Forward-thinking companies understand the importance of supplier diversity. They have formal programs and processes in place that encourage the use of diverse suppliers. While designed to benefit historically under-represented groups – often in response to regulatory requirements – progressive buying organizations recognize the value supplier diversity programs bring to their own companies: stronger relationships with their supply base, new business opportunities, greater innovation, and a more agile supply chain.
But despite the competitive advantage a diverse supply base can bring, many companies struggle to diversify their supply chains. According to an ISM study, only 44 percent of companies consistently hit supplier diversity spend targets, and 70 percent of buyers consider finding diverse suppliers their biggest challenge. Yet it could be so simple – by plugging in to business networks.
Business Networks are Like Social Networks
Business networks are to buyers and suppliers what social networks are to friends: an easy way to search for, find, and connect with each other. They make it easier than ever to drive conversations, gather intelligence, and manage relationships. As one industry leader puts it, “Business networks provide an equally easy way for companies to link and coordinate a virtual ‘extraprise’ of partners into a shared community and execute key processes in a more informed and efficient way than in the past.”
That includes making it easy to find and evaluate diverse suppliers. Leading business networks match you to the right suppliers based on your input criteria. For example, you could request to receive quotes purely from minority-owned small businesses. Defining your purchasing needs only takes a few minutes, but the cost and time savings for identifying suppliers can be huge. More importantly, the ability to quickly compare bids from multiple suppliers can help many buyers save on overall project spend.
Take for example Caesars Entertainment. By tapping into a business network, the hospitality company was able to find diverse suppliers in 50 percent less time and save 10 percent of sourcing cost. “We received strong bids from diverse suppliers, and the best price came from a local, woman-owned supplier,” says Kory Manley, director of strategic sourcing for Caesars. Without the business network, “it would have been very challenging to find this supplier.”
How to Pick a Business Network
With the benefits being clear, how does one pick the right business network? A few things that matter are easy to check for:
- As with social networks, successful business networks have scale, giving you access to as many as 1.5 million suppliers on a single platform and virtually connecting you with trading partners for any purchasing need.
- With many suppliers already transacting with other buyers on the network, onboarding and process automation should be quick and easy.
- Leading business networks connect you with suppliers across industries and geographies, covering thousands of product and service categories and offering support in a broad range of countries, languages, and currencies.
- They should provide access to an extensive pool of diverse suppliers and allow you to identify suppliers based on specific diversity criteria, including minority-owned, woman-owned, veteran-owned, and small businesses.
- Top business networks show high transaction volumes as well – look for more than $1 billion in annual business commerce and 100,000-200,000 purchase orders and invoices per year.
- They make evaluating suppliers simple with rich supplier profiles that provide instant access to key supplier data on one page, including legal and fiscal information, transactions with other buyers, certifications, ratings, references, and objective third-party financial and risk information.
- Last but not least, they are connected to sourcing, procurement, and ERP systems, allowing you to add suppliers directly to your vendor master or a purchasing event and even automate purchase orders and invoices.
With commerce heading towards a networked economy characterized by increasing globalization and interconnectivity, progressive organizations understand the value business networks can bring to achieve compliance and maximize value – not only from a supplier diversity standpoint, but far beyond. Are you ready to plug in to business networks?