Organizations increasingly realize that where they spend their money matters — there is growing evidence of the business and social benefits of a robust supplier diversity program. Socially, organizations can have a broad and deep impact on underserved communities through leveraging their purchasing power and investing in minority-owned enterprises (MOE). Increasing supplier diversity also creates a more resilient supply chain and fosters innovation. However, due to historical structural and institutional barriers, MOE are underrepresented in supplier spend. Knowing this, a global cafe chain decided to make developing a robust supplier diversity program their 2021-22 “big bet” and wanted to explore what it might look like.
While existing suppliers could note in their submissions if they were diverse or minority-owned enterprises (MOE), the chain had no proactive initiatives or internal systems to help support, cultivate, or evaluate MOE. A international coffee chain engaged us to do some research on the successful strategies and practices other organizations employed to create supplier diversity programs.
How We Did It
We started this work in the way we would most research engagements. We conducted an external landscape and competitor analysis to determine which of the chain’s peers were doing this work well. We also did an academic literature review, spoke to subject matter experts, and conducted a number of internal qualitative interviews with the chain’s supply and procurement team.
Over the course of the work, our objective morphed: the chain didn’t just want to know what best practices looked like, they also wanted concrete recommendations of what they themselves could begin to do and suggestions of where they should set their targets. We did an additional deep dive and analysis into their financials to inform these recommendations, looking at how they were currently allocating their resources.
The chain had a 2 for 1 economic impact, meaning every one dollar they spend creates a two dollar social impact. This helped bolster our case that if they changed their practices, it could significantly and positively impact diverse communities. As such, even a modest increase in spending with MOE and increasing the number of MOE in their supply chain would have an outsize effect due to the chain’s overall economic impact.
Based on our research, we created a report detailing best practices and strategies that the supplier diversity program could undertake. We then divided that content into phases. First, we defined clear targets for 2026 and 2030 that were informed by the chain’s starting point and our understanding of the landscape. Next, we created a roadmap for the chain to begin doing the work.
The work is already beginning to bear fruit: the board convened and approved the plan we set forth. The chain has started a public campaign to share their targets and goals with their customers and have also partnered with a large public university system to launch an open-source toolkit to educate diverse-owned entrepreneurs.