SMI Supplier Diversity Playbook

On behalf of the SMI Diversity and Inclusion Council, we are thrilled to present the Supplier Diversity Playbook in collaboration with the Healthcare Anchor Network (HAN). The purpose of this Playbook is to expand the adoption of supplier diversity across the U.S. healthcare supply chain, ultimately enhancing the health of the communities we serve. Our aim is to spark industry-wide conversations on this important issue and drive impactful actions that will deliver measurable results in the years ahead.

The SMI Diversity and Inclusion Council consists of a diverse group of leading healthcare providers, suppliers, manufacturers, distributors, and service organizations, all working together to drive transformational change within the healthcare supply chain. The Council is dedicated to identifying and promoting strategies that foster a culture of diversity and inclusion. We believe that when supplier diversity is thoughtfully implemented, it can enhance patient care, support financial objectives, and create significant economic impact within the communities we serve.

This Supplier Diversity Playbook brings together best practices and resources for both Healthcare Providers and Industry Partners. We believe that collaboration across the entire healthcare industry is essential to making meaningful progress.

At SMI, we strive to cultivate trust and respect between trading partners. The Supplier Diversity Playbook offers a common language, shared goals, and opportunities for both Providers and Industry Partners to grow their supplier diversity programs. It also provides insights into the requirements and expectations from the perspective of your trading partners.

The Playbook is structured for easy use, featuring eight modular chapters, eight executive summaries, an appendix, resources, and key definitions. Each section can be accessed individually or utilized as a comprehensive tool. This Playbook is built on proven practices implemented by over seventy health systems through SMI’s partner, Healthcare Anchor Network, with valuable input and feedback from SMI’s Diversity & Inclusion Council members.

The creation of this Playbook was made possible through the commitment of organizations like Cardinal Health and Henry Ford Health System who are champions of supplier diversity.

Thank you,

Bill Moir, Henry Ford Health

Robert Rajalingam, Executive Industry Leader

SMI Diversity and Inclusion Council Co-Chairs

The SMI Supplier Diversity Playbook aims to provide consistent definitions, language, and tools for healthcare supply chain leadership seeking to advance supplier diversity efforts within their organizations’ supply chain department. Much of the supplier diversity playbook is applicable to supplier diversity efforts within industry partner and provider supply chain departments.

While the role of a provider and industry partner are complex and different, some operational and programmatic efforts extend across the industry. For example, by aligning providers and industry partners with a clear definition of supplier diversity and standards such as third-party certification and reporting metrics, we can continue to advance supplier diversity efforts within the sector.

Both industry partners and providers have a supplier base to engage and collaborate with to grow supplier diversity. Throughout the playbook, you will see references to providers, industry partners, diverse suppliers and suppliers. When referencing suppliers within this playbook, consider your organization’s supplier diversity program, regardless of the part of the healthcare supply chain in which your organization resides, i.e. a supplier reference is applicable to both providers and industry partners.

The playbook provides the tools, language and methodology required to execute a supplier diversity program within the healthcare environment. The resource is focused on best practices standards and implementation. While the resource can be reviewed from beginning to end, it was developed with a modular function. Multiple organizations are referenced throughout the playbook, this is not an endorsement from SMI, and they’re only provided as examples and references.

Each of the eight chapters includes a one-page executive summary. Definitions and tools can be accessed as pop-out windows and in the Appendix if more detail is needed. The table of contents has live links to each of the areas so that you can navigate to a specific section that interests you. Lastly, if you’d like to download the resource, a PDF option is available through the SMI website.

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Executive Summary

Integrating supplier diversity into supply chain practices increases resiliency, and advances efforts to address economic and racial disparities impacting operations and community health outcomes. Healthcare supply chain is increasingly prioritizing supplier diversity and other Environmental Social Governance (ESG) related activities as critical to the mission of their organization. Gartner’s Healthcare Supply Chain Top 25 incorporates Healthcare Anchor Network (HAN) anchor mission metrics into its methodology and U.S. News & World Report’s Best Hospitals ranking includes health equity measures.

Supporting diverse suppliers increases competition within the market while leveraging existing resources to drive economic growth and strengthen organizational and community outcomes. A robust supplier diversity program can help an organization:

  • Address supply chain needs.
  • Create a more efficient and resilient supply chain.
  • Generate a thriving diverse business community.
  • Reduce unnecessary and costly utilization of medical services.
  • Strengthen your organization’s reputation as the provider of choice or a business that cares about diversity, equity and inclusion in your community.
  • As an industry partner, differentiate by including your supplier diversity program outcomes and goals during the RFP process.

    • A successful supplier diversity program includes several components:

  • Executive leadership engagement
  • A designated resource to manage the program and projects
  • Clear parameters for the supplier diversity program including scope and business objectives

    • A robust supplier diversity program includes intentional engagement and education for internal team members involved in the purchasing process, industry partners and diverse suppliers alike. The change management resource in this chapter offers an example of how to plan and prepare strategies to gain buy-in for a supplier diversity program at various stages of maturity.

    Chapter 1:
    Setting the Stage, Building a Successful Supplier Diversity Program

    Executive Summary

    When starting a supplier diversity program, begin by evaluating current supplier diversity practices and use that evaluation to set goals for program growth. Seeking advice for getting started? Click the pop-out to view a few actions to take.

    If you are further along in your journey, you can click the next pop-out to see additional examples to explore.

    The components of a successful supplier diversity program include leadership engagement, program and data tracking infrastructure, staffing and interdepartmental infrastructure, partnership and community engagement, goal setting, and program marketing. The maturity model and scoring provide a measurable way for an institution to evaluate current performance of existing supplier diversity programming, benchmark efforts against industry best practice and support direction setting for future goals.

    Leadership Engagement

    Best practice includes an accountable executive and designated project manager or point of contact responsible for the stewardship of the supplier diversity program. While the role may vary across the organization, an accountable executive is a single, identifiable leader responsible for oversight of the supplier diversity program.

    Program & Data Tracking Infrastructure

    Success in this category includes regularly measuring spend with diverse businesses and developing a dashboard to visualize data. The types of data breakdown would include spend with diverse suppliers by purchasing category

    and spend broken down by diverse-owned businesses. Sustaining your program requires developing a method

    to track purchasing dollars spent with diverse suppliers and their certification information if third-party certified.

    Staffing & Interdepartmental Infrastructure

    Successful supplier diversity programs include a dedicated full-time employee responsible for supplier diversity. This individual is responsible for the daily duties to execute and measure the supplier diversity program. Collaboration and engagement across different areas

    of expertise support the execution of a supplier diversity strategy, ownership over the work, and decision-making authority.

    Partnerships & Community Engagement

    Partnership engagement is essential for connecting with existing diverse suppliers and for the growth of diverse supplier relationships. Examples of Supply Chain Integrator

    partners include chambers of commerce and supplier diversity organizations.

    Goal Setting

    Goal setting with key metrics

    supports efforts to promote and showcase the success of your supplier diversity program and build and sustain momentum.

    Chapter 2:
    Getting Started with Supplier Diversity Self-Assessment and Goal Setting

    Executive Summary

    Setting the Stage of Program Measurement

    Successful supplier diversity programs are embedded into the organization through measurable goals aligned with organizational priorities and/or strategic initiatives. When considering the metrics of success, review any existing tools, technologies and processes that are a standard throughout the organization. For example, an organization often resources supply chain with business, financial or data analysts to support measuring cost savings and track progress towards goals.

     

    When cultivating metrics to move your program forward, consider how easy they are to measure and report. It’s important that any metric in place is clearly defined for organizational leaders and management. In Chapter 2, we covered methods to determine organizational priorities and goals of a supplier diversity program, and in this chapter we will focus on components of program measurement.

    Establish the Addressable Spend Baseline

    When beginning to measure a supplier diversity program, the first step is to establish the institution’s current total addressable spend to identify potential opportunities and current efforts underway. Use clear definitions of your supplier diversity program and common language as outlined throughout the toolkit, for example a clear definition of total addressable spend

    Leverage external technology providers to support the validation of existing third-party certified diverse suppliers.

    Supplier Diversity Metrics of Success

    Successful goals are clearly defined and measurable with objectives that are both qualitative and quantitative. Momentum is built upon small successes over time, building relationships with stakeholders, and clear goals that incentivize this work for organization leadership. Examples of goals that could be established to achieve incremental change might include the number of contracts awarded to diverse suppliers, attendance of sourcing team members at “meet the buyers” events, and the number of presentations in the community to increase transparency on the purchasing process.

    Chapter 3:
    Measure What Matters, Supplier Diversity Metrics

    Executive Summary

    This chapter focuses on strategies to work across departments to promote and integrate supplier diversity into organizational priorities and decision-making.

    Program Alignment for Success

    Best practice supplier diversity programs align with the strategic direction and priorities of the organization. Examples include aligning your program objectives with the organizational mission, diversity and inclusion efforts, and goals around social determinants of health and equitable community wealth building. This can include creating a shared understanding of why supplier diversity is important by connecting the program to the Community Health Needs Assessment (CHNA)

    data, and sharing the benefits of a supplier diversity program. More details on the why of supplier diversity can be found in Chapter 1.

    Creating the ecosystem

    One way to generate internal engagement is to connect procurement activities to larger organizational and community efforts, supplier development opportunities, and industry trends. A robust supplier diversity ecosystem includes engaged internal departments and stakeholders, community engagement efforts led by your organization, and creation of collaboration resources.

    Methods to embed Supplier Diversity into your institution

    Successful implementation of a supplier diversity program depends on clear goals and accountability. Cultivate organizational awareness, accountability, and buy-in across the organization through regularly updated internal dashboards of diverse supplier spend by functional area. Tie executive compensation to supplier diversity goals and outcomes. Measure the economic impact in the community through job creation, diversity of supplier workforce and diverse supplier ownership. Highlight success stories to build momentum internally through your intranet, blogs, and celebrations.

    Chapter 4:
    Internal Engagement for Growing Supplier Diversity

    Executive Summary

    Strategic partnerships with community partners and supply chain integrators

    are an important way to learn from peers, make connections, and advance collective goals to support the growth of diverse businesses. Strategic partners include community partners, peer organizations, and supply chain integrators. Strategic partnerships differ from building connections with diverse suppliers in the learning objectives, resourcing and priorities. Many strategies described throughout the playbook hinge on partnerships with organizations that support diverse businesses. It is important to build relationships with stakeholders and involve them in the design process of a diverse purchasing initiative. A particularly important subset of organizations are local chapters of supplier diversity organizations.

     

    Often, these organizations are willing to share their supplier databases and can connect procurement teams to qualified firms. Local chambers of commerce, business development associations, and county or city governments can also be important partners. One strategy to encourage relationship building with community partners and supply chain integrators is to have an employee participate on the board of one or more of these organizations. This allows them to communicate supply chain needs, connect directly with potential suppliers, and build trust with the local business community.

     

    The first step is to identify the organization’s existing network of community partners. The mapping process will uncover and identify current work underway to avoid duplicative efforts. Navigate to Chapter 4 to learn which departments to engage on this question. When mapping your external partners, consider which organizations your institution is in active partnership with and which organizations you still need to cultivate relationships with.

    Chapter 5:
    Developing Strategic Partnerships

    Executive Summary

    Often, traditional procurement practices create barriers for diverse suppliers, even cost-competitive diverse suppliers. Adjusting internal practices to facilitate connections between the purchasing department and diverse businesses increases opportunities for bid participation. For example, a prominent challenge for diverse suppliers is awareness of upcoming bids. To reduce this potential barrier, purchasing department team members and the marketing department could collaborate on outreach and education strategies geared towards diverse suppliers.

     

    Connection strategies, such as those described above, result in intentional procurement practices with more transparency in the bid process and methods for diverse businesses to participate. Supply chain buyers can identify existing diverse suppliers through community partners or supply chain integrators

    who work with diverse businesses and are familiar with their capabilities. Key strategies to building connections with diverse suppliers include creating transparency in the purchasing process and criteria, identifying diverse suppliers aligned with your organizational needs, and collaborating with key supply chain integrators focused on suppler diversity and economic development.

     

    Capacity strategies increase the ability of the diverse business community to meet supply chain needs. This can occur through diverse supplier sub-contractor requirements, mentor-protégé programs, promoting business incubation, and providing technical assistance. Cultivating a strong supplier diversity program requires investment in capacity building of existing suppliers and entrepreneurs, and strategies to connect diverse businesses with contracting opportunities.

    Chapter 6:
    Diverse Supplier Development and Capacity Building

    Executive Summary

    A successful supplier diversity program requires an investment in tools and technologies to support the data enrichment, visualization, measurement, and identification of potential suppliers to work with. This chapter focuses on the types of common technologies in use, how to leverage them, and key considerations.

     

    Types of technology include:

  • Data enrichment platforms to evaluate diverse suppliers including third-party certified businesses.
  • Supplier diversity portals and dashboards to provide a platform to onboard potential diverse suppliers, identify diverse suppliers for bid opportunities, and measure program success.
  • Supplier onboarding and credentialing portals to provide a “front door” for diverse suppliers to provide information and store credentials.
  • Diverse supplier databases used as a central location to store supplier credentials and identify existing diverse suppliers to include in bid opportunities.
  • Solutions that enable data collection such as Tier 2 diversity data submission and reporting

    •  

    Below are several tools that are often in used within supply chain including:

  • Enterprise resource planning (ERP) is the technology to manage core business practices such as human resources, procurement, and accounting. Engage your ERP experts to inquire about ways to include supplier diversity measurements throughout the purchasing processes including, requests for information (RFI) and requests for proposal (RFP), supplier onboarding, and supplier databases.
  • Enterprise intranets allow messaging for all staff and create an opportunity to engage employees. Leverage the intranet site to build an internal space for supplier diversity collaboration between peers, building program awareness and celebrating program successes to build momentum with your program.
  • If available, leverage your organization’s supplier relationship management tools such as a customer relationship management (CRM) platform to track engagement with key stakeholders and suppliers.

    •  

    Best practice supplier diversity programs invest in technology to build a comprehensive internal dashboard of the institution’s supplier diversity measures. A robust internal supplier diversity dashboard embeds supplier diversity measurement within the ERP system, enabling staff to track both tier one and tier two diverse vendors, and report diverse spend by department, ideally on a monthly cadence.

    Chapter 7:
    Available Technology Solutions

    Executive Summary

    A key strategy to realize diverse spending goals is to embed them within purchasing practices and policies from soliciting bids to evaluating contract performance. Including diversity goals in RFPs provides organizations with a formal framework for considering these factors. Moreover, it can help institutions leverage other supply chain actors—supply chain integrators, GPOs, distributors, dining contractors, and other large suppliers to meet diverse procurement goals. Building supplier diversity requirements into RFPs and contracts communicates that it’s an important priority.

     

    Adding language around diverse procurement to RFPs and contracts allows the supply chain team to evaluate bids based on whether suppliers have met diverse supplier participation requirements. It also encourages suppliers to report on their performance strategy and promotes subcontracting with diverse-owned businesses.

     

    If you’re unsure where to begin in your journey of supplier diversity within the contracting process, this chapter is for you. The three steps to getting started with supplier diversity in the bid process include:

     

    1. Setting the requirement for purchasing staff to include diverse supplier participation in the bidding process.

     

    2. Adding supplier diversity language into RFPs and contracts.

     

    3. Communicating supplier diversity priorities to key community partners, GPO, distributors, suppliers, and invite them to collaborate in achieving your organization’s goals.

    Chapter 8:
    Integrate Supplier Diversity into the Sourcing Process

    Closing Remarks

    Appendix

    Contributing SMI Members