According to a study by The Hackett Group, by 2025, companies expect a 50+% increase in their diversity spend goals, with an average target of 13% of their spend dedicated to companies across a wide range of underrepresented diversity groups.
Supplier diversity spend is a growing priority for our clients too. We’ve been inundated with queries about Tier II supplier diversity and how they can direct more spend toward diverse suppliers within the meeting and travel space. Tier II suppliers are third parties that an organization’s direct suppliers’ (Tier I) contract to provide and enable operational efficiency, whether in the form of a product and/or service.
Reaching these diversity goals entail a two-part process: first, determining how much of the spend is currently devoted to diverse suppliers and, second, finding diverse suppliers to add to the portfolio. Both tasks can be labor-intensive.
Fortunately, you need not do this work on your own. We spoke to Ariana Reed, senior manager of business strategy, American Express Meetings & Events (M&E), and Katherine O’Neill, global strategic sourcing manager, corporate services and sustainability, about how American Express Global Business Travel (GBT) is helping clients build their diverse supplier base.
Tracking diverse spend and identifying opportunities
Through a consulting engagement, Ariana and a collaborative team at GBT recently helped a pharmaceutical client comb through its meeting and travel spend to understand what percentage was going toward diverse suppliers and where it could unearth new opportunities.
Explaining the process, Ariana said: “In collaboration with the client’s travel manager and M&E team, we conducted a comprehensive analysis of their 2019 spend data, utilizing any information we could get our hands on – primarily the client’s travel and expense corporate card, purchase order, and meeting data. We then combined and reviewed this data to determine where the client was spending.”
Data from the client’s American Express card was easy to digest since it automatically identified merchants with a diversity designation; other tools and methods were also used to capture and confirm spend with diverse suppliers.
“After the data was consolidated, we compared our master list of diverse suppliers and matched it against theirs to identify gaps and opportunities. From this work, we saw the client had a huge opportunity to build its diversity spend with diverse-owned hotels.”
GBT then made recommendations to help the client increase its diversity spend and add 1,000 diverse suppliers to its network.
To empower clients to perform this type of data analysis independently, we have been busy building a feature within our Insights reporting tool that highlights diversity spend. The plan is to first enable clients to view Tier II spend from GBT that they can incorporate into their diversity spend calculations. This data is available to our clients at request today.
“Transparency and collaboration are at the core of supplier diversity and with that comes the need for easy access to tangible reporting. This new feature in Insights will enable our clients to access quarterly Tier II reporting directly, in addition to valuable information already available through the tool, like sustainability reporting for greenhouse gas emissions. This allows for more visibility to identify opportunities for growth and action to both meet GBT’s supplier diversity goals and assist our clients with theirs,” said Katherine.
Helping clients find diverse suppliers
It can be challenging to track down diverse vendors since there’s no overarching agency or consolidated report that allows you to identify them. As Ariana explained, “You can either partner with (i.e., pay) a certifying organization to get access to its database of diverse suppliers or you can go through the painstaking exercise of surveying vendors yourself.”
GBT is helping to make this process easier through our internal vendor assessments, which we’ve extended to our meeting and events organization. GBT’s new set of sourcing questions aim to standardize and increase the availability of environmental, social, and governance (ESG) data shared by vendors, hotels, and other venues to help corporate travel managers during the request for proposal (RFP) season. The additional questions include a series around diversity certification and programs.
Our goal is to provide stakeholders with information they find most helpful in addressing sustainability and diversity, equity, and inclusion (DE&I) goals.
“To support our clients with developments in reaching their ambitious DE&I goals and Tier II requirements, GBT has set aspirational targets that are embedded into our day-to-day sourcing initiatives,” said Katherine. “Amongst driving the best value and overall service for GBT and our clients, we aim to develop partnerships with our vendors and suppliers to drive impactful change in the travel industry.”
Promoting and supporting diverse suppliers
A diverse supplier is broadly defined as a business that is at least 51% owned by an individual or group that is part of a traditionally underrepresented or underserved group. They include minority-, woman-, veteran-, and LGBTQ-owned businesses as well as small and other disadvantaged enterprises. Even if a business meets that definition, Ariana and Katherine said many clients seek out only diverse suppliers with an official diversity certification from an authorized organization.
For some small vendors, picking up the cost of certification may not be in the budget. Others may not have time for the rigorous application process.
GBT is exploring ways to help small businesses overcome these challenges. Using the new ESG questionnaire we developed, we’ve begun identifying vendors who may qualify as a diverse supplier and that we may be able to assist. Recently, we helped one of our woman-owned Travel Partner Network members secure diversity certification.
Whether a third party has a diversity certification or not, vendors that meet our shared values on ESG will receive GBT’s top designation for preferred suppliers.
“GBT wants to be inclusive and not exclude anyone from identifying as a diverse supplier just because they do not have certification,” Katherine said. “It’s important we highlight the businesses that have certifications, but we also want to expand our supplier diversity program to promote all our vendors that are doing good things in this space, whether that’s having a phenomenal DE&I program themselves or supporting our Tier II requirements.” We also are asking all vendors about their supplier diversity goals and programs.
“By asking the non-diverse organizations about their diversity programs, it can lead to a potential Tier II opportunity for the client or for us,” Ariana said. For instance, if a technology provider procures consulting services, contracted work, office supplies, etc., from diverse suppliers, that can be categorized as indirect diversity spend for companies that utilize GBT for business travel.
Katherine shares that GBT has embedded supplier diversity into our sourcing initiatives across the business and is seeking every opportunity to procure with diversity in mind. One way we are doing this is by providing access to RFPs for small and diverse vendors. For instance, our Meetings & Events team has just procured two event-planning agencies t o support its staffing needs – one minority-owned and one woman-owned.
“Opportunities like this not only support GBT’s diversity spend objectives but also allows us to spotlight diverse suppliers to our clients and provide them with a Tier II opportunity,” Ariana said.
As we continue to grow our program, we are interested in hearing from diverse vendors whose services we may employ. If you are a diverse supplier interested in working with us, please submit your interest in our supplier network here or email us.