reporting is much more than mere data col- uncommon for a few hundred suppliers to response rates, and the number of suppliers
lection and reporting. Successful programs represent more than 80 to 95 percent of exceeding, meeting, or below goal. Suc-
ensure that there is an adequate support spend. Most programs, including those that cessful programs need to have a plan in
structure to drive high participation and now boast billions in annual diversity place to deal with “offenders.” A periodic
actual spend based on goals established. spend in the second tier, start small— annual review process should be instituted
This requires proper outreach and commu- focusing on the top 50 or 100 suppliers that with participating suppliers to review the
nication, tools to automate the data collec- represent a high percentage of their spend results against expectations. Otherwise, the
tion, a rigorous verification process to cer- and expanding their programs in a phased supplier will get the message that “it must
tify that the diverse suppliers named in manner. It is important to analyze the cho- not be important” or “no one is enforcing
sub-tiers are indeed diverse, and verifica- sen supplier base in terms of the realistic it, so let’s see what happens if we don’t do
tion that spend did occur between the two scope of diverse supplier participation at a it.” Further, measurement against internal
parties (the prime and the sub). second-tier level and to set specific goals accountability standards, such as the above
The indirect and direct procurement for each prime supplier, or set goals for all metrics by commodity group, specific
teams ultimately play a major role in dic- suppliers in a particular commodity group. buyer, business unit or plant, is equally
tating the conformance and success of the The prime supplier recruitment should important to drive continuous improve-
program. Madlyn Bagneris, manager of include contractual amendments (if neces- ments in the process.
supplier diversity at Entergy, notes that sary), proper communication of the expec- Even today’s world leaders in second
having a system that enables the company tations, training, and the setup of an ongo- tier continuously improve and evolve their
to obtain supplier information quickly and ing review process. program as their needs and the environ-
accurately has enabled Entergy “to make Successful execution requires careful ment change. The result of such high stan-
sure smaller companies have a second consideration of several critical elements dards not only ensures that supplier diver-
opportunity to work through the second- of the program design, including: sity goes beyond the surface, but can help
tier system.” Tier-tier programs are ulti- Frequency of reporting, whether it’s entire communities. Fred Lona, director of
mately driven by procurement teams. Pur- monthly, quarterly, semi-annual, or annual. supplier diversity at Hilton Hotels Corp.,
chasing managers and buyers who main- Quarterly reporting is by far the most com- says, “We’re helping the vitality of the
tain these critical supplier relationships are mon. Specific industries or commodity cat- communities where we do business by
key to driving high levels of participation egories, like the construction industry for reinvesting in local businesses.”
from suppliers. The procurement team example, may require more frequent
must have clear directions regarding its reports to be able to measure and course-
role, the policy established, the expecta- correct on the fly.
tions of a prime supplier chosen, and the square6Prime supplier training, help desk, and
exact purposes of periodic reviews. follow-up during the reporting cycle.
Another important aspect of the process square6Method and ease of reporting, whether
is establishing accountability within the measuring direct or indirect contract-
procurement team for certain levels of specific spend.
diversity spend contribution from the key square6Level of detail collected. Second Tier
suppliers nominated. This provides (con tin ued)
Rajesh Voddiraju is one of the founders of CVM Solu-
accountability for goals set for each prime square6Use of robust technology to enable effi-
tions and has helped propel CVM Solutions into one of the
supplier on their contracts with your cor- cient and accurate reporting. fastest growing providers of enterprise supplier management
poration. Goals for each prime, and for
and diversity solutions in the market today. Mr. Voddiraju has
square6Verification of diversity status of spend
led CVM from its humble, bootstrapped beginning in mid-
your organization overall, depend on a reported and auditing.
2002 to a multi-million dollar, aggressive growth firm serv-
variety of factors, including your industry square6Measurement against goals and period- ing over half of the Fortune 500 firms. Mr. Voddiraju is a rec-
(or your supply chain), the level of knowl- ic reviews with prime suppliers.
ognized speaker, author and has been recognized by Supply
& Demand Chain Executive as a “Pros to Know”. Prior to
edge of supplier diversity among your sup- square6Internal reporting.
CVM Solutions, Mr. Voddiraju served in numerous capacities
pliers, their ability to participate, and the Continuous measurement and continu- as Executive Director of Marketing and Sales, CRM Practice
potential for subcontracting opportunity ous improvement should be the mantra for
Leader and as a Regional Manager for SEI Information Tech-
nology — a 600-employee, Chicago-based IT consulting
based on their contracts. With the internal any tier-two program. The measurement
firm. Mr. Voddiraju holds a Bachelor Degree in Computer
commitment in place, prime suppliers must process should include several key pro- Science from Nagpur University, India, a Masters in Com-
be identified to launch the program. gram metrics including total diverse spend
puter Science from Western Michigan University and has
attended Management programs at UCLA and Tuck School
Across many industries today, it is not reported, total verified diverse spend,
of Business.
26 Celebrating over 15 Years of Embracing Diversity WWW.HNMAGAZINE.COM
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