversity, can also encourage reflection among those that have just started. These include creating a diverse supplier index to track representation among different categories such as minorities, women, veterans, etc. There is also the question of supplier quality performance to evaluate products and services, or their compliance with the terms of contracts. Another assessment is the impact on the local economy through job creation and community development, as an example. New products, ideas or services introduced by diverse suppliers are a way to show innovation. Companies may also wish to track their investment in development and training. Following the diverse supplier lifecycle entails measuring the average duration of relationships with diverse suppliers. These are just some of the possible areas a business may wish to monitor.
In order to assess these KPIs, businesses need to regularly collect data on these defined indicators. They can do so by carrying out surveys, by using enterprise resource planning (ERP) systems to track transactions, by creating annual reports, and by using a customer relationship management (CRM) system to monitor data from contracts that they have awarded to diverse suppliers.
This data can then be analyzed to identify trends, patterns and areas for improvement if KPIs are not met. Sometimes this requires statistical tools and software in order to provide more in-depth insights. For example, Microsoft Excel can be used to come up with pivot tables to look at trends from contracts. IBM’s SPSS software is one platform that provides statistics based on survey results.
We have previously mentioned the importance of transparency and this is achieved, in part, through accurate reporting of progress. It is recommended to do so periodically and to use visual aids, such as dashboards, tables or graphs so that the information being presented is easier to understand. More details can be provided in the form of analysis and recommendations. Results can be shared internally in order to gain support and engagement from stakeholders. External reports offer clients, partners, suppliers and others a look at a company’s success and progress.
Supplier diversity initiatives are not meant to be one-offs. Indeed, part of the purpose of implementing KPIs is to be able to identify areas for improvement so that companies can make the necessary changes to increase the impact of various programs. As practices and technologies evolve, businesses may wish to incorporate them into their strategy. These course corrections should be documented in detail for future reference and planning.
As a project of the Quebec Business Women’s Network (QBWN/RFAQ), one of our main goals is building awareness and education through training and workshops on an array of topics. So, if you are a large business seeking to overcome challenges and engage with diverse suppliers, we are here to provide you with the information you need and to offer guidance. Maïa Connex is also a platform that serves as a hub for business opportunities across Canada, and we hold networking events along with our partners.
Regardless of where you are in your journey with supplier diversity, we encourage you to sign up for our training programs, which are offered online here :
Now that you better understand these terms, you can put this knowledge to use by joining our platform, which is a hub for business opportunities across Canada, including RFPs, tenders and direct contracts. We also invite you to sign up to stay tuned for future blog posts. In addition, you will be notified of any updates and upcoming workshops.