Corporates can help diverse-owned businesses succeed by avoiding practices that can contribute to their failure. The biggest challenges that occur for diverse owned businesses when working with global corporates are:
- Challenge to beat experience/qualifications/ references in scoring factors for diverse business vs established suppliers
- Payment Terms
- Lengthy contracts & onboarding procedures
- Geographical reach – geo coverage insufficient for multi region or global RFx’s
- ISO or other required certificates missing
- Insurance (liability) coverage
- Social & environmental systems not sufficient
- Balance Sheets
- Size of the company for breadth & depth of work requested too small
Procurement officers therefore have an important role to play in helping diverse-owned businesses overcome these barriers to accessing contracts through appropriate risk assessment.
- Do we need $ 3M liability coverage for every contract?
- Do we need confirmation of a healthy balance sheet over 10 years?
- Can we agree to a 14 or 30 day payment term?
- Can we set up a short track onboarding for smaller business?
- and many more
In this Future of Sourcing online magazine article ”Procurement Teams can Diversify Suppliers & Manage Risk”; https://futureofsourcing.com/how-procurement-teams-can-diversify-suppliers-and-manage-risk, written by Lara Hodgson, CEO and co-founder of Now – she’s providing five tips to help procurement teams meet DE&I supplier goals.
Next week; What to consider when working with corporates for diverse owned businesess.