Transcript of a discussion on how companies are improving supplier diversity and the new tools that make attaining inclusive supply chains easier than ever.

1. Diversity Spend: When Doing Good Leads to
Doing Well
Transcript of a discussion on how companies are improving supplier diversity and the
new tools that make attaining inclusive supply chains easier than ever.
Listen to the podcast. Find it on iTunes. Get the mobile app. Download the
transcript. Sponsor: SAP Ariba.
Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast, coming to
you from the 2017 SAP Ariba LIVE conference in Las Vegas. I’m Dana Gardner,
Principal Analyst at Interarbor Solutions, your host the week of March 20 as we explore
the latest in collaborative commerce, and learn how innovative companies are
leveraging the network economy.
Our next digital business insights panel discussion focuses on the latest path to gaining
improved diversity across inclusive supply chains.
We’ll examine why companies are seeking to improve supplier diversity, the business
and societal benefits, and the new tools and technologies that are making attaining
inclusive suppliers easier than ever.
To learn more about the increasingly data-driven path to identifying and achieving the
workforce that meets all requirements, please join me now
in welcoming our guests, Rod Robinson, Founder and
CEO of ConnXus. Welcome, Rod.
Rod Robinson: Thank you, Dana. Great to be here.
Gardner: We’re also here with Jon Stevens, Global Senior
Vice President of B2B Commerce and Payments at SAP
Ariba. Welcome, Jon.
Jon Stevens: Thank you, I look forward to it.
Gardner: And we’re here with Quentin McCorvey, Sr., President
of M&R Distribution Services. Welcome, Quentin.
Quentin McCorvey, Sr.: Thank you, Dana.
Gardner: Jon, why is it important to seek diversity in procurement and across supply
chains? What are the reasons for doing this?
Stevens: It’s a very good question.
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Robinson

2. It's for few reasons. Number one, there is a global war for talent, and when you can get
a diverse point of view, when you can include multiple different perspectives, that
usually helps drive several other benefits, one of which could even be innovation.
We often see companies investing deeply inside their supply chain, working with a
diverse set of suppliers, and they are gaining huge rewards from an innovation
standpoint. When you look at the leading companies that leverage their suppliers to
help drive new product innovation, it usually comes from these areas.
We also see companies more focused on longer-term relationships with their suppliers.
Having a diverse perspective -- and having a set of diverse suppliers -- helps with those
longer-term relationships, as both companies continue to grow in the process.
Gardner: Rod, what are you seeing in the marketplace as the major trends and drivers
that have more businesses seeking more inclusivity and diversity in their suppliers?
Diversity benefits business
Robinson: As a former chief procurement officer (CPO), the one thing that I can
definitely say that I have witnessed is that more diverse and inclusive supply chains are
more innovative and deliver high value.
I recently wrote a blog where I highlighted some statistics that I think every procurement
professional should know: One is that 99.9% of all US firms are in a small business
category. Women- and minority-owned businesses represent more than 50% of the
total, which is responsible for employing around 140 million people.
This represents a significant portion of the workforce. As we all know, small businesses
really are the economic engine of the economy – small businesses are responsible for
65% of net new jobs.
At the end of the day, women and minorities represent more than 50% of all businesses,
but they only represent about 6% of the total revenue generated.
The only thing that I would add is that diversity is vitally important as an economic driver
for our economy.
Gardner: Rod points out a rich new wellspring of skills, talent and energy coming up
organically from the small to medium-sized businesses. On the other hand, major
national and international brands are demanding more inclusivity and diversity from their
suppliers. If you are in the middle of that supply chain, is this something that should
interest you?
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3. Targeting talent worldwide
Stevens: You are spot-on. We definitely see our leading
customers looking across that landscape, whether they are a
large- or medium-sized company. The war for talent is only
going to increase. Companies will need to seek even more
diverse sources of talent. They are really going to have to
stretch themselves to look outside the walls of their country
to find talent, whereas other companies may not be doing
so. So you're going to see rising diversity programs.
We have several customers in emerging parts of the world;
let's take South Africa for example. I spend a lot of time in South
Africa, and one of our customers there, Nedbank, invests a lot of
time and a lot of money in the growth and development of the small businesses.
In South Africa, the statistics that Rod talked about are even greater as far as the
portion of small companies. So we are seeing that trend grow even faster outside
of the US, and it's definitely going to continue.
Gardner: Rod, you mentioned that there are statistics, studies and research out there
that indicate that this isn't just a requirement, it's really good business. I think McKinsey
came out with a study, too, that found the top quarter of those companies seeking and
gaining gender, racial and ethnic diversity were more likely to have a better financial
return. So this isn't just the right thing to do, but it's also apparently demonstrated as
being good business, too. Do you have any other insights into why the business case
for this is so strong?
Diversity delivers innovation
Robinson: Speaking from first-hand experience, having been responsible for
procurement and supplier diversity within a large company, there were many drivers.
We had federal contracts that required us to commit to a certain level of engagement
(and spending) with diverse suppliers. We had to report on those stats and report our
progress on a monthly and/or quarterly basis. It was interesting that while we were
required by these contractual mandates -- not only from the government but also
customers like Procter and Gamble, Macy's, and others -- we started to realize that this
is really creating more competition within categories that we were taking to market. It
was bringing value to the organizations.
We had situations where we were subcontracting to diverse suppliers that were
providing us with access to markets that we didn't even realize that we were missing. So
again, to Jon's point, it's more than just checking a box. We began to realize that this is
really a market-imperative. This is something that is creating value for the organization.
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Stevens

4. The whole concept of supplier diversity started with the US government back in the late
’60s and early ’70s. That was the catalyst, but companies realized that it was delivering
significant value to the organization, and it's helped to introduce new, innovative
companies across the supply chain.
At ConnXus, our big break came when McDonald's gave us an opportunity five years
ago. They took a chance on us when we were a start-up company of four. We are now
a company of 25. Obviously, revenues have grown significantly and we've been able to
attract partners like SAP Ariba. That's the way it should work. You always want to look
for opportunities to identify new, innovative suppliers to introduce into a supply chain;
otherwise we get stagnant.
Small but mighty
Stevens: I'll add to what Rod said. This is just the sort of feedback we hear from our
customers, the fact that a lot of the companies that are in this inclusive space are small
-- and we think that's a big advantage.
Speed, quickness and flexibility are something you often see from diverse suppliers, or
certainly smaller businesses, so a company that can have that in its portfolio has better
responsiveness to their customer needs, versus a supply chain with very large
processes or large organizations where it takes a while to respond to market needs.
The quick in today's world will be far more successful, and having a diverse set of
suppliers allows you to respond incredibly quickly. There is obviously a financial benefit
in doing so.
Gardner: A big item of conversation here at SAP Ariba LIVE is how to reduce risk
across your supply chain. Just like any economic activity, if you have a diversified
portfolio, with different sizes of companies, different geographic locations, and different
workforce components -- that can be a real advantage.
Now that we've established that there is a strong business case and rationale for
seeking diversity, why do procurement professionals have trouble finding that diversity?
Let's go to Quentin. What's holding back procurement professionals from finding the
companies that they want?
McCorvey: Probably the biggest challenge is that the whole trend of supply chain
optimization, of driving cost out of the supply chain, seems to be at odds with being
inclusive, responsive, and in bringing in your own diverse suppliers. A company may
have had 20 to 30 suppliers of a product, and then they look to drive that down with to
just one or two suppliers. They negotiate contract prices for three-year contracts. That
tends to weed out some of the smaller, more diverse organizations for several reasons.
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5. For example, Rod talked about McDonald’s taking a chance
on him. Well, they took a chance on him being a four-person
organization; if he had to [grow first] he never would have
had the opportunity.
For a company that requires a product in the market for every
location nationally -- as opposed to regionally -- at a certain
price, that tends to challenge a lot of the inclusion or the
diversity in the supply chain.
Gardner: Right. Some companies have rules in place that
don't provide the flexibility to attract a richer supplier
environment. What is being done from your perspective at
SAP Ariba, Jon, to go after such a calcification of rules that
leads to somewhat limited thinking in terms of where they can
find choices?
Power through partnerships
Stevens: That short-term thinking that Quentin talked about is absolutely one of the
big barriers, and that generally comes down to metrics. What are they trying to
measure? What are they trying to accomplish?
The more thought-leading companies are able to look past something in the first year or
two, and focus on not just driving cost out, as Quentin talked about, but discovering
what else their suppliers can help with, whether it’s something from a regulatory
standpoint or something from a product and innovation perspective.
Certainly, one challenge is that short-term thinking, the other is access to information.
We see far too many procurement organizations that just aren't thinking on a broader
scale, whether it's a diverse scale or a global scale. What SAP Ariba is now bringing to
the table with our solutions is being able to include information about where to find
diverse suppliers, where to search and locate suppliers, and we do that through many
partnerships.
We have a solution in South Africa called Tradeworld, which addresses this very topic
for that market. We have a solution called SAP Ariba Spot Buy, which allows us to bring
diverse suppliers automatically into a catalog for procurement organizations to leverage.
And at SAP Ariba LIVE 2017 we announced that we are partnering with Rod and his
firm, ConnXus, to expand the diversity marketplace by linking the ConnXus database
and the SAP Ariba Network, which opens the door to more opportunities for all of our
customers.
Robinson: If I could add to Jon’s point, one thing I also look forward to as a part of our
partnership with SAP Ariba is thought leadership. There are opportunities for us to share
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McCorvey, Sr.

6. best practices. We know companies who are doing it really well, we know the
companies that maybe struggling with it, but within our joint customer portfolios, we will
be able to share some of those best practices.
For example, there may be situations where a company is doing a big maintenance,
repair and operations (MRO) bid and you have some large players involved, such as
Grainger. There may be opportunities to introduce Grainger to smaller suppliers that
maybe provide fewer stock keeping units (SKU)s that they can leverage strategically
across their accounts. I have been involved in a number of initiatives like that. Those
are the types of insights that we will be able to bring to the table, and that really excites
me about this partnership.
Gardner: Those insights, that data, and the ability to leverage a business network to
automate and facilitate that all at scale is key. From what we are hearing here at SAP
Ariba LIVE, leveraging that business network is essential. Rod, tell us about ConnXus?
What’s being announced here?
Seek and ye shall find in the connected cloud
Robinson: ConnXus is a next-generation procurement platform that specializes in
making corporate supply chains more inclusive, transparent, and compliant. As I
mentioned, we serve several global companies, many of which we share relationships
with SAP Ariba. Our cloud-based platform makes it easy for companies to track,
monitor, and report against their supplier diversity objectives.
One of the major features is our supplier database, which provides real-time searchable
access to nearly two million vetted women-, minority- and veteran-owned businesses
across hundreds of categories. We integrate with the SAP Ariba Network. That makes it
simple for companies to identify vetted, diverse suppliers. They can also search on
various criteria including certifications, category, and geography. We have local, national
and global capabilities. SAP Ariba already is in a number of markets that we are looking
to penetrate.
Gardner: I was really impressed when I looked at the ConnXus database, how rich and
detailed it is, and not just ownership of companies but also the composition of those
companies, where those people are located. So you would actually know where your
inclusive supply chain is going to be, where the rubber hits the road on that, so to
speak.
Jon, tell us about the news here on March 21, 2017, a marriage between SAP Ariba and
ConnXus.
Stevens: The SAP Ariba Network has a community of over 2.5 million companies, and
it’s companies like M&R Distribution Services that we have been able to help grow and
foster over time, using some of the solutions I talked about and Ariba Discovery.
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7. Adding to the information that Rod just talked about, we are greatly expanding that. We
have the world’s largest, most global business network and now we have the world’s
most diverse business network, due to the partnership with ConnXus being able to
provide that information through various processes.
Fortune 2000 companies are looking all the time through requests for proposal (RFP)s,
through sourcing events, and analyzing supplier performance on the SAP Ariba
Network. The partnership with ConnXus will allow us to provide a lot more education, a
lot more awareness to them.
For the suppliers that are on our network and those who will be joining us as a part of
being in ConnXus, we expect to drive a lot more business.
Gardner: If I am a purchasing agent or a procurement officer and I want to improve my
supplier inclusion program, how would something like, say, SAP Ariba Spot Buy using
the ConnXus database, benefit me?
Stevens: As you decide to search for a category, we will return to you several things,
one of which is now the diverse supplier list that ConnXus has. One of the things we are
going to be doing with SAP Ariba Spot Buy is to have a section that highlights the
diversity category so that it’s front and center for a purchasing agent to use and to take
advantage of.
Gardner: Clearly there is strong value and benefit here if you are a procurement officer
to get involved with the ConnXus database and Ariba Network. Quentin, at M&R
Distribution Services, tell us from the perspective of a small supplier like yourself, what
you're hearing about Ariba and ConnXus that interests you?
Be fruitful and multiply business opportunities
McCorvey: You referenced a marriage between SAP Ariba and ConnXus, and part of a
marriage is to be fruitful and multiply. So I want them to be fruitful so I can multiply my
business opportunities. What that does for a company like ours is, we are looking for
opportunities. It’s tougher for me to compete as a small business against a Grainger, or
against a Fastenal, or against other larger companies like that.
So when I am going after opportunities like that, it’s going to be tough for me to win
those large-scale RFPs. But if there is a target spot opportunity that I am looking for or
within a region, it’s something that I can begin to do if a company is looking for someone
like me.
We’ve talked a lot about corporations and the benefit of corporations, but there is also a
consumer benefit, too, because we are in an age where the consumer is socially
responsible and really wants to have a company that they are either investing in or
they’re buying products from and they look for inclusion in their supply chains.
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8. Folks are looking at that when they are make their investment and consumer decisions.
Every company has an extremely diverse consumer base, so why should they not have
a diverse supplier base? When companies look at that business ethic and corporate
social responsibility as a driving tool for their organization, I want them to be able to find
me among the Fortune top 20 companies. The relationship that ConnXus and SAP
Ariba are driving really catalyzes these opportunities for me.
Gardner: Rod, if a company like M&R Distribution Services is not yet in your database
and they want to be, how might they get going on that process and become vetted and
be available to a global environment like the Ariba Network?
Robinson: It’s really simple. One of the things that we have strived to provide is a
fantastic, simple user experience. It takes about six minutes to complete the initial
supplier profile. Any supplier can complete a profile at no cost.
Many suppliers actually get into our database because of the services that we already
provide to large enterprise customers. So if you are a McDonald's supplier, for example,
you are already going to be in our database because we scrub their vendor data on an
annual basis. I think Quentin is already in because he happens to be a vendor of one of
our customers, or of multiple customers.
There is a vetting process where we integrate with other third-parties to pull in data, and
then you become discoverable by all of the buyers on our platform.
Gardner: Before we close out, let’s look to the future. Jon, when we think about getting
this rich data, putting it in the hands of the people who can use it, we also are putting it
in the hands of the machines that can use it, right?
So when we think about bots and artificial intelligence (AI) trends, what are some of
your predictions for how the future will come about when it comes to procurement and
inclusive supply chains?
The future is now
Stevens: You talked about trends. One is certainly around transparency and visibility;
another one is around predictive analytics and intelligence. We believe that a third is
around partnerships like this to drive more collaboration.
But predictive analytics, that’s not a future thing, that's something we do today and
some of the leading procurement companies are figuring out how to take advantage of
it. So, for example, when a machine breaks down, you are not waiting for it. Instead, the
machine is telling our systems, “Hey, wait a minute, I've got a problem.”
Not only that, but they are producing for the buyer the intelligence that they need to
order something. We already know who the suppliers are, we already know what
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9. potentially should be done, and we are providing these decisions to procurement
organizations.
The future, it’s here, you see it in our personal lives, on our phones, when you get
recommendations in the morning, on the news, and everything else. It’s here today
through some of our solutions.
And this trend around diversity, it’s also here. You mentioned SAP Ariba Spot Buy and
we also have some of these other solutions like SAP Ariba Discovery where a
procurement person is starting to create a sourcing event. We have the ability in our
solutions to automatically recommend suppliers and based off of the goals that that
procurement organization has, we can pre-populate and recommend the diverse MRO
suppliers that you might want to consider for your program.
You’re seeing that today through the Ariba Network and through things like Guided
Buying, where we are helping facilitate many of those steps for procurement
organizations. So it's really fun and the future in many respects is here right now.
Value-driven supply chains
Robinson: I envision a future in procurement of being able to make informed
decisions on supplier selection. Procurement professionals are in a great position to
change the world, and the Chief procurement officer (CPO) of the future; they are going
to be Millennials. They want more control, and they want more transparency, and, to
Quentin’s point, they want to buy from organizations that share their same values.
Our partnership with SAP Ariba will create this environment where we can move closer
to fulfilling this vision of whenever you have a specification that you’ve put into the
system, you’ll be pushed supplier options, and you can actually configure your criteria
such that you create this optimal supplier mix – whether diversity is important to you,
green/environmental issues are important you, if ethical practices are important to you.
All of this can be built-in and weighted within your selection. You will create an optimal
supplier portfolio that balances all of the things that are important to you and your
organization.
McCorvey: Why I am excited? This conversation has come full circle for me. I started
off taking about supply optimizations and some of the challenges that they pose for
businesses like me. We know that people do business most often with people they
know, like and appreciate. What I want to do is turn a digital connection into a digital
handshake and use predictive analytics and the connections between Jon and Rod that
propose an opportunity for folks to know me, for me to grow as a new organization, and
for me to be in the forefront of their minds. That is a challenge that this kind of supply
chain optimization helps to overcome.
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10. I’m really happy for where this is going to go in the future. In the end, there are going to
be a lot of organizations both large and small that are going to benefit from this
partnership. I look forward to the great things that are going to come from it, for not only
both organizations -- but for people like me across the country.
Gardner: I’m afraid we will have to leave it there. We have been talking about the latest
path to gaining improved diversity across inclusive supply chains. And we’ve learned
how improved supplier diversity along with business and societal benefits can be
achieved easier than ever thanks to new tools and technologies.
So a big thanks to our guests, Rod Robinson, Founder and CEO of ConnXus;
Jon Stevens, Global Senior Vice President of B2B Commerce and Payments at SAP
Ariba, and Quentin McCorvey, Sr., President of M&R Distribution Services.
A big thank you as well to our audience for joining this latest BriefingsDirect discussion
coming to you from the 2017 SAP Ariba Live conference in Las Vegas. I’m Dana
Gardner, Principal Analyst at Interarbor Solutions, your host throughout this series of
SAP Ariba-sponsored BriefingsDirect digital business insights discussions. Thanks
again for listening, and do come back next time.
Listen to the podcast. Find it on iTunes. Get the mobile app. Download the
transcript. Sponsor: SAP Ariba.
Transcript of a discussion on how companies are improving supplier diversity and the
new tools that make attaining inclusive supply chains easier than ever. Copyright
Interarbor Solutions, LLC, 2005-2017. All rights reserved.
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