by Sükrü ilkel Birakoglu, Senior Director
Supplier diversity is a business strategy that ensures a diverse supplier base in the procurement of goods and services for any business or organization. It emphasizes the creation of a diverse supply chain that works to secure the inclusion of diverse groups in procurement plans for government, non-profits, and private industry.
In other words, supplier diversity refers to a supply chain that incorporates businesses owned by diverse individuals or groups. A diverse supplier is, in the broadest sense, a business owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group. In the United States, for example, there are approximately 16 categories used to identify diverse businesses.
Common examples are small-business enterprises (SBEs), minority-owned business enterprises (MBEs), and women-owned business enterprises (WBEs). For an organization to record and report diverse supplier spending, it is important to ensure that its suppliers are certified through third-party certification agencies.
Why should companies make inclusive supply chains a priority?
The reasons range from social responsibility to the bottom line. Ideally, supplier diversity combines the best of our desires for a better, more equitable world and the drive to be a competitive leader in the marketplace.
Let’s look at the value-add on the social responsibility side first. Does your enterprise have a corporate sustainability/social responsibility mandate? If so, then supplier diversity should be in alignment with that mandate.
First and foremost, supplier diversity programming adds economic value because it encourages the growth of diverse businesses. Diverse businesses typically encounter barriers that challenge their start-up and sustainability efforts, such as access to capital and networking opportunities, and effective supplier diversity strategies can alleviate these pain points.
Beyond the social responsibility and economic impact metrics, the fact is that inclusive supply chains present a competitive advantage, as progressive organizations that have already implemented an effective strategy have realized.
It also provides companies multiple channels from which goods and services can be procured and drives competition on price and service levels between the company’s existing and potential vendors.
How does this fit in with SAP Systems?
In an SAP system, a field in the vendor master record determines the minority group to which the vendor belongs. The minority indicator is generally relevant for companies operating in the United States.
With the minority indicator field in the vendor master record in SAP Systems, we have the possibility to check if our vendors belong to a group that must be supported. It is an indicator for the management which shows if a company is diversifying its vendor to fulfil its social and economic duties.
Logpoint and SAP Systems
With our BCS for SAP solutions, we are providing our customers with a generic framework to retrieve security and business process-related data from SAP Systems and create system security-related, business process-related, and business integrity-related dashboards and alerts in Logpoint SIEM. You can see two examples of these dashboards which are related to supplier diversification in following figures:
Figure 1: Trend analysis about the percentage of purchases from vendors which belong to minorities/women
Figure 2: Percentage of purchases from vendors which belong to minorities/women per quarter
These dashboards are not designed directly to be assessed by SOC Employees, they are more of management and business process monitoring tools. With our Converged SIEM Platform, we open SIEM Systems for further usages other than traditional cybersecurity-related usages. Alerts can be created to inform related managers/employees if supplier diversity diminishes or falls under a certain threshold value.