The HACR Corporate Inclusion Index (CII) serves as an evaluation tool for Corporate America’s Hispanic diversity and inclusion practices in four key areas: Employment, Procurement, Philanthropy, and Governance. This week, we will highlight some key points from the Procurement pillar of the 2019 HACR CII Report and what they tells us about the progress and challenges faced by companies in maintaining diversity throughout their supply chain.
WHAT DOES THE PROCUREMENT PILLAR MEASURE? The Procurement pillar of the HACR CII measures the impact of a company’s supplier diversity strategy. Many companies are starting to recognize that, much like overall employee diversity, supplier diversity is also a business imperative. Supplier diversity impacts large firms and small businesses enabling them to grow their consumer base, develop community relationships, and build their brands among potential new customers and partners. By providing vendor opportunities to underrepresented suppliers and facilitating the success of Hispanic-owned businesses, corporate giants have the power to promote the economic development of the local and regional areas surrounding these businesses. It’s a win-win situation for everyone.
WHAT DID WE LEARN? Procurement continues to be an area with enormous opportunities for improving Hispanic inclusion. Based on aggregate outcomes from the 2019 HACR CII survey, there are several areas that Corporate America and its Hispanic constituents should continue to follow closely:
The average procurement spend with Hispanic suppliers was one (1) percent. Companies continue to underutilize minority vendors. Investing in minority-owned businesses is ultimately an investment in the communities and local economies that a company occupies. More importantly, investment in these communities can help stimulate innovation – as they grow, so do the organizations that work with them.
Although 89 percent of companies surveyed have supplier development initiatives in place, only 51 percent of companies offer financial assistance to their suppliers. A common concern for companies working with diverse suppliers is their capacity to handle the size of their business. Financial assistance can come in a variety of forms: through investment in the company, flexible and advance payment terms of contracts, loans, and covering the cost of the development needed to increase their capacity (i.e. skill-building programs). Again, such investments help stimulate innovation for both the supplier and the companies they work with.
Corporate America can continue to work on improving the diversity of their suppliers by strengthening their partnerships, starting with ones within their own internal networks. Hispanic employee resource groups (ERGs) can facilitate relationship building with Hispanic business owners in the community. Once connected, the businesses that require further development in order to become qualified can be matched with resources or programs that could be mutually beneficial to the continued growth of both organizations. Most importantly, companies should also strive to continue developing and improving the tracking of their suppliers. Research indicates that companies with the ability to track their supplier diversity strategy goals see a significant increase in their earnings. Not only is harnessing the power of diverse suppliers critical, but so is tracking the impact of supplier diversity initiatives on growth and success.
To learn more about procurement trends and best practices, download a copy of the 2019 HACR Corporate Inclusion Index report here.
The 2020 HACR Corporate Inclusion Index (CII) survey launched January 7, 2020. If you are interested in participating, please click here or contact us directly at firstname.lastname@example.org.