The views expressed in this article do not represent those of the Federal Reserve Bank of New York or the Federal Reserve System.
Ownership and Accountability: Elements for Building an Effective Supplier Diversity Program - Navin M. Persaud
Over the past few years, supplier diversity has increasingly become an important focus among a large number of organizations in both the public and private sectors.
Companies are applying these principles to their procurement practices not only as part of their corporate social responsibility goals, but equally important, to promote greater cost efficiency, innovation and growth into their operations.
But what are organizations doing to see to it that their programs are effectively including a more diverse population of vendors and that these efforts are delivering tangible benefits to them?
The Federal Reserve Bank of New York ("Bank") has long held supplier diversity as an important goal with respect to its ongoing procurement initiatives and remains committed to ensuring that all firms interested in and qualified to do business with it have the opportunity to do so. In an effort to foster supplier diversity in its acquisition activities, the Bank seeks to promote an environment that provides access and opportunity for minority and women-owned business enterprises seeking to do business with the Bank. Maria Frangelaki, Vice President, Procurement Value Management ("PVM") and the Bank's Chief Procurement Officer, noted, "While the Bank has always been proactive about including diverse suppliers into its acquisition initiatives, over the past 18 months we've made a concerted effort to build further on our approach and add collective ownership and greater accountability to our process."
This has involved refining the Bank's supplier diversity strategy by moving from a single point of contact charged with all aspects of efforts relating to supplier diversity,
to a model that extends responsibility
across the entire procurement organization.
Making this shift has helped to incorporate supplier diversity into each procurement, allowing a broader group of vendors direct access to the Bank's strategic sourcing professionals and increased involvement of the procurement team in outreach activities.
In addition, the Bank's strategic sourcing professionals host technical assistance forums focused on educating diverse suppliers on the Bank's acquisition process and more effectively connecting Bank business area representatives with anticipated need for the suppliers' specific products or services. The impact of these activities has been very positive in helping diverse suppliers become more effective in articulating their value proposition to the Bank's business area representatives and strategic sourcing staff as well as navigating the Bank's acquisition process.
Since the implementation of this new strategy in 2015, the Bank has realized a significant increase in diverse supplier participation in every phase of the acquisition process. The number of qualified diverse suppliers identified by the Bank's PVM Function increased 41%. The total number of diverse suppliers invited to submit proposals increased 71%; the number of diverse suppliers who submitted proposals increased 43% over this same period. The contracts awarded to diverse suppliers increased by over 100%. The positive trend has continued in the first and second quarters of 2016.
In addition, to keep a finger on the pulse of trends in supplier diversity, the Bank's PVM team continues to develop strategic partnerships with supplier diversity business organizations such as the New York and New Jersey Minority Supplier Development Council (NYNJMSDC), the Women Presidents' Educational Organization (WPEO), the Institute for Supply Management's Diversity Committee, the Financial Services Roundtable for Supplier Diversity (FSR SD), and the National Minority Supplier Development Council (NMSDC). PVM leverages these organizations to identify potential diverse suppliers, benchmark its supplier diversity efforts, and keep abreast of evolving best practices.
"Our goal in terms of the Bank's supplier diversity strategy is to extend beyond purely reporting diverse spend. Our collective effort is geared toward partnering with a diverse population of suppliers who can provide entrepreneurial perspectives, innovative solutions, and value-added business propositions to successfully meet the Bank's acquisition needs" added Frangelaki.