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Breaking Down Barriers for Diverse-Owned Businesses

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For a long time diverse-owned companies have faced a number of challenges when it comes to accessing capital, however business diversity programs are making this a thing of the past, enabling diverse-owned companies to expand their network and unlock potential business opportunities.

One company breaking down barriers for diverse-owned businesses is US insurer Allstate. It provides support to diverse businesses, including minority women, LGBTQ and disabled-owned firms. The insurer has been working within this space for the last 18 years and has a goal to double its diverse supplier spend by the year 2025.

Cheryl Harris, senior vice president, sourcing and procurement solutions at Allstate said: "Our DE&I program, reflects our corporate culture and our values, and in doing so it benefits our customers, because we are able to drive new products and customer experiences. It also benefits our community by driving economic prosperity and impacting communities.

"Our DE&I strategy is very closely aligned and interwoven into our ESG priorities. Those priorities are important not only to the people that support environmental, social and governance related initiatives, but every single employee within the organization. We work in a regulated industry and the regulators and legislators are very much focused on how we are being a force for good in all the work that we do."

One supplier Allstate has influenced to strengthen their diversity program is US-based furniture company, Steelcase. "Our approach to diversity, equity and inclusion is both part of a comprehensive strategy and a natural extension of who we are. We are committed to advancing diversity, equity and inclusion (DEI) and have defined desired aspirations for 2025," said Christina Downs, DEI communications manager, Steelcase.

"For more than 25 years, the Steelcase supplier diversity program has supported the growth and development of minority-owned, women-owned, veteran-owned, service-disabled veteran-owned and HUBzone businesses in the U.S."

Harris explained that the insurer's spend with a diverse supplier can create a continuous cycle that expands the supply chain of diverse suppliers. "We know that when we spend US$1 with a diverse firm, it creates roughly US$1.93 in economic impact," she said. "When we spend US$1, with a diverse supplier and they expand their capabilities, to address our needs, they then hire somebody. And that employee then has to pay taxes. The case may be their company may actually engage with other diverse suppliers and we encourage our diverse suppliers to do this."

Overcoming Challenges

Harris outlined three key challenges to supplier diversity. First, the myths surrounding how diverse suppliers operate. Harris said: "There are many myths associated with doing business with diverse suppliers. One of the first ones is that diverse suppliers cannot scale. A true challenge that they have that impacts in some cases their ability to scale is that they don't have access to capital.

"Myths also include that diverse suppliers provide a lower quality of goods and services and that the use of diverse suppliers is riskier than using a large supplier."

Some companies offering business diversity programs have been recognized for how well they run and they have been able to put an end to all of these myths. Harris said: "These organizations have not only sort of stamped out the myths, but they are actually achieving quite the opposite, which has been our experience as well.

When you create a DE&I plan it is something that you constantly refer back to and improve on as you create new learnings and deliver new outcomes.
Cheryl Harris, senior vice president, sourcing and procurement solutions, Allstate
Cheryl-Harris.jpg

"We partner with suppliers to help them build capacity and capabilities because they do not have fair and equal access. There are billion dollar minority and women owned businesses that are out there — organizations just need to commit the time to locate them versus assuming that they do not exist."

A second challenge facing organizations is the shift to virtual work environments as a result of the Covid-19 pandemic. Harris said: "There are many people that have been tied to suppliers that they know and trust they have been using them for years. And those suppliers have always delivered in this virtual environment.

"If you want to introduce a new diverse supplier to an organization you have to get very creative in how to build those connections — it all starts with a relationship. And where do you place your trust? That is one of the challenges that not only diverse suppliers are facing but people that lead these programs are facing."

Harris explained that companies that do not have a well structured, DE&I program may find it difficult to understand the impact that are having and whether they are impacting the right things. She said: "When you create a DE&I plan it is something that you constantly refer back to and improve on as you create new learnings and deliver new outcomes."

A third challenge organizations face is the impact employees' perceptions might have on the suppliers they choose to work with. According to Harris, this is very complex and it really is understanding how decisions get made. It really requires understanding human behavior.

"As procurement processes and practices have become more complex so has the ability to drive successful business diversity programs, which is which is why it takes full commitment, it takes resilience, it takes patience, so that one can achieve sustainable outcomes."

A Bottom-Up Approach

The Hartford is another insurer making an impact in this area, supporting diverse-owned businesses through its supplier diversity programs. It has developed a set of bottom-up strategies for diverse supplier improvements by establishing annual diverse spend goals and working with category managers and lines of business.

The insurer is taking a number of steps to support diverse-owned businesses including: formalizing its supplier diversity dashboard to capture multiple level spend and improve quality and consistency of reporting; developing eLearning materials on supplier diversity for employees of The Hartford; communicating its DE&I and supplier diversity focus with major suppliers to ensure that it understands their practices; increasing its participation in national organizations such as the National Minority Supplier Development Council and the Women’s Business Enterprise National Council, which offer certification, education and networking opportunities to diverse businesses.

Janet Gill, SVP and chief procurement officer at Hartford said: "We are committed to leading the way in supplier diversity by implementing inclusive and equitable sourcing strategies and contracting processes that deliver exceptional value to our company.

"Raising awareness of our programs helps us to identify, build relationships with, and advocate for diverse suppliers who share our values and will partner with us to provide high quality goods and services at competitive prices."

The insurer's 2020 supplier diversity report highlighted its spend with small and diverse suppliers in 2020 resulted in US$94.5 million in added revenue into the US economy and US$169.5 million in cumulative revenues of all businesses impacted through their supplier diversity program. These purchases supported 551 jobs and US$38 million in wages and benefits at these businesses.

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