While decarbonization and optimization initiatives are taking center stage for facilities management, operators have another key role that is sometimes overlooked, but critical to ensuring these actions are carried out in an environmentally and socially responsible manner — procurement and supply chain management. It includes procuring items for day-to-day operations of a building, parts for maintenance repairs and creating relationships with vendors that can provide the required supplies at the right price.
Supplier diversity programs grew more prominent in 2023. They ensure that organizations forge partnerships and relationships with vendors that are at least 51% owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group, according to Harvard Business Review.
This often involves actively questioning suppliers about their diversity designation and seeking out diverse suppliers, according to Sara Barker, vice president of corporate services at Medxcel, who leads the healthcare facilities services provider’s supply chain, compliance and program and project management service lines. While the definition of a diverse supplier varies between organizations, Medxcel’s designations include minority and women-owned enterprises and small businesses, service-disabled and veteran-owned organizations and small disadvantaged businesses.
“We look to include at least one diverse supplier. When we're doing a [request for proposal] we want all essential suppliers who will meet our criteria and actively [want to] see at least one diverse supplier. Sometimes it's easier than other times,” Barker told Facilities Dive. “But those suppliers do have to meet or exceed the performance criteria. The diversity and inclusion [requirement] are not intended to be a shortcut or negatively impact the business in any way.”
Supplier.io’s 2023 State of Supplier Diversity report, which surveyed hundreds of supplier diversity professionals, underscores the importance of a diverse supply chain and the growing creation of these programs. “Despite staffing challenges, [spending] with diverse suppliers continues to rise year-over-year, prompting companies to set higher goals and systematize their efforts,” Rod Robinson, senior vice president of supplier diversity at Insight Sourcing, says in the report.
When asked about what drives efforts to increase supplier diversity, 81% of respondents stated that aligning with corporate culture and workforce inclusiveness was a factor. Two-thirds said that supplier diversity improves their supply chain competitiveness, compared with just 40% who said these initiatives are driven by customer requirements and 36% who said government compliance is a driving factor.
The growing emphasis on supplier diversity accentuates the importance of supply chain data, the report said, noting that the biggest improvements leaders reported in 2023 were in data quality in program processes. Yet, data remains a roadblock for many programs, the report found: 29% of respondents said ensuring accuracy was their biggest challenge. Topping the list of priorities was tracking and reporting metrics, working with business peers and supplier discovery. Thirty-four percent said there is “too much work,” while 28% cited accuracy concerns.
“We ask the diversity questions upfront, as we're qualifying vendors. We ask them, ‘Do you have a diversity program?’ We actually track those vendors that do or don't and then proactively reach out to them,” Barker said, suggesting that’s one of the best ways to obtain and manage this data.
While it is more straightforward to obtain Tier 1 data, or the diversity status of direct suppliers, from purchase-to-order data, Barker said that it is more difficult to obtain and manage Tier 2 data.
“The best example of [Tier 2 data] would be Grainger, our primary maintenance, repair and operations partner. They, in and of themselves, are not diverse, but they buy from many diverse suppliers,” Barker explained. She noted that this data is also incorporated into Medxcel’s procurement catalog so that its technicians can factor in diversity and sustainability designations, in addition to price, when they order supplies and parts in the field.
To meet that need for accurate Tier 2 data, such as how diverse the vendors used by a primary supplier are, organizations have shifted to using third-party data to monitor supplier diversity status. The report noted that 67% of respondents reported using third-party data to monitor the status of their supply chain diversity.
While gathering second-tier spending data is ranked as the second biggest challenge for organizations that do not use third-party data, it did not rank as a top-five challenge for those that did, Supplier.io noted. Instead, those using third-party insights focused on tasks like benchmarking, data use and management, the report said.
Barker noted that benchmarking is the first step to increasing the diversity of suppliers and creating these programs. “You’ve got to start somewhere,” she said. “You’ve got to get a baseline before you can try to move the needle on your diverse vendor population.”
