Why Multi-Tier Diverse Supplier Spend
Tracking is Essential

Diverse supplier spend is the total amount of money that your organization will spend with diverse-owned businesses, especially when you purchase any products or services. 

You will decide which categories from the diverse-owned companies to include: women-owned, minority-owned, disabled-owned, LGBT-owned, veteran-owned.. We can also talk about the multi-tier diverse spend tracking for your company. 

Multi-tier will refer to how deep your supply chain you are going to track and report your diverse spending. If you only want to report spend with prime or Tier 1 suppliers that are diverse-owned, you can call it a single tier. 

If you also want to track and report spend with other diverse suppliers at Tier 2, Tier 3, and any additional tier, you can call it multi-tier. If your company is working together with diverse-owned prime suppliers, you may want to create a multi-tier spend report for your business. You will get some benefits from this spend reporting. 

Diverse Supplier Spend Tracking

If you want to increase diverse spending quickly and create more economic opportunities for the diverse suppliers, you may want to look more than Tier 1 supply chain suppliers. When you get to more than Tier 1 suppliers, you will have an unlimited potential for your company’s growth. 

When you apply this diverse spending report, you can identify and report any spending that already occurs inside your supply chain. It will accelerate your reporting progress, so you can make everything efficient in your business. 

Overview of the Supply Chain

Multi-tier reporting will help you get an overview of the organization’s supply chain from an inclusive sourcing perspective. By looking at this report, you will know how many diverse suppliers are included at many different levels of the supply chain around your company. You will be able to identify any areas where you may want to improve. For example, you may need to find some potential suppliers for your business unit. One of your prime suppliers may need help creating their supplier diversity program to be more effective. 

Looking at your supply chain for your company as a whole will also help you identify any risks, so you can learn how to mitigate these risks effectively. You will notice if you are relying too heavily on one single supplier for your company. It will be beneficial for you to split a request for proposal or RFP into several smaller contracts. By doing so, you will get access to diverse suppliers that will be ready to assist with your products and services. You can prevent supply chain disruption by using this diverse supplier spend multi-tier report. 

Small Business Opportunities

It is well known that the majority of the diverse suppliers are small businesses. Many small companies don’t have the capacity to provide Tier-1 level products and services, so they may miss out on opportunities to work with larger organizations. Through the Tier 2 and Tier 3 contract, these small businesses can supply one of your primes to become a part of your supply chain. 

For example, there is company A which is a small and minority-owned construction firm which is specializing in commercial projects. When you have a major construction project to bid on and also a diverse spend goal attached, you can award the contract to company B. Company B is a larger company with better experience than company A. Then, you can introduce company A to company B as the potential subcontractor. During the process, Company B can hire Company A for completing some parts of the project. In this situation, Company B will act as your Tier 1 supplier, while company A will act as your Tier 2 supplier. 

Making a Big Impact on the Local Economy

Including the Tier 2 supplier in your diverse supplier spend report may tell you a bigger story about the economic impact you have on the communities. The economic impact will measure the overall effect of the purchasing event on the economy in the specified area. when creating this report, you can also include some metrics, such as changes in the business revenue, jobs created, and also personal wages. You will find out that your diverse spending will make a great impact on the economy on the communities. 

Integrated Systems Design provides a comprehensive way to track and verify your organization’s diverse spend. Contact us today to grow your supplier diversity program.