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The Evolution of Diversity in Procurement

Julie Holmes & Lois Rouder, Sr. Channel Business Managers, W.W. Grainger, Inc.

The vendors you procure from can be as important as what you're ordering. Organizations can partner with diverse vendors to reach internal diversity targets or to meet state and federal diversity requirements. In both cases, diversity in procurement stimulates the local economy, provides value-added products and services, and enables traditionally underrepresented workforces to succeed.  

However, for organizations that choose to pursue internal diversity goals, the challenges can be daunting. Here are a few ways to make the shift without significantly disrupting your current procurement processes.

What It Takes to Procure from Diverse Businesses

Companies must first ensure that the small/diverse businesses carry the right certifications. Depending on the business, changes to procurement practices, payment, and even eCommerce can be required. Some small/diverse businesses may not even have a scaled shipping process or appropriate staffing for the job.

The same challenges are true for states and the federal government, as governmental organizations continue to pursue aggressive diversity targets for contracts they award. These can range depending on the state, with Virginia mandating that 42% of contracts awarded include woman- or minority-owned small businesses. Competing for contracts in states with these requirements means sourcing from vendors with the right certifications and ownership.

Tier 1 Distributor Alliance

The Grainger Tier 1 Distributor Alliance (DA) is comprised of Disadvantaged Business Enterprise vendors, authorized to resale Grainger’s MRO products. DA can help you reach diversity targets while still leveraging the power of Grainger’s procurement process. All participants in the DA program must hold specific diversity certifications and maintain compliance, and undergo extensive vetting to ensure quality, support levels, and appropriate staffing.

When you select a DA partner, you work directly with the organization to shop, order, and pay. In the background, Grainger helps DA partners scale eCommerce and ordering systems, and ensure timely delivery. DA partners can help grow their business and support their local community while your organization meets diversity goals without sacrificing quality or scale.

If you have internal or contracted diversity targets, DA can provide access to the appropriate certified small/diverse business. With Grainger’s procurement tools backing DA partners, you can ensure that you meet internal or contract goals without the need to manage individual vendors.

Tier 2 Supplier Diversity

Like Tier 1 DA providers, Tier 2 providers are selected for diverse ownership and workforce. The Tier 2 Supplier Diversity program continues this focus by enabling select small businesses to list their products on®.

Tier 2 Supplier Diversity supports the growth of historically underrepresented businesses in the U.S., representing nearly 170 women-, minority-, veteran-, service-disabled veteran- and LGBT-owned businesses. These businesses list more than 32,000 products on Grainger’s eCommerce solutions. Customers leveraging Grainger eCommerce can choose to buy from the Supplier Diversity program directly from their existing punchout or Grainger’s mobile app, without the need to procure from specific vendors.

Grainger can track your diversity-eligible purchases and automatically report on the entire procurement process, making it simple to understand your spend with diverse partners. Grainger also offers its Supplier Diversity program partners access to training, mentoring, and Grainger procurement, so that smaller organizations can learn and scale.

The Results 

Diversity is mutually beneficial for you and the small/diverse business. Grainger’s Tier 1 and Tier 2 programs succeeded in Texas, where state mandates require 22% of contracts to be supplied by small and diverse businesses. Working with the state, Grainger vetted 7 DA partners representing HUB, women-owned, Hispanic women-owned, Asian-owned, African American, and service-disabled veteran-owned businesses.

With mentoring and procurement support from Grainger, Texas made strides toward its diversity goals, and grew the local economy by supporting small businesses. Small/diverse businesses not only brought products to the state, but also provided valuable additional services like embroidery, kitting and branding. As a result, small business revenue grew by 10% in 2017 in Texas, and more businesses could enhance and participate in the statewide economy.

Learn more about Grainger's Tier 1 and Tier 2 programs and how you can add small/diverse businesses to your procurement process.

Julie Holmes is a Sr. Channel Business Manager and oversees Grainger’s Mentor-Protégé Program (MPP). She is responsible for developing and implementing new programs for Grainger which will enable various forms of business development assistance to small/diverse businesses. In addition, she is responsible for communications, marketing and training for the Channel Development program which promotes diversity in customers’ supply chains through an established network of small, woman, minority and veteran-owned distributors across the U.S.

Lois Rouder is a Senior Channel Business Manager, responsible for directing the strategy and business development activities of the Texas and Florida small business resellers.  In addition, Lois provides the small business partners with specific segment roadmaps which enables them to understand customer challenges that are aligned with Grainger’s product offers. 

The information contained in this article is intended for general information purposes only and is based on information available as of the initial date of publication. No representation is made that the information or references are complete or remain current. This article is not a substitute for review of current applicable government regulations, industry standards, or other standards specific to your business and/or activities and should not be construed as legal advice or opinion. Readers with specific questions should refer to the applicable standards or consult with an attorney.


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