Supplier Diversity, Equity, and Inclusion - Challenges and Opportunities

Announcer:
Welcome to MIT Supply Chain Frontiers from the MIT Center for Transportation and Logistics. Each episode features center researchers and staff who welcome experts from the field for in depth conversations about business education, and beyond. On today's episode, MIT's sustainable supply chains director, Alexis Bateman speaks with Nalini Bates and Kris Oswold, after a roundtable on supplier diversity, equity and inclusion. The three share challenges and insights from the discussion and offer pointers for others, aiming to advance D, E, and I in their organizations. Take it away, Alexis.

Alexis Bateman:
Thanks for joining today. My name's Alexis Bateman. I'm the director of MIT sustainable supply chains. At our lab, we have been looking at supply chain sustainability broadly. One of the topics that has emerged, which is under the umbrella of the United Nations sustainable development goals is diversity, equity and inclusion. Today we're very fortunate to have two long-term supplier diversity professionals, Kris Oswold from UPS and Nalini Bates from Procter and Gamble. Welcome.

Kris Oswold:
Hello, my name is Kris Oswold. I'm with UPS and I'm the vice president of global supplier diversity.

Nalini Bates:
Thanks for having me. This is Nalini Bates from Procter and Gamble. I lead what we call supplier citizenship at P&G. So that is both supplier diversity and responsible sourcing sitting in our purchases function.

Alexis Bateman:
I think today we wanted to join together just to reflect on some of the learnings about the roundtable and generally around supplier diversity, equity inclusion. What do you think were some of the points of disagreement or challenges that came up in the roundtable? Maybe I can turn this over to Kris to start and then get Nalini's reflections.

Kris Oswold:
Thanks Alexis, and let me thank you for putting the roundtable together because events like this are so important to really feed some provocative discussions and get some issues out on the table. We were able to do that in this format, which was wonderful. I don't like to frame them as disagreements because in many cases, it's just causing us to think about things in a different way and maybe recognize challenges that we haven't been addressing, or we haven't been talking about to the level that's needed. I think we were able to surface a number of challenges, which is good because that's where you have to start. If you don't know what your challenges are, how are we ever going to drive change and how are we ever going to make really a step change and impact our supplier diversity on economic inclusion? So these types of discussions are important.

Kris Oswold:
I'll start with one. One of, I think, the areas of challenge, and Nalini did a great job in the roundtable, talking about this, has to do with metrics and how you set up your metrics around a supplier diversity program to drive the right behavior. One of the challenges that we often don't talk about as much as we should is that with such a focus on spend and how much money we spend with diverse suppliers, that can cause behaviors that over-focus on a dollar amount of spend and maybe under focus on the impact that spend is having on communities.

Kris Oswold:
We see that when we see supplier diversity programs that maybe really concentrate spend on just a handful of suppliers. Those suppliers are great suppliers and they're bringing great value to the corporations. There's absolutely nothing wrong with that. But if that's the focus of the program, is just driving spend, we miss the opportunity to impact more suppliers and broader communities. I think that's one of the key challenges that we see in supplier diversity, and Nalini led a great discussion on it, I appreciate it.

Nalini Bates:
Yeah, I couldn't agree more with how she articulated one of ... well, my take away, that was one of the biggest challenges we're all talking about. We all feel like economic inclusion and economic impact is what we are trying to drive with the work we do. Those of us who get to do this every day understand that this is complicated. There are many ways that we can help drive economic empowerment in our supply chains. That is with diverse-owned companies, but we have other tools in that toolbox.

Nalini Bates:
We have to think about encouraging suppliers to have diverse workforces. We have to encourage our suppliers to have diversity in their leadership and in their board of directors. All of this together can have the same economic impact that we have been working so hard on with this traditional supplier diversity program. I think when it comes to things like certification and the definition of how we certify, Kris's discussion on that was really enlightening because, and I agree it's not necessarily a disagreement on how to move forward, but I do think it's a challenge on if we want to think more holistically there are some of these traditional measures and metrics that we do have to think differently about. Putting some structure around that, I think, across corporations and academia might be a great place to move going forward.

Kris Oswold:
For sure. You know, Alexis, if I could jump in, I think the role of academia is so critical here because corporations like UPS, like P&G, we've been working at this for decades. We've worked with nonprofit agencies and within government programs in some cases. Good work gets done, but we have not really moved the needle, of late, in terms of the scale of impact. I think it is because this is a hard set of ships to move. We're nonprofits who are dependent upon corporate dollars, governments have their own prioritization and impact us in different ways. A step and a role for academia is important to bring some objectivity and some rigor to what we're doing, and I think that can help us drive change.

Kris Oswold:
There was another key challenge that came up, and I don't recall who brought this up, but I think is really important. That is the amplification of the value of what we do in supplier diversity if we are better coordinated across various functions and pillars of diversity in our organization. Oftentimes we think of diversity around employment. We think of it as suppliers, many of us look at communities and customers as well. When we better coordinate as corporations across the functions that support each of those constituencies, we can better understand the value of what we do and then optimize our investments and optimize our work.

Kris Oswold:
When I collaborate with marketing and we think about what can we do to help diverse businesses grow, then I've got a marketing piece that says small business growth is part of our strategy, we're in, how can we help? How can we invest? What can we offer? We're in from the procurement side as well. When I partnered with our foundation and they say, we're investing in philanthropic efforts. I'm like, you know what? If we shift a little bit of that investment over into some of this economic area for businesses, we can grow a customer base and grow a supplier base, and you start amplifying those impacts. I think historically supplier diversity has often been isolated in companies as a group. The extent that more companies can see the synergy of looking at all the pillars of D, E, and I together and collaborating on messaging and investment and prioritization, I think this is a huge, huge opportunity for us that not everybody is tapping into yet.

Nalini Bates:
Yeah, and I would add maybe a different spin on the same topic. There might be things we can learn from the environmental sustainability work that I think we're all aware of too, but there has been a lot of work in the last 10 years to come together across industry, as Kris was saying, across the value chain to really think about what are the priorities. There's been alignment on how to measure some of that environmental sustainability work.

Nalini Bates:
I think one of the really interesting brainstorming topics coming out of the roundtable is how can we follow that same path when it comes to D, E and I, and how can we think about common metrics and defining impact? Then being able to measure that within our businesses. I think that is the desired end state, but lots of questions and challenges on how to get there.

Kris Oswold:
To follow up on that, I don't know, Nalini, did you want to potentially encapsulate one key takeaway from that day?

Nalini Bates:
For me, and just probably given the journey that we are on at P&G, this idea of how to measure the impact corporations can make is probably the most critical question that I have to think about. We spend tens of billions of dollars every day. So when I talk to my buyers around the world, that's a great responsibility to spend that money buying things and from companies that further our purpose values, and principles that we hold so dear at P&G.

Nalini Bates:
So how do you find those like-minded suppliers to build a value chain that is really furthering everything that we're aiming to do across equality and inclusion, sustainability, community impact, all of that CSR type of work? There's definitely a greater role that our buyers, the purchasing area, our supply chain colleagues can play. But this question about how to measure the impact when you do that outside of your company, to me, is the key question for us going forward.

Alexis Bateman:
Anything Kris, for you that was like a key, aha moment?

Kris Oswold:
Sure. There were a lot of great moments. I think one thing that has probably resonated with me the longest and I've thought about the most since we finished up the roundtable are thinking through some of the unintended consequences of our current certification model. We had a great conversation challenging whether or not the certifications as they're done today are really serving our purpose. I think it's important to think about that in terms of have we created some unintended consequences that are running counter to our purpose? We had a discussion around as certifying minority businesses, should we stop and think have we created some form of a black tax by adding effort and expense to a process for folks to get that extra support to bid on a corporate contract?

Kris Oswold:
We don't have all the answers yet, but I think we'll never get the answers unless we start really digging into some of the assumptions that we've made, that how we've worked historically and how certifications have worked historically will serve us into the future. I'm not sure that's true. I think there was some great discussion around maybe it's not a one size fits, maybe it's not only one certification that we need. Maybe there are other considerations that we need to think about to be able to broaden the network and bring more diverse businesses in and engage more corporations in this work.

Alexis Bateman:
Yes. I think that was such a critical point and such an important point of view, to kind of revisit these long-held assumptions, this is the right way that this works for everyone. Where in some cases, in many cases, it's a barrier to entry when that's not really the original purpose of some of those approaches. Given that you both have long-standing programs at your organizations, we're seeing a lot of new entrants to a D, E, and I in general, but also supplier diversity. Do you see that continuing into 2021? Maybe what is the key issue here of the depth of investment? Do you worry that perhaps there'll be new entrants that are not doing it as well and as completely as they should be? Maybe I'll turn that to Nalini to start.

Nalini Bates:
It's a great question because I think for those of us like Kris and I, who have been part of organizations that have been doing this a long time, I think we probably both get a lot of phone calls from our peers that are starting out or through the roundtable type discussions where we try to informally coach others as they try to stand up their programs.

Nalini Bates:
There are some great things about that and there's also some risks to that. Clearly, as we just talked about today, going forward, we have to do things differently. So if we continue to coach others who are setting a foundation for their program, the way we've done ours, perhaps we miss an opportunity. So I think it's really important that we also encourage these new entrants to potentially think about this in a different way. In a way, they have less to lose by trying something different and then we can learn from them. It's a great example of how it's important that we bring to the table people with all sorts of different experience. It truly is a place where we all learn. It's not just a one one-way, we learn just as much.

Alexis Bateman:
Good words, and thinking about how there's an opportunity there for these new entrants bringing new ideas and bringing fresh perspectives. Maybe the last kind of concluding thoughts, any advice to those newly starting up the supplier diversity programs and the path ahead?

Kris Oswold:
Although there have been programs that are around forever, it really is a greenfield on how you approach it. I think what's important is that you align your focus to your corporate strategy. For businesses that try to do this as a, everybody else is doing it, I guess we need one of these approaches, will very likely, almost always struggle with resources and buy-in from stakeholders and trying to get the seat at the table to get people to try new suppliers.

Kris Oswold:
If you align what you're trying to accomplish with supplier diversity with your corporate strategy, your growth strategy, then you've got a business reason and you have economics behind what you're trying to do. That makes it so much more powerful. Value alignment is important, of course, but today, shame on any company that doesn't have D, E, and I as part of their values. Value alignment alone is not going to be enough to make the program real. Make sure you are aligned very, very closely to your corporate strategy, and that will get you the support you need to make the investments and drive the change.

Nalini Bates:
Kris stole mine. Of course, having it aligned with your corporation's [inaudible 00:14:59] strategy is critical. The second thing I would say is try to prioritize. I think this is something that is also hard. I think a lot of us feel like there is so much opportunity, that we want to do a million things. Really forcing yourself to prioritize and get some quick wins and gain momentum, while it might feel hard in the moment, longterm will probably be more beneficial.

Alexis Bateman:
I just want to thank you both for joining and summarizing the learnings of the day, but just really especially bringing your expert insights on supplier diversity, equity inclusion. We can foresee this continuing to be a key focus area going forward and hope that we can continue to bring awareness, bring recognition of the importance of this issue and scaling efforts. So thank you both for your time and thanks everyone for joining us today.

Kris Oswold:
Thanks, Alexis, and thank you to MIT and the center for putting this together, incredibly valuable.

Nalini Bates:
Yes. Thank you so much. I appreciate the invitation and look forward to helping out however I can, going forward.

Announcer - Arthur Grau:
All right, everyone. Thank you for listening. I hope you enjoyed this edition of MIT Supply Chain Frontiers. My name is Arthur Grau, communications officer for the center. I invite you to visit us anytime at ctl.mit.edu, or search for MIT Supply Chain Frontiers on your favorite listening platform. Until next time.