Last month, JumpStart Accounting Manager Nancy Schlairet and I flew to Las Vegas to present at Advantage 2017, Sage Intacct’s annual gathering of its accounting system’s users and partners.
The slogan for this year’s gathering was “Lead the Future,” a phrase that could just as easily be applied to what JumpStart is trying to do in the field of supplier diversity. In our presentation, Nancy and I addressed not only how we go about tracking our data to make sure we’re meeting our supplier diversity goals, but also why having these goals is important.
Here’s a quick summary of our main points:
Why track supplier diversity data?
Part of JumpStart’s mission is to “unlock the full potential of diverse and ambitious entrepreneurs.” The Finance team currently contributes to that mission by soliciting, recording and reporting supplier diversity data.
However, you don’t have to share our mission to care about supplier diversity. Multiple studies have shown that strong supplier diversity programs benefit a company’s bottom line in many ways—including connections to new markets and potential clients/customers. We’ve seen this first hand at JumpStart, where a Cleveland entrepreneur like Dana Simmons with a growing photography/videography business can be both a great vendor, and a great client.
And if that doesn’t persuade you, GuideStar’s VP of Strategic Partnerships, Adrian Bordone made the importance of this work very clear during his non-profit keynote speech at Advantage 2017—predicting every single one of us would have goals and objectives based on diversity, equity and inclusion in the near future. Why? Because it’s something your customers, funders and other stakeholders care more about every day.
How do you get started tracking supplier diversity?
A great first step is to design a modified form W-9—a form which we sometimes refer to as our “vendor intake form” when we email it to suppliers.
Page one of the form asks all the questions that are normally found on a W-9, while page two covers all the questions that relate to the various classifications of a “diverse” business. Page three is a Q&A that explains why we ask our vendors for this information and defines few key terms we reference throughout the form.
As we developed this form, we consulted several other companies’ diversity questionnaires. We also asked for feedback from our vendors and partner organizations, including our local Hispanic Business Center and the Inclusion Officer of Cuyahoga County’s Department of Public Works, Luis Cartagena.
How does your accounting system fit in?
Our Las Vegas presentation focused heavily on how we’ve customized our accounting system (Sage Intacct) to track the data we gather with our vendor intake form. This process begins with modifying vendor profiles with custom fields to accommodate the above diversity information. The next step is to add two additional categories to the system: vendor type and addressability.
The vendor type field allows us to easily group our vendors by how we use them i.e., consulting services, catering, office supplies, marketing services, IT-related services, etc. The addressability field allows us to rank how difficult our overall spend is to address on a scale of one through four:
- Category one is for products/services that are easily available and not restricted by existing contracts—meaning these orders can be easily given to a different supplier.
- Category two involves spending that is harder to change, such as specialized products/services from unique vendors, consultants with contracts that can be cancelled with a reasonable amount of notice, consultants who already have a valuable familiarity with our business, etc.
- Category three covers even more entrenched spending such as rent and employee benefits providers.
- Category four is money going out that we don’t consider traditional “spend,” including pass-through grants to other organizations, venture capital investments, fees paid to government organizations, financial awards for pitch competitions, etc.
Add it all up and you have a very useful tool for planning realistic diversity-based spending goals for your company. Not only does this system help us identify low-hanging opportunities, it also helps us plan for more ambitious diversity initiatives that require consideration of long-term contracts/relationships.
What is a reasonable goal for supplier diversity?
It is impossible to set the same goals for companies of disparate sizes and structures that may do business in different industries and geographies. Also, like JumpStart, many companies do not have a team dedicated to procurement. With a decentralized decision-making structure, various teams, each with unique obligations and opinions, must be involved in order to increase an organization’s diverse spend percentage.
With this in mind, the best goals will always be the ones you can realistically achieve and measure. Your current goal could be as simple as setting up a basic “vendor intake form.” Maybe you could start customizing your accounting software to identify easy opportunities to increase your diverse spend? Maybe it’s time to take a look at some of those expenses that aren’t so easy to change. Or, if you’re ready to take your commitment to the next level, it might be time to begin encouraging your own suppliers or partner organizations to start their own supplier diversity programs.
Whatever goal you choose, forward progress is what’s most important. Remember Guidestar’s prediction for 2018 and consider the changing demographics of our country. This work is only going to get more and more valuable.
For more information on JumpStart’s overall commitment to diversity and inclusion, click here.