In our post earlier this week on what is diversity and what is in it for you, we noted that supplier diversity is a much talked about concept and while it is often misunderstood, it is a concept that needs to be well understood, and well executed, because not only is diversity necessary to supply certain public sector organizations, but it is often necessary for your strategic supply management program to succeed.

Chances are that your supplier management team has already elevated you most strategic suppliers to the best level of efficiency and productivity that you can expect without a much bigger contract award or more investment, and additional improvements in the supply chain are going to require new suppliers with new capabilities, which are going to come from new suppliers. But if you really want new capabilities, new ideas, and new innovations, you shouldn’t always go back to the same old supplier pool, and for most organizations, a diverse supplier pool is not the same supplier pool.

But how do you get a diverse supplier pool? You start with a strategic supplier diversity plan, get executive support and budget, and work hard to identify, select, and train diverse suppliers to serve your organization. And how do you build a good supplier diversity plan? With preparation, and, most importantly knowledge. But where do you find that knowledge, especially when many organizations pronounce the benefits of good supplier diversity but don’t provide you much information on how to get there. And it’s not a subject covered much in Universities and Colleges that still teach classic operations research programs. But that’s where organizations like Next Level Purchasing come in. Next Level Purchasing’s latest offering is a course on Strategic Supplier Diversity that not only explains what it is, but how to define and put a successful multi-tier supplier diversity program in place.

The course, which defines a 5-level maturity model for supplier diversity initiatives, calculations for diversity ROI, a 5 step process for maximizing diversity value, benefits of automated supplier diversity tracking, how to verify a supplier is diverse (and not just diverse on paper), and implementation steps, also tackles the notion of multi-tier supplier diversity, which goes well beyond what most articles and papers address and this is where the full value of diversity shines.

While there is value in first tier supplier diversity, such as new ideas, capabilities, better service, and cultural comfortability, at some point, the benefits the diverse supplier can bring on its own will wear out. The supplier will grow, reach its potential, and level out in terms of new value. It will still be minority owned, and still be diverse on paper, but the diversity value it brings beyond that will be minimal. But if the diverse supplier uses diverse suppliers, it will have a constant supply of new ideas, capabilities, services, and cultural influences that will help it constantly improve, which will help you constantly improve.

But it’s not easy to craft a program that will not only be successful within your organization, but flow down into your suppliers and successful in their organizations. It takes a depth of understanding, a great deal of communication, a well constructed policy and guidebook, and internal and external training — and all of this communication, documentation, and training has to be expertly assembled and delivered, which is hard to do if you’ve never done it before – and chances are you haven’t. Senior positions in supplier diversity have only started to materialize over the last decade and the number of experienced diversity managers and executives with experience successfully creating and delivering multi-tier diversity initiatives are few and far between, so you will have to do it yourself, and to do it right, you will need training.

Fortunately, NLP’s new course on Strategic Supplier Diversity, part of their upcoming SPSM4 certification, is very well designed, thought out, clear, and even actionable in its x-step programs and is there to help you understand what you need to do, why, and how best to accomplish it. This is one course on the subject that SI can confidently recommend. Check it out and you will be one step closer to building your own multi-tier diversity program that will rival those of the best Global 3000s.

Supplier diversity is a much talked about and much misunderstood concept in North America. In the United States in particular, suppliers to (big) public sector organizations need to either be diverse or themselves use suppliers that are diverse to meet necessary requirements to supply the (big) public sector organizations.

What does this mean? It means that the supplier must meet a definition of diversity to the public sector organization (government body, council, etc.). What is this definition? Typically, it must be “minority owned”, where minority is often defined as “women owned” or “non-caucasian owned”, or “veteran owned”, but some organizations, especially those in the private sector that have adopted their own diversity programs and definition of diversity, also include “LGBT-owned” or “disability owned” or other definitions that are not “white male caucasian owned”.

But why would you want a diverse supplier? Especially when such a supplier is, as the saying goes, smaller, more expensive, and less capable. Because while many diverse suppliers are smaller, and often look more expensive at a first glance than larger suppliers, they are not necessarily more expensive. The value of a supplier is more than the unit cost of each product or hour of services. It’s the value the supplier brings. Sometimes diverse suppliers bring innovation, cultural diversity, and increased productivity as employees work harder to embrace the new methods and cultural compatibility (because sometimes in a non-minority owned business, the factory has a large number of minority employees).

Plus, diversity can be a great boon to your PR organization. While the diversity movement was not well accepted in the beginning, now it is not only well accepted but appreciated by consumers who find that the companies who practice diversity both in their organization and their supply base are more responsible and deserve more of their dollars.

While the goal of a diversity program should never be cost savings, diversity can bring a lot of value to an organization. New suppliers, even smaller ones, can bring new technologies and new ideas. It can give you access to a new supply base that can reduce overall supply chain risk. Diverse suppliers might use newer methods and technologies that provide you with near real-time information on order status, project completion, or other data elements that you care about. They might be more willing to treat you as a customer of choice and work with you on joint innovation projects or give you first access to production runs or new capabilities. They might be more likely to themselves use diverse suppliers, allowing you to claim a supply chain with multi-tier diversity at home and abroad.

Diverse suppliers can also give your senior employees and management options for mentoring, as smaller diverse suppliers can often use the guidance as they grow into larger minority-owned suppliers to support your future business needs, access to a pre-qualified community of diverse suppliers, as they will already have checked out the diverse suppliers they use, and more PR, as they will be just as happy to issue a press release about your organization and their selection for a project as your PR team will be about releasing a press release about how great your organization is doing in diversity and how socially responsible it is.

But building an effective supplier diversity program that ensures that your organization will set, and hit, appropriate diversity targets in terms of spend and suppliers, and achieve the benefits diversity has to offer, is no easy feat. But that’s the subject of our next post.

Water, water everywhere
and not a drop to drink

As we indicated in our damnation post on water, fresh water is quickly becoming the scarcest resource. While nearly 70% of the globe is covered by water, less than 2.5% of it is fresh. Moreover, only 1% of our freshwater is easily accessible, with the rest trapped in glaciers, snowfields, and the earth itself. In essence, at most 0.007% of the planet’s water is available to fuel the planet’s 7 Billion people. And the situation is only going to get worse.

By 2025, over 5 Billion people could be dealing with water scarcity issues. That’s (well) over half the planet, and, by then, a significant amount of these people will be in developed countries with the means to do something about it. Governments will have to do what it takes to ensure their people have enough water, and rather than risk revolt, they won’t care about what that does to your business.

The reality is that it’s not just we as individuals that need fresh water to drink (and, to some extent, to bathe and clean) and to grow our food (in dry climates that need irrigation), but our organizations need it too. When it comes to modern production, water is needed to clean and cool modern production plants. For example, not only is it impossible to make semiconductors and modern computer microchips in anything other than an ultra-clean facility, but ultra-pure water is required during production.

But it’s not just semiconductor and microchip plants that require clean, and sometimes ultra clean, water, it’s also data centres that use water cooling, production plants that have to clean production lines between runs, and so on.

As indicated in our damnation post, you can no longer depend on your local city infrastructure to deliver fresh, clean water to you. In many developed economies, there is not always enough water for consumers. In the southern US, municipalities often have to ban people from watering their lawn, in southern Europe, there is not enough water for agriculture, and so on. Countries where, even a decade ago, one would not expect a freshwater crisis are now experiencing water shortages.

You need to insure as soon as possible that the only fresh water required by your organizations is the fresh water your employees need to drink. Your office buildings should be updated so that only the faucets, and maybe the showers, use fresh water, the toilets should use recycled water that goes through a filtration purifier. All of your plants should be retrofitted with multi-stage filtration that includes desalination, that can take whatever water source is available — recycled water, locally pumped groundwater, and even re-routed seawater — and use that. If astronauts can survive on fully recycled water for six months or more in the space station, it’s obvious that this technology is no longer rocket science, well understood, and very affordable — and much cheaper than the skyrocketing costs to the local municipality that can be expected or the cost of a disruption because your water gets shut off during a crisis. Build your own water processing plants now, or form a cooperative with other nearby factories or large office complexes to do so, and reap the benefits later.