What is supplier diversity? Why does it matter? Supplier diversity is about creating work opportunities for minority, women, and veteran owned businesses. Naturally, the diverse suppliers benefit by being able to pursue and win work where they may not have had prior opportunity. This access to work allows their businesses to grow. Many of these diverse suppliers are small businesses too. As small businesses grow, the local economy grows and the entire community benefits from this growth – another way for a health care organization to support the health and wellness of the community.
The hospitals benefit directly too. By having more suppliers capable of providing services to the hospitals, competition for work increases. This competition in the supply chain lowers the cost of services to the hospital and drives the suppliers to innovate to stay viable in the face of increasing competition. The innovation brings fresh ideas into the market place and creates opportunity for break-through improvements in the industry. By including diverse ownership in this process, fresh ideas come from non traditional sources forcing the innovation levels even higher. In the era of health care reform, the importance of innovation and lower costs cannot be understated for any health care organization.
So how does a hospital drive higher levels of supplier diversity?
- The hospital should start with outreach to notify diverse suppliers of the business opportunity available. Health care organizations have excellent access to economic inclusion resources through the National Minority Supplier Development Council, the Women's Business Enterprise National Council, and their local affiliates. These organizations provide connection points between the hospital and diverse suppliers allowing outreach to be more effective. In addition, these non profit organizations support the growth and development of diverse businesses by providing resources not typically available to smaller organizations.
- After creating awareness of work opportunities, the hospital should evaluate their procurement strategies. Do your current purchasing strategies create barriers to entry for smaller diverse businesses? If so, redefining how materials and services are purchased to increase access will be important. For example, are linen services being purchased for the entire hospital network or individual hospital locations? If you are buying services for the entire network, you may be limiting some excellent and cost effective suppliers because they don't have the capacity or resources to service the entire hospital system. Although they don't have the economies of scale of a larger organization, they can be very cost competitive because of their lower overhead structure. Often the smaller businesses are more adaptive and flexible, which can provide additional benefits to the hospital.
- The hospital can start working more deliberately with some minority, women and veteran owned businesses. Hospital executives have a wealth of business experience that is invaluable to a growing organization – why not create a formal mentoring program between an executive and a diverse company? In addition, the hospital executive can help the supplier navigate the health care organization to create better access and become a better service provider. In some cases, hospitals may consider further developing into a strategic partnership with a diverse supplier. By having a long-term commitment in place, the hospital helps the organization grow their business.
So where do you start within your organization? Economic inclusion initiatives frequently start as a large corporate initiative with high level support and drive from leadership. However, this is not the only path to successful economic inclusion. Significant changes are possible by starting one step at a time from where you are today. In fact, sometimes small diversity initiatives often prove to be more successful over the long-term than the broad reaching programs. Large organizations often need to see a small win to truly understand the value of supplier diversity before elevating to a corporate level. Don't wait for some else to say it is important, start today with one small step.
Economic Inclusion Vice President
Messer Construction Co.
Health Care Vice President
Messer Construction Co.
Messer holds as a core value that achieving and encouraging diversity within our workplace and on every Messer project is the lifeline of our future. It's not just something that we say we do; it is a key component of our business plan, and is critical to the economic vitality of the rich mix of diverse communities and customers that we serve. Supporting the growth and development of our industry’s diverse business partners and workforce creates sustainable change and leads to an improved quality of life for all citizens.