Expert Interview Series: John Suarez of CVM Solutions on Supply Chain Diversity

John Suarez is the Marketing Manager of CVM Solutions, a premier provider of supplier diversity solutions, where he handles the brand image, advertising strategy, public relations and marketing processes.

We recently asked John for his insight on supplier diversity and the importance of big data in building diverse supply chains. Here’s what he shared:

What is Supplier Diversity? Why should businesses care about it?

Supplier diversity is a business strategy that ensures a diverse supplier base in the procurement of goods and services for any business or organization. Having a diverse supplier base means using suppliers owned by various minority groups, such as an African-American owned business or a Woman-owned business. Research has shown that companies that embrace supplier diversity are more profitable than companies that do not, because supplier diversity:

• Promotes innovation through the entrance of new products, services and solutions
• 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 on shifting demographic realities
• Displays an organization’s commitment to doing business, beyond consumerism, in diverse markets
• Showcases the company’s interest in and commitment to the economic growth of all communities

What are the risks to a business of not building a diverse supply chain?

Establishing a diverse supply chain is a practice of procurement excellence for a reason. After foregoing the various benefits of a supplier diversity program (listed in the previous question), a business with no program might take on some undesirable risks:

• Reduced innovation or price competitiveness
• Heavy reliance on a few large suppliers magnifies the impact of a service failure
• Minimal supplier product innovation
• Inability to secure government contracts
• Corporate image that lacks social responsibility

Just about every Fortune 500 company has their own supplier diversity program because they not only want to reap the benefits, they also do not want to tolerate the risks.

What are best practices for building a diverse supply chain? Where should businesses begin?

Although no two supplier diversity programs are identical, there are several widely recognized best practices that most programs are founded on. The first and most important step to creating an effective supplier diversity program is determining your diverse spend baseline and then setting proper goals. Running your list of suppliers through a third-party data enrichment process will identify how much you are currently spending with diverse suppliers. Once your current spend is defined, setting goals that align with your organization’s overarching objectives will help steer a program from beginner to world-class.

In addition to setting internal goals, it’s a smart idea to benchmark against another supplier diversity program. When benchmarking, look outside your own industry and evaluate the processes used by leaders in other industries. Bringing in techniques from other sectors may give a competitive edge over peers and establish an organization as a supplier diversity leader.

A few other best practices include quarterly data enrichments, supplier diversity and procurement department collaboration, and involving diverse suppliers on all relevant bidding opportunities. We at CVM created a supplier diversity best practices white paper to help new programs get off the ground, found here.

How challenging is it for businesses to create a diverse supply chain? What contributes to these challenges?

We recently concluded an industry study that surveyed over 150 supplier diversity practitioners. One of the questions we asked was, “What is your biggest challenge in supplier diversity?” Of the respondents that had a program for a year or less, most of them indicated their biggest challenge was finding qualified diverse suppliers for bidding opportunities. There is likely one central reason for this: new supplier diversity programs often don’t invest into a supplier locator tool right away. While resource constraints may be to blame, it’s crucial for new programs to utilize a supplier locator tool as they create a network of trusted diverse suppliers. Many supplier diversity professionals I’ve talked to about this topic would agree that a good locator tool is their programs most valuable asset.

As more corporations begin to realize the various business cases for supplier diversity – instead of just corporate social responsibility – it will continue to become less challenging to create a diverse supply chain.

What role does big data play in supply chain diversity?

Big data supports supplier diversity in several ways, not the least of which is data enrichment. Data enrichment is the process of cleaning, appending and de-duplicating a master vendor file by running it against a “big data” database. When a corporation wants to enrich their master vendor file, either for the first time or on routine, they utilize a third-party like CVM Solutions to handle the process. We will run the vendor file against our own database to make sure our client’s vendor information is accurate. Our database, equipped with millions of diverse supplier records, updates daily from hundreds of sources and is managed by an algorithm that ensures only the most accurate supplier data enters our system. Data enrichment lets supply diversity managers use big data to their advantage and free days of time while saving money.

What are some of the major data management headaches for businesses in working with suppliers?

I would say that the biggest data management headache is the same for supplier diversity as it is for any other industry: the rapid pace at which data changes. Supplier diversity practitioners need to be sure that their supplier data is accurate for reporting, risk assessment and regulatory reasons, which becomes very challenging as a supplier list grows.

When reporting supplier diversity growth, bad data will skew program progress and cause issues such as diminished C-suite buy-in or loss of program confidence. Perhaps a more serious a consequence, though, is when you have bad risk assessment or regulatory data. A supplier risk assessment will indicate which suppliers are right for a bid opportunity and which suppliers might not have the financial strength yet. Having incorrect risk data could lead to awarding a contract to an underprepared supplier. Additionally, many government contracts require corporations to use a certain percentage of diverse suppliers. If audited and found to be under the diverse supplier threshold, corporations could lose important government contracts.

I see supplier data turnover at an average rate of 30 percent each year, so it’s safe to say this headache will continue for some time.

How can these pain points/headaches be overcome? How can companies improve the way they manage their supplier data?

A very easy and efficient way to overcome supplier data headaches is to schedule data enrichments with a third-party provider. Because data changes so often, we recommend running enrichments quarterly or align enrichments with your reporting requirements. Developing an enrichment schedule allows a practitioner to “set it and forget it”; they know their data is always fresh.

As a supplier diversity program matures, there are methods beyond routine enrichments that greatly increase efficiency. Supplier registration portals, for instance, offer a single point of contact for suppliers to communicate with procurement professionals. This ability can be the difference maker for managing supplier data, undoubtedly elevating any supplier diversity program.

What trends or innovations in business technology are you following today? Why do they excite you?

This is completely unrelated to supplier diversity, but as a marketer, I’m really excited to see what video evolves into. Right now, video creation and consumption are at all-time highs. Businesses in every industry are using video to inform, educate, sell, and entertain their audience. However, as we all know, too much of anything is bad. Videos will eventually oversaturate the web. Companies will need to get creative with their next content medium when this happens.

If I were a betting man, I would say that augmented reality (AR) is the next big platform. By using AR we are finally able to ditch screens, adding a virtual touch to everyday life. Remote collaborations can take place outside of a conference room. Product demonstrations can happen in 3D. Traditionally computer-focused tasks will move to a more efficient medium. The possibilities are endless, and that’s why it really excites me to see AR evolve. While the technology is still very fresh, I wouldn’t be surprised if there was widespread AR adoption by 2022.

Tell us about the CVM Solution’s mission. How are you helping your customers?

Back in 2002, two minority entrepreneurs who had a passion for both their businesses and their communities founded CVM Solutions. Since then, we have worked as a trusted advisor to the Supplier Diversity community. Our mission is to support every program by providing superior end-to-end Supplier Diversity solutions. Equipped with unparalleled data intelligence, superior technology and expert guidance, businesses can effectively establish and advance their diversity initiatives. CVM partners with corporate supplier diversity programs in every stage of their evolution– from those that are just getting started, to the most advanced, world-class programs.

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