Benchmarking Your Diverse Supplier Dollars in Logistics
Diverse Spend in Logistics
If you’re one of the 85% of U.S. organizations with a supplier diversity program, chances are that some areas of your business are uncharted territory for investing in and documenting diverse spend. Supplier diversity programs are those that benchmark a certain level of an organization’s operating budget to be spent on purchasing products and services from diverse businesses. These programs have been on the rise in recent years, and their diverse spend is typically documented in contingent labor, advertising, and marketing. But what about logistics as a destination for diverse spend? Many companies spend more than 10% of their costs on supply chain and logistics, and diverse-owned carriers account for more than half of the transportation industry – so it’s clear that this untapped potential of logistics as a diverse spend source can’t be overlooked.
EASE Provides Support to Benchmark Diverse Spend
In 2023, EASE recognized an opportunity to support customers with supplier diversity programs. EASE customers like Sysco with diverse spend programs needed our support to benchmark their diverse spend. As a result, EASE launched an outreach program to build our Certified Diverse-Owned Carrier Network, both to give our customers visibility into their baseline diverse spend, and to support diversity in logistics by engaging with diverse-owned businesses. To build our Certified Diverse-Owned Carrier Network from the ground up, EASE designated a task force and developed a multi-pronged strategic approach:
- EASE first identified those carriers within our network who are already certified diverse-owned businesses. This was done over a period of several months through internal research and targeted outreach.
- The task force then conducted external research and outreach to connect with trade and membership organizations, identifying and onboarding certified diverse-owned businesses who have not previously worked with EASE or been a part of our carrier network.
Inequity in the Supply Chain
Over the course of EASE’s research and outreach to certified diverse-owned carriers, our task force learned a startling fact: in 2021, diverse-owned businesses shared a mere .07% – or $640 million – of the $875 billion logistics industry. With diverse spend programs ever on the rise, how could this be? A 2022 survey of over 1,000 small businesses found that fewer than half (43%) of diverse-owned businesses have secured the certification that communicates their identities as diverse-owned (owned by women, racial or ethnic minorities, LGBTQIA individuals, veterans, and persons with disabilities). EASE’s task force has observed this percentage to be lower amongst business owners in trucking, with owner-operators. These business owners experience difficulty in achieving diverse-owned certification. They are standalone businesses without front office support to pursue the months-long certification process that includes paperwork, interviews, and site visits, and that incurs its own costs. It’s safe to say that the certification process is unattainable for many small trucking businesses. This gap in certification certainly contributes to well-documented disparities in the logistics industry. Diverse-owned carriers, who account for more than half of the transportation industry, carried just 0.07 percent of the industry’s total spend in 2021, a spend that exceeded $800 billion in the U.S. On paper, this is an opportunity for supply chain leaders looking to increase their diverse spending; however, EASE has observed the reality – that many carriers struggle to communicate and position themselves for these opportunities.
Supply Chain Innovation at EASE
The EASE task force worked to create resource materials and a strategic communications plan to inform diverse-owned carriers of the path to certification. The task force even included an internal primary contact for these carriers, acting as a navigator to help them through the certification process. This proactive engagement, encouraging diverse-owned carriers to pursue certification, alongside our deliberate and strategic efforts to expand our certified diverse-owned carrier network, are standout initiatives in the logistics and supply chain space.
How to Benchmark Your Diverse Spend in Logistics
EASE Project Manager Natalie Carroll was recently featured in Supply Chain Brain to discuss how supply chain executives can lean into their partnerships with third-party logistics providers and optimize their diverse spend dollars. Here’s an excerpt the questions that Carroll suggests supply chain executives can propose to logistics partners when looking to increase their diverse spend:
Q: Can you give me visibility into how much of my current spend is going to certified diverse-owned carriers?
A: Visibility is critical to every part of the logistics process, and diverse carrier initiatives are no exception. One of the best ways to start planning your investment in diverse logistics is to ask your partners how many of your current loads are being carried by diverse-owned businesses. Setting a baseline and understanding the opportunities to diversify the spend will make it easier down the road when evaluating what programs to support.
Q: Do you have a program in place to track certified diverse-owned carriers?
A: Not every partner will have the ability to curate this information or the process in place to track it, but the ones that do will be able to provide you with data that can support future business decisions. Even better, ask how they’re supporting the carriers in their network with the certification process. Partners with a pulse on the challenges facing their drivers can provide better context, more accurate timelines and market considerations on how to begin investing diverse supplier dollars within logistics.
Q: What does your company do to support your customers’ carrier diversity initiatives?
A: This question flips the script and forces partners to look at their programs through the lens of their customers. If a provider is actively investing in diverse carrier initiatives that will support their customers’ own key performance indicators, you can feel confident that they’ll be able to support your own efforts. Supplier diversity is here to stay but there are challenges that lie ahead to make sure the transportation and logistics industry is set up for success with these programs. These programs are a benefit to our industry and will play a key role in growth and recovery in years to come and for stakeholders looking to increase investment in diverse spending, logistics is an untapped opportunity.
Invest in Diversity in the Supply Chain with EASE
EASE is positioned to set your company up for success; with our Certified Diverse-Owned Carrier Program, you can benchmark your diverse spend in logistics. In its first year, EASE grew its network of certified diverse-owned carriers by 5,125%, and we’re just getting started. Email us to drive diversity in your supply chain with EASE!
