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How CPG Brands Can Deliver On Supplier Diversity Promises, By Costas Xyloyiannis, CEO Of HICX

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Global consumer packaged goods (CPG) brands have good reasons to build supplier diversity plans. Apart from making a positive impact they also need to meet the expectations of regulators, shareholders and consumers, which have economic implications. In fact, supplier diversity is a top-level issue. At least eight of the world’s top 10 CPG brands by spend have stated goals in this area. Unilever has committed to spend €2 billion annually with diverse businesses by 2025 and by the same year, Mars intends to reach £1 billion globally in diverse business spend and have at least 60% of its suppliers actively promoting diversity programmes within their organisations. Other brands including Mondelēz International, Coca-Cola and Nestlé are also dedicated to sourcing from businesses that are 51% owned by a historically under-represented group. Likely, more CPG brands will continue to make supplier diversity a priority. But while the leaders of global brands plan to drive spend to diverse suppliers, in practice, their teams on the ground face an obstacle: diverse suppliers are difficult to find. Often only some diverse suppliers are certified, and it’s not a given that they will have the skillsets needed to meet the business’s needs. If CPG leaders want to succeed in this area, then they must support Supplier Diversity teams to add robust sourcing processes. Here’s a 3-step approach that teams can follow. Take stock of your existing supplier diversity status Before teams can deliver on supplier diversity commitments, it’s sensible to determine how many diverse suppliers already work with the brand. Teams can survey suppliers and use data enrichment services to match against existing databases of diverse suppliers. When actioning these surveys, take care to offer suppliers a helpful experience, because it will impact the quality of results. For example, if suppliers receive questions that don’t apply to them or that aren’t in their first language, this will harm their ability to respond well. At best, it will slow them down and at worst, they may ignore the request. The idea is to remove any barriers to reliable feedback. A great way to do this is by segmenting suppliers into categories and communicating with them accordingly. Whatever the approach, act like a “customer-of-choice” when rolling it out. It’s likely to get the best results. A recent HICX survey revealed that a staggering 73% of suppliers for some of the world’s biggest manufacturers would “go the extra mile” for their most important customer if this was also a customer-of-choice. Grow your number of diverse suppliers Next, teams can grow their selection by improving how they source. Guide buyers and requestors to proactively work with diverse suppliers by educating them and providing policies. Further, define what qualifies a supplier as diverse in various territories, then set out to find them using directories, research and recommendations. Then, onboard new suppliers using processes that capture their information reliably. This step would benefit from the help of Procurement because the function already works with and onboards suppliers. It’s worth considering whether Procurement should play an advisory role in helping buyers to spend with diverse suppliers. Lock-in progress by maintaining supplier data Finally, with diverse suppliers found and onboarded, keep their data accurate. This is crucial because teams need a clear view of the supply chain to deliver diversity promises. But in reality, supplier diversity teams face a barrier: few can see who their suppliers (some tens of thousands of them) are and what they’re doing. For instance, where is this supplier based? What qualifies them as ‘diverse’? Does the number of diverse suppliers from yesterday still hold today? Gaps in this knowledge can bring reporting errors and inefficient operations. At the end of the day, if CPG leaders help their Supplier Diversity teams to add good sourcing processes, then they can equip them to deliver on ambitious goals and leave a positive impact.   By Costas Xyloyiannis, supplier data expert and CEO of HICX, the supplier experience platform

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