The idea of ‘supplier diversity’ is not new for retailers, but the pandemic has catapulted the practice to priority status for the foreseeable future.

Just a few years ago, supplier diversity initiatives focused primarily on maintaining business continuity by ensuring there were other suppliers to leverage if one supplier or region was not able to perform. Today the definition of ‘supplier diversity’ is becoming more inclusive as retails become keen to establish programs to help facilitate sourcing goods and services from underrepresented minority, disabled, veteran, LGBTQIA+, and female-owned businesses.

So, how can retailers increase supply chain diversity and compliance? Here are four ways to get started.

  1. Clearly define your DEI supply chain policies and tracking mechanisms.

To change the trajectory for Diversity, Equity, and Inclusion (DEI) in the supply chain, retailers must first implement comprehensive, broad-based DEI policies that take the entire supply chain into account. Companies often expand the impact of their diversity policies by requiring their suppliers to create their own diversity initiatives.

While these types of policies can have a far-reaching impact, they are only effective if properly documented and tracked. Establishing the tools and systems an organisation will use to hold itself accountable to these policies is the necessary first step to create a successful supplier diversity program. As organisations are held more accountable for their supply chain diversity practices, clearly defining and implementing strong DEI supplier policies can help retailers better serve their customers.

2. Promote diversity within the supplier onboarding process

Prioritising diversity within the supplier onboarding process is key to enabling retailers to track and meet diversity commitments. By implementing and collecting key information as new suppliers are added to a network, organisations can set precedents for future success and ensure compliance with internal and jurisdictional rules—including company initiatives and regulations regarding diversity.

Leveraging supplier diversity and compliance applications as part of the onboarding process can automate defining supplier policies, such as documentation and data requirements, which helps improve compliance early in the process. What’s more, this enables retailers to gain visibility into diversity compliance status by triggering event-based compliance monitoring and alerts for any violation.

3. Derive the most value out of contracts

While contracts are the single source of truth for supplier commitments and relationships, historically they have been under-utilised assets—treated as static documents and filed away after they have been executed. This should never be the case, as contracts contain critical business information that defines a retailer’s supply chain and the rules by which it runs. Fulfilling supplier diversity initiatives across complex business landscapes requires organisation-wide visibility into whom a company is doing business with and on what terms, and mechanisms to guarantee terms are being met. Contracts provide this data.

To derive the most value out of contracts, companies need contract intelligence—that is, structured and connected contract data that gives them real-time insights across the supplier agreements that define their supply chain. Advanced contract lifecycle management (CLM) solutions can serve as the system of record for supplier relationships, obligations, and entitlements. CLM technology helps retail and CPG companies ensure the intent of every contract is realised, ultimately maximising value and minimising risk in commercial relationships.

Through digitisation and deep integration of enterprise data, organisations can execute category strategies that insert supplier diversity consideration into all their buying decisions. When applying artificial intelligence (AI) across these integrated systems, companies can identify and even anticipate potential supply chain disruptions before they happen and make necessary adjustments to minimise risk.

4. Identify and manage current supplier diversity commitments

For a supplier diversity program to be effective, retailers must have visibility into which contracts contain supplier diversity clauses and which agreements contain clauses supporting disadvantaged business enterprises. This is where a CLM solution becomes important once again, as these clause audits are far simpler when contracts are digitised and in a central repository. CLM systems fueled by AI can digitise and parse legacy and third-party contracts to surface DBE clauses, and store those agreements in a central contract repository. This allows for a deeper and more efficient audit when necessary.

Supplier-diversity success into the future

The prioritisation of supplier diversity is long overdue. Having a diverse supply chain and developing supplier diversity initiatives provide retailers with a critical advantage, helping to mitigate risk across supply chains, win new business, retain customers, and reinforce brand reputation. As organisations increasingly embrace diversity initiatives in their contractual relationships, CLM technology will play an important role in tracking supplier diversity and ensuring that these initiatives succeed.

Nathan Kale is country manager for Australia and New Zealand at Icertis.