Set Goals for Spending and Other Interactions with Diverse Suppliers. Then Track Them.
Establishing metrics to determine the success of your supplier diversity program should happen early in the planning phases of your program’s development. The easiest way to define these goals and desired outcomes is to create an outline using the Objectives and Key Results (OKRs) framework. The objectives and key results that your organization chooses should be defined early in the planning process so that there is ample time for effective tracking. Establishing these goals early on also allows for built-in accountability and understanding throughout your organization.
What Does Success Look Like?
Getting these key metrics in order can be done by figuring out what success looks like for your organization. Every industry has specific requirements and benchmarks for supplier diversity, as does each individual organization. When using an OKRs framework, the main objective will define your organization’s reasoning for creating a supplier diversity program and will most often be an objective like increasing the percentage of diverse suppliers by a certain percentage or by meeting your organization’s industry standard.
How is Success Measured?
Success is most often measured quantitatively in regards to the success of your organization’s supplier diversity program. Key results should always be measurable benchmarks that are reached in order to achieve the program’s goals. What organizations track will vary, but the process most often looks something like this:
Set your quantitative diverse supplier development performance goals. These goals can be the overall number of diverse suppliers your company has engaged, the increase in spends with diverse supplier groups, and the like.
Track your cost savings with diverse suppliers or cost reduction contributions. Diverse suppliers generally offer a more competitive price point and are more adaptable to market fluctuations.
Select your return on investment (ROI) model.
How Do I Track Supplier Diversity Data Accurately? This is A LOT of Data!
Indeed, this is a lot of data! Establishing a diverse supplier tracking system is often very time consuming. While there should be personnel allocated to track this data, it’s often the case that the solution needed is far more intricate and robust for one person to deal with in a traditional manner. Your organization will need to track diverse supplier spend by business unit/department, buyer, commodity, geographical area, ethnicity, gender, cost reduction, and all the other metrics you’ve identified prior. Your organization will also need to keep record of each transaction it has with a diverse supplier.
Tracking and Reporting Economic Impact
The focus of supplier diversity has traditionally been to promote growth within underserved and underrepresented communities. One of the main challenges is translating this qualitative goal into quantitative numbers that can be used to measure value. While measuring and reporting direct-spend dollar growth is important, understanding how your organization affects its local economic environment helps paint a more complete picture.
Economic impact tracking and reporting is how your organization can more fully understand just how its procurement practices affect the local economy. Economic impact is simply the effect that your organization’s business practices have on the economy. In the case of supplier diversity, it’s a measure of how doing business with local small and diverse suppliers generates local revenue, income, and jobs.
How to Track and Report Economic Impact
There are four types of economic impact:
Output effect is the measure of revenue created by small and diverse suppliers within your supply chain. This is tracked simply by recording every purchase your organization makes from a small or diverse supplier. By purchasing from a small or diverse supplier, your organization directly impacts that supplier’s revenue.
Employment effect is the measure of the number of jobs created as a result of the business activities of small and diverse suppliers in your organization’s supply chain. For instance, if your organization purchases large quantities of a product or service from a diverse supplier, that supplier may then need to hire additional staff or purchase additional supplies from their own suppliers to fill your order. In turn, this means these secondary suppliers may need additional hires as well.
Income effect is the measure of total income generated with small and diverse suppliers within your organization’s supply chain. This is where organizations can really see how their supplier diversity program impacts the broader economy. When diverse suppliers have to hire additional employees to meet demand, income paid to these new employees positively affects the local economy.
Tax effect is the measure of local, state, and federal and personal tax dollars generated due to your organization engaging diverse and small businesses. For example, if your organization hires a diversely owned marketing company to launch a nationwide marketing campaign, when a campaign specifically for Chicago is launched, that campaign will support state, local, and personal income taxes in that particular municipality.
The Compounding Effects of Economic Impact
One of the most powerful measures of your organization’s supplier diversity program is how the actual money spent with diverse businesses continues to have impact beyond the initial spend. This compounding effect is technically known as ‘the multiplier effect’.
The multiplier effect is seen most easily through the vehicle of job creation. When your organization contracts a small diverse supplier, jobs can and do result further on down the supply chain. When your organization spends money with diverse suppliers, that money gets used on payroll, other suppliers in the supply chain, and other operational costs. Downstream suppliers do the same thing, thus creating the multiplier effect.
Measuring Economic Impact is Powerful
Measuring and reporting economic impact and showing how the multiplier effect operates are hugely important for stakeholder buy-in. Economic impact reporting clearly demonstrates how engaging small and diverse suppliers creates a more robust and sustainable supply chain for your organization and can help with ensuring adoption and accountability to the supplier diversity policy and program throughout your organization.
SupplierGATEWAY Announces Partnership with Unilever West Africa for EDC
SupplierGATEWAY is proud to announce partnership with Unilever West Africa by introducing Enhanced Digital Certification® (EDC) Africa. The program launched May 11, 2022. This innovative diversity certification is a fast, affordable, and easy way for women-owned and disability-owned businesses in Nigeria to become diversity certified. EDC Africa certification also exposes these businesses to new opportunities as more companies in the private and public sector seek to engage certified diverse suppliers. The launch event will be held in Lagos, Nigeria at Unilever West Africa’s headquarters, with support from WIMBIZ and UN Global Network. Our CEO Ade Solaru will be a featured speaker during the event’s roundtable.
“We have 56,000 supplier partners around the world, and if all our partners commit to increase their spend with diverse suppliers, it will exponentially scale up and accelerate the transformation of our value chain,“ states Dave Ingram, Chief Procurement Officer at Unilever. “My big ambition is that our suppliers will consider the value of supplier diversity, and commit to it across their full network.”
SupplierGATEWAY’s Enhanced Digital Certification® Africa is a seamless solution to the problems diversely-owned businesses face when attempting traditional supplier diversity certification. Completely digital and entirely online, EDC is a new, fast and inexpensive way for small and diverse businesses to get certified as diverse owned organizations, while at the same time exposing them to new opportunities afforded by being in the SupplierGATEWAY network. Certifications last for either one or three years, and cost either $25 or $70 USD which substantially lowers the cost barrier for certification.
The launch of SupplierGATEWAY’s Enhanced Digital Certification® has attracted attention globally from institutions invested in creating an ever-growing and inclusive base of diverse suppliers.
Evaluate Your Current Supplier Base for Diverse Suppliers
Establishing baseline metrics for your company’s current engagement with diverse suppliers is of critical importance when starting a supplier diversity program. Without these baseline metrics, your company won’t be able to evaluate how successfully the program is implemented throughout your organization.
Chances are, your company is already working with a number of diverse suppliers and small businesses but doesn’t even know it.
As the saying goes, “You don’t know what you don’t know.” Uncovering and understanding your current engagement with diverse suppliers allows your organization to implement key performance indicators for your new supplier diversity program.
Evaluating your current supplier base for diverse suppliers can be quite a challenging task for many reasons, but the largest reason is that many diverse suppliers aren’t actually certified to begin with.
There are several reasons why a supplier or business may choose not to be certified:
Cost-prohibitive. Oftentimes, the cost of certification can be a barrier, particularly for smaller companies. Certification can cost thousands of dollars a year, which may not be in the budget for smaller organizations.
Time-intensive. Most traditional certification processes take an inordinate amount of time to complete. Between paperwork and site visits, a traditional certification can take months to process and even longer to be issued.
Certification is not all-encompassing. If a business has multiple diversity statuses (i.e., a business that’s primarily owned by a Black disabled woman who’s also a veteran), each of those statuses must be attested to separately. This means that a business owner with multiple diversity statuses has to hold a certification for each of those statuses in order to be officially recognized as diverse in that particular category. The same cost and time attributes apply for each certification, which would have also to be renewed yearly.
Unaware of the benefits of certification. While the cost and time involved with being certified are major drawbacks, some organizations find that the benefits of being certified outweigh those drawbacks. So many organizations don’t know that companies like yours are actively looking for diversely certified businesses to engage with and, therefore, don’t understand that diversity business certification opens up opportunities for major growth.
Without certifications, there’s no easy way to attest to the diversity of your supply chain. Attempting to fill in the blanks on your own is often a very expensive and time-consuming process that involves dedication to gaining access to databases and then cobbling information together with very little certainty as to the accuracy of your findings. Your company may even find that it needs to develop custom applications to do the job, and this is a huge sink of both time and money.
Because of these hurdles, many organizations use a third-party company (like us!) to do what is known as data enrichment. The data enrichment process looks like this:
Your company supplies its supplier information to a third-party company.
The third-party company uploads your supplier information into a system that then “fills in the blanks” of your current supplier information. Third parties fill in missing supplier information via access to hundreds of different data sources that are international, national, and local in nature. These data sources are cross-checked with your current supplier database to find diverse suppliers that you’re already working with.
Depending on the data your company tracks, a third-party company can also identify Tier 2 spending with diverse suppliers. The inclusion of Tier 2 data paints a much more comprehensive picture regarding your company’s current engagement with diverse suppliers. Tier 2 data does require information from your Tier 1 suppliers, and this process can be a lot more time-consuming.
Once your supplier data has been enriched, you can see exactly how your company currently engages with diverse suppliers. This includes where and how your money with diverse suppliers is being spent. With this knowledge, your company can develop initiatives to adjust or redistribute your current spend.
For example, you may find that while you do spend with small businesses, those small businesses don’t fall within your supplier diversity program’s engagement parameters. You can decide to move that spend to another company that does, engage with new suppliers that meet your program’s criteria, or keep engaging with the current supplier as-is.
Ultimately, you can’t know where you’re going unless you know where you currently are. Evaluating your current supplier base for diverse suppliers gives your company the knowledge it needs to create a robust supplier diversity program that’s constantly improving and evolving.
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SupplierGateway’s Supplier Diversity Platform makes evaluating your current suppliers quick and easy. Talk with sales and find out how our platform can help you create a world-class supplier diversity program for your organization.
Five Steps to Defining Your Supplier Diversity Program
Defining your company’s supplier diversity program is a crucial early step in getting a supplier diversity program started. Establishing guidelines early on creates a clear and concise pathway for stakeholders to follow while letting suppliers and the public know about the scope of your program.
1. Determine which groups your supplier diversity program will include
Choosing which supplier groups your program will include is entirely up to your organization, but needs to adhere to any local laws and ordinances. In the US, it is common best practice to recognize diverse suppliers as organizations that are owned and operated by at least 51 percent of any of the following groups:
Women
Persons with disabilities
Minorities (US, or where a minority group is recognized by a country’s government) including:
Native American
African American
Asian American
Hispanic American
Veterans and military-service-disabled veterans
People who are lesbian, gay, bisexual, or transgender
2. Determine what certification types your program will accept
There are several third party organizations that certify diversity status and maintain databases for member companies to access. Below is a current list of organizations that certify diverse suppliers and small businesses:
For more information on supplier diversity certifications, check out this article.
3. Determine what metrics your supplier diversity program will measure.
There are several different ways to measure supplier diversity success within your organization, and the most common are by identifying increases in spend with diverse Tier 1 and Tier 2 suppliers.
Tier 1 suppliers are those suppliers, diverse or not, that your company has awarded direct contracts to.
Tier 2 suppliers are those suppliers, diverse or not, who are awarded contracts from Tier 1 suppliers.
Asking your Tier 1 suppliers to source inclusively from diverse Tier 2 suppliers offers diverse companies the chance to participate in your company’s supply chain. It also increases the reach of your company’s supplier diversity program, creating more opportunities for diverse suppliers.
Other metrics that are commonly measured include economic impact (number of local jobs created), brand enhancement metrics, number of diverse suppliers invited to RFPs, number of new, diverse suppliers that have been onboarded, dollar savings due to utilizing diverse suppliers, and increase in customer satisfaction.
4. Identify the organizations and industry groups that your company will join
Joining certification organizations and other industry groups as a company grants your company access to peer networking, matchmaking opportunities, databases of diverse suppliers, communication platforms, and supplier development opportunities.
There are international, national, and local organizations that your company can join:
Most states and municipalities also have smaller, local groups that are specific to a particular diverse population. Joining your local chamber of commerce can help steer your company in regards to engaging local diverse suppliers and other businesses.
5. Identify key employees that will be responsible for developing and maintaining the program.
According to a paper published by the University of Washington in partnership with the Northwest Mountain Minority Supplier Development Council, it is imperative that a full-time employee or employees be authorized to oversee the supplier diversity program. Supplier Diversity should also reside within the procurement department within a “Center of Excellence” (COE) framework. The supplier diversity program, while separate, must be integrated into all existing business functions. In order to do this, supplier diversity needs to be positioned high enough within the company’s structure so that it can influence decision-making cross-functionally across all organization departments.
Aside from a specific person/department dedicated to supplier diversity, all levels of management and leadership must be held accountable to the supplier diversity program. Each department manager should be ensuring that supplier diversity is incorporated into their respective departments. To ensure that each department is adhering to the policy, a supplier diversity advisory board should be formed and this board should meet quarterly.
How to Develop Your Company’s Supplier Diversity Policy in Four Steps
When starting out on developing your company’s supplier diversity program policy and statement, it’s essential to outline and understand several key elements.
You’ll want to understand:
What the purpose of your supplier diversity program is
What the program’s goals are
How you plan to achieve those goals
Having a clear and concise supplier diversity policy will encourage buy-in across departments and with leadership, act as a guide for your supplier diversity team, and also help to build awareness regarding your supplier diversity program from both the public and suppliers themselves. This policy will also act as a guide for suppliers, helping them manage expectations around your company and its current needs.
Below are four actionable steps to guide you through the process of developing your company’s supplier diversity policy.
1. State the Purpose of Your Supplier Diversity Program
Why is your company interested in supplier diversity, and what is your company hoping to achieve by having a supplier diversity program? Here are some common answers to these questions:
Increasing supply chain resiliency and strength
Finding the best suppliers by increasing competition and encouraging innovation
Promoting diversity – it’s the right thing to do
Creating positive economic impact on the local economy
Make sure you’re secure in the reasoning behind your purpose. Include pertinent information in your supplier diversity policy that reinforces your reasoning and best explains your company’s rationale for establishing a supplier diversity program. This makes creating goals and initiatives a lot easier and more cohesive overall.
2. Define What Diversity Means to Your Company and Your Supplier Diversity Program
Leadership, stakeholders, and suppliers themselves will need to know what diversity means in regards to your specific supplier diversity program. These parameters will specify what diversity categories count towards your diverse spend goals. Decide what diversity categories your program will track, and make sure those categories are listed in your supplier diversity policy.
Here are some commonly tracked diversity categories:
You’ll also need to decide whether or not you’ll require diverse suppliers to be certified by a third-party certification body. Many organizations require suppliers to be certified by third-parties in order to verify their diversity spends, but there are also cases where suppliers may self certify. Programs that report to government agencies like the Small business Administration (SBA) will need to be certified through the SBA’s certification program. Be up-front about what certifications your business will accept.
3. Develop Goals for Your Program
We all know how difficult it is to work towards a goal that hasn’t been stated or quantified. Your supplier diversity policy will need to include goals that guide your company’s supplier diversity program towards results.
Certain goals will have tangible results that are easy to track and measure, like increasing diversity spend by a certain percentage or dollar amount. If you’re interested in creating a positive economic impact on your local economy, your company can pledge to spend a certain percentage with local-to-you suppliers.
Less quantifiable goals for your company’s supplier diversity program might look like increasing supplier resiliency, driving company innovation, and increasing company sustainability.
No matter what goals you choose for your supplier diversity program, make sure they are clearly understood, specific, measurable, and attainable.
The most difficult part of setting goals is often the uncertainty about what constitutes a reasonable goal. One way to get a sense of reasonableness is to benchmark against other organizations. Ideally your benchmarks should be against organizations in a similar situation, market and size as you – but seeing what other industries are doing can also provide some insight into what’s possible.
4. Design and Implement Programs to Reach Your Supplier Diversity Goals
Once you’ve developed goals for your supplier diversity program, it’s time to figure out how to reach them. Determine the initiatives and programs necessary for your company to reach stated goals and include these in your supplier diversity policy. This will let suppliers know about opportunities with your company and act as guidance for your supplier diversity team in developing future initiatives.
Lots of companies make use of a supplier registration portal that allows diverse suppliers to register with the company. This helps tremendously with diverse supplier management. Supplier Diversity Software helps your company track multi-tier spending, keeps your data in order, and keeps your company up-to-date regarding any compliance issues with your suppliers.
Joining local chambers of commerce builds credibility in your local community while giving your company access to smaller, diverse suppliers. Developing relationships with national diverse supplier councils will help your company engage a larger variety of suppliers, making your diversity goals easier to reach.
Remember: your supplier diversity program policy should act as an informational guideline that keeps stakeholders, leadership, the public, and suppliers up-to-date regarding the goals of your supplier diversity program. The supplier diversity policy should also lay the groundwork for strategies that will help your company achieve the program’s goals.
As your supplier diversity program grows and changes, so should your policy, so be sure to keep your supplier diversity policy updated.
Four Reasons Your Company Needs a Supplier Diversity Program
Starting a supplier diversity program from the ground up is certainly a challenging endeavor with lots of specific hurdles to overcome. One of the biggest challenges we hear about is getting stakeholders like upper level management and C-suite executives to buy into the cause. Ultimately, instituting a supplier diversity program in your organization requires a fundamental cultural shift that starts from within. A little bit of external social pressure never hurts, either.
There are, however, specific areas that you can discuss with stakeholders when trying to sell a supplier diversity program. While there are mandates in place in the US that require organizations of a certain size to spend a certain amount of money with diverse suppliers, focusing on this “bare minimum” strategy undermines the more direct and tangible benefits that come along with having a robust supplier diversity program.
Here are four talking points that you can use to help shift your organization’s culture around instituting a supplier diversity program.
Instituting a Supplier Diversity Program is the Right Thing to Do Ethically and Economically.
If your organization is concerned with responsible corporate citizenship, instituting a supplier diversity program is simply the right thing to do. Your business may already have diversity initiatives in place for workforce and investment. Supplier diversity runs parallel and often intersects with other diversity initiatives that are already part of your organization’s culture.
Supplier diversity isn’t just good for ethics— it’s good for economic growth.
The U.S. Small Business Administration estimates that the US has about 8 million minority-owned companies. These companies generate some $400 billion in economic output, leading to 2.2 million jobs and $49 billion in annual tax revenue according to the National Minority Supplier Diversity Council.
Diverse-owned and small businesses are a massive site of growth in the US economy. A study conducted in 2015 by Womanable and American Express showed that woman-owned businesses in the US created over 300,000 new jobs while male-owned businesses cut over 1 million jobs.
Organizations that fail to see the ethical or economic value of adopting inclusive practices are certain to be left behind.
Supplier Diversity Programs Create Stronger, More Resilient Supply Chains
Your organization’s supply chain will simply be more agile and resilient when it includes diverse suppliers. Having more sourcing options in your supplier pool means that when one supplier falls through, another supplier can come through.
Instituting a supplier diversity program alongside a multi-sourcing strategy ensures that your supply chain is better protected from things like natural disasters, pandemics, and unforeseen emergencies.
Supplier Diversity Programs Save Money and Create New Opportunities
Diverse and small businesses are often more price competitive than their large, non-diverse counterparts, so including them in your supply chain encourages competition and drives down costs.
According to this study, even when procurement teams had even slightly higher supplier diversity adoption rates, they managed to generate around 133% better returns on the cost of procurement, which created an extra $3.6 million for their organization’s bottom line.
Another study shows that organizations that adopt supplier diversity programs are more likely to penetrate into new markets and find new customers and clients.
Supplier Diversity Programs Foster Innovation and Collaboration
Innovation oftentimes happens outside of mainstream markets, and that’s oftentimes where small and diverse suppliers are forced to operate. These suppliers differentiate themselves from their larger competitors by constantly innovating and working with their clients on innovative solutions. Small and diverse businesses also tend to be more adaptive and can quickly find solutions to your organization’s challenges.
Without access to these nimble small and diverse suppliers, your organization won’t be able to access the full spectrum of innovation that naturally happens when you prioritize a diverse supplier base. Sometimes finding and accessing these suppliers can be difficult, but there are several ways your organization can find and interact with them.
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COVID-19 has taught manufacturers a bitter lesson. The global supply chain doesn’t adjust well to unexpected or unusual incidents — so-called black swan events. Extended lockdowns, changes in consumer behavior, spikes in fuel costs and tensions among global trading partners have caused an unprecedented breakdown of the supply network.
Today’s organizations need to take action to create a more resilient supply chain. But how to do it is still up for debate. Planning for future disruptive events, whatever they may be, isn’t easy. Following are seven suggestions for manufacturers to consider.
Prioritize business continuityand cashflow. Before the pandemic, few would have anticipated that supply chain disruption could be so devastating to the global economy, or that a shipping container shortage could cause a cascading domino effect spanning the globe. Now we know. CEOs and their executive leadership teams are obligated to reexamine and make business continuity strategies a priority. Reliable financial analytics across the enterprise — including branches, plant assets, fleets, and inventory — are required. Disparate or siloed systems will make consolidating capital harder.
Understand risks. Continuity plans should cover potential issues from employee safety and workforce accessibility to inventory of raw materials and the ability to deliver goods and services to customers. Communications and connectivity are two cornerstone elements to protect. Such plans require one fully integrated enterprise resource planning (ERP) application for full visibility. In addition, advanced analytics with built-in artificial intelligence and machine learning provide predictive abilities. Such advanced tools, along with a digital twin, will help leaders explore “what-if” scenarios and determine risk and potential impact. all of these steps are necessary for planning courses of action in the face of an emergency. Knowing what to do in an emergency means a more resilient supply chain.
Know your suppliers’ suppliers. It’s no longer enough to be familiar with tier-one suppliers and the potential risk they might carry. Purchasing agents should have a complete picture of where and how resources originate, and routes associated with each step in the progression. Less than half of the companies in a recent McKinsey survey say they understand the location of their tier-one suppliers and the key risks those suppliers face. But only 2% have visibility into the third tier and beyond. That matters because many of today’s most pressing supply shortages, such as semiconductors, happen in deeper supply tiers. Modern supply chain tools can track product through those tiers. A command tower which helps geo-track shipments and routes enables visualization of goods movements in real time.
Ensure traceability and accountability. Manufacturers should insist on relationships with shared information and accountability. According to a recent Bain survey, fewer than 15% of executives feel their current capabilities allow them to deliver traceability consistently. A majority of companies have started to build some traceability capabilities, but struggle to integrate them or consistently create value. Resiliency is impossible unless buyers, suppliers and other parties along a supply chain are willing to share data and collaborate. The Reuters report Where’s My Stuff? suggests that businesses share sensitive data with partners by creating “safe rooms” where joint teams can analyze data, without the fear that competitive information can be accessed.
Balance sourcing. “Don’t put all of your eggs in one basket” is the maxim that applies to the supply chain. Manufacturers need to build relationships with multiple suppliers in various geographies. Disruptions in the supply chain have rekindled interest in bringing suppliers, plants and warehouses closer to the end consumer. For many verticals, this is a challenge that will play out over years, with manufacturers needing to balance costs and reliability. When the supply chain planning tool is tightly integrated to the ERP and backend financials, companies can better grasp the financial impact of moving operations closer to the customer.
Throw out just-in-time delivery as the default strategy. This common lean concept has worked for decades, but the current disruption has proved that a just-in-time strategy for stocking the warehouse can leave manufacturers vulnerable. Safety stock that’s set very low doesn’t consider the mass interruptions that can occur. Automakers such as Toyota, Volkswagen and Tesla are stockpiling batteries, chips and other key parts. This also ties up capital, though, and consumes warehouse space, creating other challenges. The ideal solution is yet to be determined. Manufacturers will need to evaluate each part and component for its availability, risk, and alternatives. This isn’t just a supply chain issue; it’s also one of C-level strategy. Like most top-level strategies, it requires reliable analytics, easy-to-use reporting tools, and data-driven predictive insights.
Back to the drawing board. In some extreme cases, manufacturers might need to look to engineering to alter designs, specifying parts which are more readily available and from multiple sources. Again, integrated software tools make this type of strategic planning easier and more productive. Collaborative tools for communication between teams and advanced product lifecycle management (PLM) applications help manage this type of product development, tracking milestones and testing, while documenting decisions.
The supply chain will continue to be in the spotlight as consumers, manufacturers and suppliers are forced to make compromises and adjust. The ideal answers might be slow to gel, but it’s clear that manufacturers must take action or risk being caught with stockouts and cancelled shipments. While short-term solutions can help with some immediate needs, knee-jerk responses like stockpiling can be more detrimental than helpful. Companies must think through a holistic strategy that analyzes customer retention risks as well financial impact. C-level officers need to become engaged, helping to evaluate options, devise creative solutions and plan long-term strategies. The supply chain can’t be repaired overnight, but getting started is essential. More black swan events can strike at any time.
Andrew Kinder is senior vice president of industry and solution strategy with Infor.
Top 10 Tips to Operating a Sustainable Supply Chain
COP26 has highlighted the importance of sustainability, read the ten ways that you can operate a sustainable supply chain, with reference to ShipERP’s blog.
What is the meaning of sustainability? Sustainability has been at the forefront of people’s minds for years, but COP26 and similar events have highlighted the real need for change and for sustainability, sustainability is (simply) meeting our own needs without compromising the ability of future generations to meet their own needs.
We share ten tips for supply chain professionals to bear in mind.
1. Use recyclable materials
Many companies use plastic, which is not biodegradable, it is important that companies consider alternative, recyclable materials such as cardboard, paper, or bubble wrap as these are all biodegradable and are versatile, therefore they can be used for most, if not all, types of products.
2. Use alternative packaging materials
Many businesses are already exploring the avenues of plant-based products, so why not explore plant-based packaging? Instead of using packaging peanuts made from Styrofoam, consider using air pillows that are made from recyclable materials, not only are these cheaper to purchase and ship, but they are better for the environment as they can be recycled and used again.
3. Minimize production and supply chain processes
Your suppliers and manufacturing partners are there to support you, work in partnership with them to reduce the environmental impact of your supply chain. Many suppliers and companies alike can cut down or even eliminate their use of paper by going mobile in certain stages of the process.
4. Avoid pictures and text on packaging
Customizing your packaging can add a special touch for the consumer, but at what cost? Customizing your packaging can take up more resources and use up more materials. Instead of using expensive printing ink or similar, consider options such as inks that are made from milk proteins, rather than ink made from harmful chemicals which can be detrimental to the environment and wildlife.
5. Reuse packaging
All business owners will know that packaging can be expensive, so why not use packaging that can be reused by the customer? Not only will you get more value from the packaging, but it will have a positive environmental impact as fewer single-use materials are going into landfills. Organic fabric bags as opposed to plastic bags can be reused by the consumer, giving it another life rather than going to landfills and polluting the environment.
6. Ship items in bulk
Selling your products in larger quantities can help with reducing packaging waste, as the items can be packaged in the same, biodegradable parcel. Not only are you wasting less packaging, but shipping these items in bulk as opposed to multiple trips for small shipments can reduce carbon emissions from vehicles that are involved in the logistics process.
7. Reduce packaging size
The one size fits all approach does not apply to packaging, you should not use the same sized package for all items, instead, you should pack smartly, use the correct sized box so you avoid unnecessarily wasting space and/or materials.
8. Use carrier packaging
Having your own customized packaging can be nice, it can add a personal touch for the consumer, but is it worth the environmental impact for the customer to take a look at it, and place it in the bin? Instead of using this customized packaging, consider using the packaging provided by couriers such as UPS, they provide standard cardboard boxes which are involved in recycling programs, which makes it easier for associated companies to be sustainable.
9. Choose a different shipping method
Overnight air shipping is convenient and may get the product to the customer faster, but there are other transportation modes that are less harmful to the environment such as ground transportation. You may not be able to choose ground transportation everywhere, but take a look at and analyze your shipping history to see where you can use each method of shipping to save not only emissions but costs to your business.
10. Offset waste with green benefits
If you can not change your packaging or explore different means of shipping, your business should consider offsetting the emissions that non-sustainable packaging and air shipping costs. Many companies choose to plant a tree for every purchase that is made, if this is feasible for your business, this should be considered. Not only will this help offset your emissions, but it can positively impact your brand awareness as customers can see that you are actively doing something about the climate crisis.
We Need More Small-Manufacturing CEOs Making Bold Moves
A look at three leaders who are committing to the future, rethinking risk and embracing collaboration. Originally written by Ethan Karp and Guy Coviello for Industry Week Magazine.
It was a fairly typical day for Bob Messaros, former college football coach and current CEO at Commercial Metal Forming (CMF). As he strolled onto the production floor, he noticed an operator attempting to fix a piece of equipment—not the operator’s usual role.
“We consistently drove home the message that all of our associates could take the opportunity to lead,” Messaros recalls. “And we expanded on it to help them recognize when the opportunity might surface.
“And here in front of me was the result: a person willing to embrace the challenge by solving a problem outside his scope. He was thoroughly engrossed in finding the solution, and I was elated. Because let’s face it, if everybody thinks I have all the answers, they’re going to be sorely disappointed.”
In the not-too-distant past, manufacturing leaders often not only believed they had all the answers, but also focused on short-term profit at the expense of longer-term growth. Removing inefficiencies was the game plan, and it wasn’t out of the question to see employees, suppliers and certain customers as expendable.
Leaders like Messaros tell a much different story. Their sights are set on improving business growth, customer relationships and innovation while supplying vision and purpose to their teams. They nurture and grow their workforce, and value collaboration over autocracy.
To lead the world in smart manufacturing, we need more of this kind of leadership. We need CEOs making bold moves to improve their companies and light the path forward for the industry. We often think that means big manufacturers making massive investments in headquarters and training centers. This is enormously important. But we tend to forget about the leaders of small and mid-sized companies (the bulk of the industry) who are raising their game and revolutionizing manufacturing.
As MAGNET interviewed manufacturing and community leaders, like the Youngstown/Warren Chamber, to create the Blueprint for Manufacturing in Northeast Ohio we uncovered three things that the most successful small manufacturers do well: commit to the future, rethink risk and embrace collaboration. There are many amazing stories, but here are three examples that exemplify leadership that’s built for what’s next.
Commit to the Future
Growth happens when companies lead well for today and tomorrow. It’s all too easy to get lost in the day-to-day firefighting, particularly for the CEO of a small company who “does it all.” The key is to keep one eye firmly focused on the future and invest accordingly.
That’s what helped ROE Dental Labs thrive during the pandemic. The company normally manufacture crowns and dentures but with the help of 3D printing made a quick pivot to producing face shields and nasal swabs.
In two months, ROE manufactured 500,000 nasal swabs, which allowed Ohio’s government to ramp up COVID-19 testing, paving the way for the state to safely re-open. And because ROE branched out into new products, it grew its workforce from 180 to 220, despite the pandemic. The key to success was that before the pandemic, the company had already transformed its operations and trained its workforce in digital production and 3D printing.
“We’ve really evolved into computer screens and milling machines and working with a mouse as opposed to hand tools,” explains BJ Kowalski, ROE Dental president. “So, we have a very technologically advanced staff. That really helped us make this transition quite easily.” Being tech-forward allowed ROE to do things faster, at a higher quality and at a lower price point that it would have otherwise, Kowalski says.
Rethink Risk
By its very nature, manufacturing is not a carefree endeavor. It’s defined by testing, measuring, refining and constantly improving production. Combined with engineering requirements, quality control and the critical nature of what’s being created, it’s no surprise that risk is an unwelcome visitor. Leaders, however, must overcome risk-aversion to fully embrace the future.
“Making the leap to adopting Industry 4.0 looks, at first glance, like a risk,” says Mike Garvey, head of M7 Technologies, a manufacturing engineering research company that uses cutting-edge digital technologies. “But manufacturing CEOs need to understand that successfully adopting digital technology is actually about limiting risk. The upfront costs are real, but failure to adapt will lead to obsolescence.”
Garvey knows this firsthand because his family business almost went under after the steel industry started collapsing in the 1970s. M7 started as a bronze foundry in 1918 and when Garvey took over in the mid-eighties, the company was insolvent. Instead of giving up, Garvey began investing in expensive digital measurement equipment. It took 10 years to turn things around, but the risk paid off.
“Now we have approximately 50 employees. And we’ve grown our revenue at about 18% a year, year over year, for the last 35 years,” says Garvey.
Smart investments in Industry 4.0 technology took M7 from the brink of bankruptcy to being a pioneer in digital and additive manufacturing. In fact, M7 now has one of the largest 3D printers in the world.
Garvey’s advice for other small manufacturers? Stop thinking short-term and start looking at where your customers will be in five or 10 years. Then, develop the capabilities, workforce, and technology to meet their future needs. He says there’s lots of support, funding, and expert help to do this—manufacturers just have to seek it out.
Embrace Collaboration
Something invaluable Garvey recognized early on is that manufacturing is not a solo sport. Collaborating with other manufacturers, funders, researchers, educational institutions, and community groups can help smaller companies fight above their weight class, embrace new technologies, and unlock growth.
Matt Hlavin, the CEO of Thogus, a plastic injection molding company, is using this approach to help overcome talent shortages. Last year, Thogus launched a five-year training program for high school juniors, seniors and recent grads. The company partnered with nearby Lorain County Community College to develop a curriculum that encompasses finance, cost analysis, pricing, quoting, and production, technical, and shop floor basics.
Trainees fund their initial year at college. Then they spend the next four years working at Thogus, rotating between material handling, setup, processing, maintenance, and the tool room. So far, the first two trainees are exceeding expectations and Hlavin plans to expand the program.
“Our current and future associates understand we’re building an ‘Oceans 11’ team, where each person is supremely talented in their area of expertise, and we’re all aligned to one goal,” says Hlavin. “And if we’re wrong on the goal, we’re building a team that can challenge us on it.”
Clearly, industry-education-community collaboration is the only way to address massive issues like the talent gap. And every individual leader like Hlavin who steps up to help create innovative solutions puts us one step closer to building the workforce we need to win in the future.
Push Progress in the Same Direction
As we rebuild our post-pandemic world, we have a singular opportunity to build a better future for manufacturing. A more resilient supply chain. A diverse, technology savvy workforce. A digital, connected, innovative industry. As these three stories demonstrate, we can all lead, no matter where we are or what size our company is. Leadership starts with each of us. And if we also come together to catalyze change and push regional and national progress in the same direction, our story will end with a manufacturing industry that leads the world.
Ethan Karp is president & CEO of MAGNET, Northeast Ohio’s Manufacturing Advocacy & Growth Network, and Guy Coviello is president & CEO of the Youngstown/Warren Regional Chamber.
SupplierGATEWAY partners with Kaleida to offer Enhanced Digital Certification in the UK
SANTA ANA, Calif. March 7, 2022 – SupplierGATEWAY, in partnership with Kaleida, is proud to bring Enhanced Digital Certification® to the UK starting in April of 2022. This innovative diversity certification is a fast and accessible way for qualified businesses in the UK to get diverse supplier certification. EDC UK, through partnership with Kaleida, opens access to thousands of tenders worth billions of pounds for certified suppliers in the UK.
In the UK, finding diverse suppliers is time consuming and involves intense research and cross-checking against databases. EDC UK, in partnership with Kaleida, enables companies to quickly and easily connect with certified diverse suppliers who want access to more opportunities in both the public and private sector.
EDC UK is an all-in-one, fully inclusive certification for diverse UK suppliers. The certification is easily verified 24/7. Companies can also verify certification by logging into the SupplierGATEWAY platform or electronically through an API connection.
UK companies can invite their current suppliers to apply for certification. Businesses can apply for $25 USD. The process is quick, easy, and entirely online.
The launch of SupplierGATEWAY’s Enhanced Digital Certification® has attracted attention globally from institutions invested in creating an ever-growing and inclusive base of diverse suppliers.
SupplierGATEWAY is a leading digital supplier management software platform that automates and simplifies supplier and vendor management for some of the most recognized companies in the world. Products encompass supplier sourcing, registration, risk management, compliance, and management, as well as corporate responsibility and diversity & inclusion.
For more information visit SupplierGATEWAY’s website.
About Kaleida:
Kaleida International is the UK’s and EMEA’s first fully-inclusive B2B marketplace for tenders connecting buyers to diverse suppliers.
Finding diverse suppliers in the EMEA region is time consuming as the process today involves researching against multiple databases.
The Kaleida platform, a golden source of supplier diversity data, improves the accessibility of diverse suppliers to corporate buyers with an ESG mandate.
