2017 STATE OF SUPPLIER DIVERSITY REPORT DIVERSE SUPPLIERS
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1 7 STATE OF SUPPLIER DIVERSITY REPORT DIVERSE SUPPLIERS
2 CONTENTS Introduction Executive Summary Methodology Breakdown of Respondents 5 Supplier Size 7 Years in Business 8 Supplier Diversity Client Base Fortune Government Clients Finding Partners 5 Portals and Databases 6 Diverse Supplier Challenges 7 Challenges with Finding New Business 8 Supplier Diversity Program Influence The Joys of Being a Diverse Supplier Conclusion
3 INTRODUCTION The present is an exciting time to be a diverse supplier. Successful minority-, woman-, LGBTQ-, veteran-, and disabled-owned businesses can generate even more success by partnering with companies looking to increase supplier diversity spend. And in 7, increasing that spend has become a priority for many large enterprises. However, both sides sometimes struggle to form those partnerships, failing to find each other so that supplier diversity programs and the suppliers they employ can both grow. This situation can be especially frustrating for vendors, ready to expand their businesses but not being noticed by companies that can benefit from their services. We created a survey to give these businesses an opportunity to share their realities and opinions. CVM Solutions set out to learn more about the best practices, challenges, frustrations, and triumphs that diverse suppliers deal with every day as they look to grow and be successful. We created a survey to give these businesses an opportunity to share their realities and opinions. The results, gathered from 77 respondents, provided valuable insight on the state of supplier diversity from the often-overlooked supplier s point of view. 7 State of Supplier Diversity Report - Diverse Suppliers
4 EXECUTIVE SUMMARY Our comprehensive survey covered questions, some multiple-choice and some open-ended, that addressed a variety of diverse supplier topics. Some of the more interesting findings, which are detailed throughout this report, include: 8 percent of respondents employ fewer than people. 8 % of respondents are influenced as consumers to purchase from a company that operates a supplier diversity program. 8 percent of respondents have been in business for more than four years. More than half of responding suppliers say at least a quarter of their business is with Fortune companies. Networking events are the top means for diverse suppliers to find partners. 5 % of diverse suppliers actively pursue government contracts. % of both minority-owned businesses and woman-owned businesses that took the survey are certified. 7 State of Supplier Diversity Report - Diverse Suppliers
5 METHODOLOGY The roles our respondents hold also varied, with most identifying as the president of the company: VP Sales/Account Manager/Business Development 8% % % 6% CEO/CFO/COO Director We asked diverse suppliers across all industries to participate in our survey and received 77 responses in February and March 7; participants completed the survey in its entirety. Respondents came from a wide variety of industries, though almost half (5.7 percent) were from the professional, scientific, and technical services sector: Which industry/sector best corresponds to your organization? Accommodation and food services.% Administrative and support services 8.% Construction.7% President 65 8% % % Founder Educational services.% Healthcare/pharma.7% 7 Information.% 6 7% Manufacturing Marketing, advertising, and communications 6.%.5% 6 7 Other 6 Manager 7 Other Professional, scientific, and technical services.6% 5.7% 8 Real estate, rental, and leasing.% Finally, responses to open-ended questions that we ve highlighted in this report have been edited for grammar, clarity, and length. Telecommunications Transportation and warehousing.%.% Wholesale trade.% 8 7 State of Supplier Diversity Report - Diverse Suppliers
6 BREAKDOWN OF RESPONDENTS Certification by respondents category: Which category of supplier diversity pertains to your organization? (select all that apply) % 6% Minority-owned business enterprise 5% % If your organization is a minority-owned business enterprise, is it certified as such? Woman-owned business enterprise 8% Veteran-owned business enterprise 5% % 6% LGBTQ-owned business enterprise 6% 6 Small business enterprise % 6 % If your organization is a woman-owned business enterprise, is it certified as such? Other 8% Yes Certification in progress No 7 State of Supplier Diversity Report - Diverse Suppliers 5
7 If your organization is a veteran-owned business enterprise, is it certified as such? Respondents to the main question could choose more than one category; for example, a minority-owned business might also classify itself as a small business. Also, many respondents who fit the general definition No of a small business fewer than did not identify 8% themselves as one for this question. % Yes If your organization is a LGBTQ-owned business enterprise, is it certified as such? If your organization is a small-owned business enterprise, does it meet the federal and/or SAM requirements of a small business? All 6 LGBTQ-owned businesses that answered our survey stated that they were certified. % No % What impressed us was the percentage of respondents who confirmed that 7% their organizations were certified as diverse. For example, percent of reporting minority-owned businesses said they were certified, as did Yes 85 Yes 6 7 State of Supplier Diversity Report - Diverse Suppliers percent of women-owned businesses; all 6 LGBTQ-owned businesses that answered our survey stated that they were certified as well. Although this suggests our survey drew diverse businesses that were almost all certified, it also shows the importance of certification in the minds of those businesses. 6
8 5 SUPPLIER SIZE By diversity category: Women Minority How many work at your company? 8 % - % Veteran % 5 % 5, 5 Total: Total: Total: LGBTQ SBA Other %,+ % 5 6 Although diverse suppliers come in all sizes, for the most part, respondents to our survey are technically small businesses 8 percent employ fewer than 6 5 people, even if they aren t certified as an SBE. With percent employing 5 fewer than, the stakes are high for these companies: They must be proactive 5 in connecting with supplier diversity programs willing to hire them. Total: 6 7 State of Supplier Diversity Report - Diverse Suppliers 5 Total: 5 5 Total: 5,,+ 7
9 6 YEARS IN BUSINESS How long has your organization been in business? By diversity category: < year 6 < year Minority % 5 < year Women % 5 % years years 6% + years 5 8% years % 5 + years 85% % Veteran LGBTQ < year < year years % years % + years 77% + years 8% 8% < year SBA % < year Other years 8% 7 years % 5 + years + years 75 8% + years 6 76% 7 State of Supplier Diversity Report - Diverse Suppliers 8
10 By company size: < year 5 < year % years years 8% + years % % 7 + years 68% 7 5 % 8 5 < year % < year years % years + years + years % 8 % Most diverse suppliers are not fly-by-night operations but stable, successful organizations 8 percent have been in business for four 5,,+ < year < year years years + years or more years. Even more than two-thirds of businesses with fewer % 7 State of Supplier Diversity Report - Diverse Suppliers + years than have been around for more than four years. Statistics such as these should give supplier diversity programs confidence that experienced, diverse vendors are out there, waiting for partners. % 5
11 SUPPLIER DIVERSITY CLIENT BASE By diversity category: Minority % 5 Women 6% 8 7% % % 6 % Veteran % % % 6 5% % % 6- % 8% 7 % 8% -5 5% - 86 The findings from this series of questions present an optimistic picture on the state of supplier diversity. First off, percent of respondents are designated 5% % 5 % % % Other 6% % 7% SBA % 7 6% LGBTQ 7% 6% How many corporations is your organization currently working with as a designated diverse supplier? % % 6 % 7 as diverse suppliers by at least four clients supplier diversity programs. More- % 6 over, percent were employed by more than six. Good suppliers get noticed by supplier diversity programs and can expand their client base by continuing their outstanding work, networking, and making the most of their certifications State of Supplier Diversity Report - Diverse Suppliers 6- +
12 Next, and not unexpectedly, the number of is proportional to the number of clients. Smaller suppliers tend to be designated by fewer supplier diversity programs; larger vendors cast a wider net. For example, 8 percent of respondents with fewer than have - clients; that number drops to 6 percent for suppliers with -5. Here s the exciting data from this series of questions: Respondents have more clients with supplier diversity programs today than three years ago. The number of suppliers designated as diverse by zero companies dropped from percent three years ago to percent currently. Alternately, just percent of the respondents reported being tabbed by or more supplier diversity programs three years ago; that number more than doubled to in the present. -5 % % 5% 5 6-7% 7 By company size: -5 5% -5 5% 8 5% 5 6-7% 5 + % + 8% The news isn t all cheery: More than a fifth of respondents are not designated by a single supplier diversity program. Diverse suppliers are out there, but companies are still struggling to find them. 5-7% % -5 % 5% 7-5 6% -5 % Over time: 6-8% 5 6-7% + 8% 8 + % % 5 5% 86 % 8% % 5 5% % 86 7 % 6 % % % 7% 87 % 6% % % 5% 8 6% 6% 5 % 5-,,+ -5 % -5 % Currently year ago years ago years ago 6- % % 7 + 8% State of Supplier Diversity Report - Diverse Suppliers
13 8 FORTUNE How much of your business is with Fortune companies? Nearly half of respondents said 5 percent or less of their business is with members of the Fortune. Only about a third reported that they conducted at least half of their business with the largest enterprises. Although the 7 7% smallest (- employers) suppliers reported less business with the Fortune, surprisingly, the -to-5-employee range (6 percent with more than 5 percent business) outperformed the 5 classification ( <5% 8% percent). That might just be a statistical quirk, but it also suggests a diverse supplier doesn t need to be big to attract big clients. 6-5% 8 7% 5-75% 76-% 8% 7% By diversity category: % 58 5% % Women 5 % 7% % Minority 5 5% % 5 7% 7 State of Supplier Diversity Report - Diverse Suppliers 55% 6 8% LGBTQ % 5 % % Veteran 7 6% 7% Other 7% 5 % 5% SBA 7% % 6 %
14 By company size: -5 <5% 5% 5 <5% % 5 6-5% % 6-5% % 5-75% % 5-75% % 76-% 7% 5 76-% % <5% 6-5% % % 76-% 5- % % 5 5% 5-, <5% -5 7% 6-5% % % 6% 7 76-% 5%,+ Although the smallest (- employers) suppliers reported less business with the Fortune, surprisingly, the -to-5- employee range (6 percent with more than 5 percent business) outperformed the 5 classification ( percent). <5% % <5% 5% 6-5% % 6-5% 5% 5-75% % 5-75% 5% 76-% % 76-% 5% 7 State of Supplier Diversity Report - Diverse Suppliers
15 By diversity category: GOVERNMENT CLIENTS % 6 8% 6 % 8 Do you actively pursue government entities as clients? 66% 5% % Minority Women Veteran % % 8% 7 56% 8 68% 6 8 6% 5% 5 LGBTQ SBA Other By company size: % 7 8% % % 7 5% 5% 7% More than half of our respondents answered yes to this question. Generally, the more a diverse supplier has, the likelier it will go for government 7% 5% % 67% 5% 75% contracts. Also, veteran-owned businesses were the most active in pursuing government clients of respondents answered yes to this question ,,+ 7 State of Supplier Diversity Report - Diverse Suppliers
16 FINDING PARTNERS How do you find corporations to partner with? (select all that apply) What are your top three ways to find corporations to partner with? Networking events are the most popular way to find corporations two-thirds of respondents cited networking events as a top-three method. Moreover, choosing other gave respondents an opportunity to describe what they meant, and many cited conferences, LinkedIn, and industry events, all of which can easily fall under the networking umbrella as well. Registration sites Online forms s % % 5% 6 Registration sites are the second-most-cited reason at 5 percent, followed by RFPs at 6 percent and at percent. Some of the more interesting other responses were: Cold calls 8% 75 Bloomberg or other tools that enable you to see who is bidding, incumbents, and so on Outside sales % 6 Invitations from Tier suppliers to be a Tier supplier Networking events 66% 75 Social media and marketing Working with procurement RFP s 6% Other 6% 7 State of Supplier Diversity Report - Diverse Suppliers 5
17 By diversity category: By company size: Minority 5% 8% % 8 % % 7 6% 8-6% 6% 6 % 6 % 5 5% 6 8% 5 PORTALS AND DATABASES Women % 8 % % 7 8% % % 6-5 7% 5 % 8 8% 7% % 7% How many portals/websites/databases is your company currently enrolled in? 6% Veteran LGBTQ SBA % % 5% 7% % 6% 6% % % 7 % 8% 8% % % 8% 7 % % , % 6 6% 8 8% 6% 5 % % % % 6 % 7 8% % % % % % % % % % % 5% Other % % 5% 5 % 8 5%,+ 5% 5% 5% The top answer to this question, in a runaway, is -5 outlets at 5 percent. The percentages of the remaining options are evenly answered in a narrow range, but surprisingly, the + answer drew 6 percent, good enough for second place. 7 State of Supplier Diversity Report - Diverse Suppliers 6
18 DIVERSE SUPPLIER CHALLENGES What is your biggest challenge in the supplier diversity space? Diverse suppliers face additional challenges on top of the usual concerns the average small or midsized business faces. The respondents to our survey gave a wide array of answers when asked this question; what follows is a sampling of their opinions: Keeping our registrations/certificates up to date on all the various company websites. Our biggest challenge is that companies with supplier diversity programs often do not have a plan for directing their program managers and users to engage with diverse suppliers. Overcoming preconceived barriers of being a diverse supplier, such as lack of scale, quality of product, and so on. We need a more robust supplier diversity program some of our customers now require a certain amount of spend with diverse suppliers. Getting connected with corporations and the right individuals within them particularly the right buyers. A catch- with companies, which say, We want to do business with small companies but don't believe you are big enough to handle us. Visibility and true opportunities that should be part of the spirit of the diversity programs at the larger corporations. Being provided the opportunity to get a seat at the table and allowed to participate in programs. Companies that have a supplier diversity program but don't take action. Connecting with companies that require diverse supplier relationships, yet not being in the right place at the right time allowing us to participate. Finding corporations that have ingrained supplier diversity into their procurement cultures with measurable and tangible goals not window dressing. Supplier diversity department and the department that needs a technical services partner are not on the same page. Finding the right person responsible and responsive in the corporation for supplier diversity and getting a response from them. There should be one marketplace to find opportunities for diverse suppliers. All the customers should post their requirements to find their vendors. I found that the major challenge is that potential clients only pay lip service and are not really invested in providing navigational help to become a supplier. Getting beyond the supplier diversity professional to be able to dialogue with and present my business value to line decision-makers. Everyone talks the talk; not everyone walks the walk. 7 State of Supplier Diversity Report - Diverse Suppliers 7
19 CHALLENGES WITH FINDING NEW BUSINESS What are your biggest challenges in finding new business? Finding new business is always a challenge for diverse suppliers. Interestingly, in our supplier diversity professionals survey, many responding companies stated that finding diverse suppliers is a challenge as well. Here is another sampling of answers our supplier respondents gave, this time to the specific challenge of finding new business: Much of corporate America 'checks the box' on supplier diversity and may say they want to support but really go back to the same suppliers they always use. It is hard to get a foot in the door. Getting past the meet-and-greet to actually talking to the decision-maker about the services we offer. It does not take a big-time commitment to a person to state that you are not interested, but it is huge to get a response to close an opportunity and refocus your efforts on hotter prospects. Convincing companies we are on the same level as companies based in Finding the right contact person in corporations who can make a decision to utilize our services. the larger cities. We can handle all volume of sales and deliver in the time frame promised. Competition from overseas. An enthusiastic start to a discussion that disappears without notice. Our biggest challenge seems to be getting past the 'system' and actually Because we are small, clients equate diversity with incapability. finding a contact person whom we can talk to. Persuading corporations to include my company in upcoming RFPs. Weeding through the companies trying to make a quick hit and not taking a long-term approach. 7 State of Supplier Diversity Report - Diverse Suppliers 8
20 SUPPLIER DIVERSITY PROGRAM INFLUENCE By company role: As a consumer, does an organization with a supplier diversity program influence whether or not you will buy from them? Strong Influence CEO/CFO/COO 6% 5 Strong Influence Director 58% 7 Slight Influence % Slight Influence 5% No influence No Influence % No Influence 7% 6% Strong Influence Founder 57% 7 Strong Influence Manager % 8% Strong influence Slight Influence % No Influence % Slight Influence 5% No Influence 5% 6% Other President Strong Influence 7% Strong Influence 55% Slight influence Slight Influence % 6 Slight Influence 5% 76 No Influence % 5 No Influence % Sales/Account Manager/Business Dev VP If you need proof that supplier diversity supports the bottom line, here it is: Strong Influence % 7 Strong Influence 8% Eighty-four percent of respondents say the existence of a supplier diversity program at least slightly influences their decisions to purchase from such a company; nearly half of respondents say it has a strong influence. The results are not surprising buying Slight Influence % No Influence 7% 8 Slight Influence 58% No Influence % from organizations that believe in supplier diversity is a way to support diverse businesses, and consumers realize it. 7 State of Supplier Diversity Report - Diverse Suppliers
21 THE JOYS OF BEING A DIVERSE SUPPLIER 5 What do you enjoy most about supplier diversity? This question gave respondents a chance to tell us what they like about the importance of supplier diversity. Their answers were enlightening: I firmly believe you cannot have innovation without diversity. Ability to be competitive with large organizations and play in the same playing field. Access to resources and information on how to do business with corporations. It is a source of ideas for innovation. Market intelligence and insights. I believe it just levels the playing field and allows otherwise disadvantaged companies to have a chance. It provides a mechanism for large organizations and new, young organizations to connect. Provides multiple channels from which to procure goods and services. Drives competition (on price and service levels) between the company s existing and potential vendors. Allows a company to take advantage of new opportunities for business expansion with the emergence of new consumer needs based upon shifting demographic realities. Recognition by government agencies, and privileges to work for the esteemed companies and government departments. Supplier diversity has given our woman-owned business the opportunity to present our capabilities and innovative programs to America's top corporations. This type of access is invaluable and gives us the opportunity to compete based on our abilities. I am proud to be part of a group that is making a positive difference. Being able to network with like-minded professionals. Equal opportunity for small and medium business to succeed. I enjoy the camaraderie! The opportunity to work with America s best companies. Promotes innovation through the entrance of new products, services, and solutions. It helps open doors with customers that have a diversity initiative and puts us on a level playing field. We still have to show our credentials, but at least we get a listening ear. It leads to a more connected, more inclusive planet. It is the first time in my career where my personal and professional beliefs fully align. Supplier diversity can only make a business gain better insight into new ideas, innovations. 7 State of Supplier Diversity Report - Diverse Suppliers
22 CONCLUSION The results of our survey show that despite the progress made and success enjoyed by diverse suppliers, many still have a long way to go in being noticed by supplier diversity programs that could benefit from their expertise. CVM Solutions offers help to suppliers looking to be recognized by organizations aiming to increase diverse spend. ASCEND powered by CVM Solutions helps connect smaller suppliers with larger corporations, forever changing the direction of both companies. Visit our website at to learn more. Also, contact us if you want to participate in our 8 diverse suppliers survey LEARN MORE
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