The Role of Governance in Supplier Diversity Initiatives

The supplier community plays an integral role in improving enterprise diversity standing.

The supplier community plays an integral role in improving enterprise diversity standing. I’d like to share some observations from my career, along with tips for the supplier community and enterprise procurement teams to improve diverse supplier access, expand opportunities and provide support.

A Risky Approach to Client Management

Historically, client management and sales practices have been disjointed and focused on winning by dividing and conquering. A generation of sales teams has been trained to get as much information as possible out of the client organization to sell them what they have, instead of what the client needs, and have been somewhat siloed in the process.

In large supplier organizations, clients doing business with them on the applications side would struggle to engage from the marketing or infrastructure side. This short-sided view usually led to the client chasing the supplier organization to find the right resources.

The "whole client" management approach is necessary to transform the sales process to fit the more modern and sophisticated enterprise customers. Not having a modern sales approach is one area where clients, both Procurement and business stakeholders, get incredibly frustrated when dealing with a supplier organization. Many of the practices considered “old-school sales tactics” have become relatively visible to the enterprise client. For example, taking enterprise employees (particularly business stakeholders) to lunches or dinners at fancy restaurants, sporting events in private boxes and conferences in an attempt to build relationships, with a focus on gaining commitment to sales, early visibility and access to opportunities.

Some of these practices can lead to award behaviors that create organizational risks and conflicts of interest. To not get ensnared in these unscrupulous practices, many well-run organizations that value strong corporate governance have put in place policies, processes and tools to communicate principles, expectations of suppliers and employees, and to demonstrate accountability by monitoring, measuring and having consequences for failing to do so.

Many enterprises have not embraced these governance practices, including public ones, and will continue business as usual until it affects the organization's reputation or risk, becoming the catalyst for change like the social activism events that played out in 2020. In speaking to supplier communities over my career, I have observed their fearfulness to bring up risky enterprise practices for fear of retaliation. These practices have a cost to the supplier, and while not always visible, an increased cost to the enterprise.

When faced with such an organizational dilemma, it leaves suppliers with no choice but to add a margin to their cost of doing business with that client, which means that the enterprise will pay more for the same product or service than another organization with strong governance practices in place. So, while the more comfortable thing to do is blame the supplier, this higher cost isn't necessarily the supplier's fault. Instead, it is up to the enterprise to review its governance practices to determine how much of the increased costs are due to their stated cultural norms or lack of effective policies, processes and controls compared to their peers.

How acceptable are organizational practices, principles, policies, procedures and accountability? An organization should have a process in which employees or suppliers can report these without the fear of retaliation and should be considered by the C-suite and the board.

The Impact of COVID-19 on the Sales Process and Client Management

COVID-19 led sales teams to reimagine how to engage with clients in a meaningful way that yields the same results. While well-run sales organizations have been able to engage prospects, close deals and expand business during these difficult times, many have been challenged. This is not entirely due to organizational practices, but rather macro circumstances.

The COVID-19 pause led to revisiting business needs and brought new opportunities for the supplier community, bringing them to the table (albeit remotely) to support unprecedented transformational efforts to deploy such modern approaches as moving to the cloud, AI and deploying user-centric solutions. 2020 also brought about opportunities to value the diversity of thoughts, people and suppliers, a critical consideration for enterprises to survive in the stakeholder capitalism-centric future.

2020 also pushed the organizations to look at their diversity practices – or lack thereof – and seek solutions to improve them.

So, what does it all mean for suppliers, particularly those that are considered small or diverse? It means that the floodgates have opened for the first time in a meaningful way. Still, diverse suppliers will need to be vigilant about navigating its waters without drowning and ensure they have adequate tools and resources. Many diverse suppliers can see the flood of opportunities but don't know how to narrow down what they are best suited to handle swiftly and strategically. If not done well, it could mean losing future opportunities with enterprise clients and perhaps even perpetuate the age-old excuse by organizations: that it’s impossible to find small or diverse suppliers, or that these suppliers don't know how to work with large enterprises.

If this is a topic that interests you, I’m writing a multi-part series on diversity and inclusion for both enterprise clients and suppliers in SIG’s digital publication, Future of Sourcing. Part one is an overview of how large enterprises have historically approached supplier diversity initiatives and why they have underperformed. Part two focuses on seven ways to shape the future of supplier diversity in the enterprise. Part three is a roadmap for suppliers to proactively help enterprises improve and exceed their supplier diversity goals.

If you want to continue the conversation please connect with me on LinkedIn, or read some of my other articles on topics related to AI and the role of procurement in the organization.

Purvee Kondal, Senior Director of Technology & Engineering Sourcing
Purvee Kondal is a Senior Director of Technology & Engineering Sourcing at the Albertsons Companies, an advisory board member at RampRate, and a National Association of Corporate Directors Accelerate program participant. She is a seasoned executive with over 15 years of experience leading transformational changes at notable organizations such as Johnson & Johnson, General Electric, Capgemini, Ross Stores and Globality. As a champion of diversity and inclusion, she co-chairs the Fellowship Nomination Committee at the Athena Rising Foundation as an Athena Alliance member.

She helps companies identify value and improve efficiencies for Procurement, Sourcing, and Vendor Management functions through advanced technology, collaboration, innovation, diversity and partnerships. She was nominated for "Transformation Leader of the Year" by the Women in IT Summit & Awards Series in 2020.  

Purvee holds an MBA from the Kellogg School of Management at Northwestern University and a Bachelor of Science in Marketing from San Jose State University.