The Financial Gains of Supplier Diversity
With eight years of defense specific analytical experience, RLC President of Finance and Operations Adrianne Norwood has established a successful reputation for herself in the financial industry.
Born at Wright-Patterson Air Force Base in Ohio, just outside of Dayton, Adrianne spent most of her life living in Texas after her father finished his service while she was still young. Attending Texas A&M and graduating with a Bachelors in Marketing, she accepted her first job working with the Weapons of Mass Destruction division at TEEX, which was the school’s engineering extension service.
It wasn’t until Adrianne was working in franchise marketing and vendor relations just a few years later that she discovered her love for public speaking and negotiating. This quickly led her into the defense industry as she began working for Raytheon, following in her both grandmother and father’s footsteps as a third-generation employee.
“For me, RLC was the logical next step since I can use and expand my skills to help more people be successful in following their dreams,” Adrianne Norwoord says.
After sitting down with Adrianne for an interview, she shared about the financial benefits that support the case for supplier diversity and why business owners need to establish programs to further promote their success.
KB: Coming from a defense analytical background, what was it that attracted you to the supplier diversity industry
AN: I think supplier diversity is really important to companies, it’s a future version of the American dream where everyone has the freedom to achieve their professional aspirations. It’s our job to promote entrepreneurship, and because those entrepreneurs sometime need a little extra encouragement and motivation it is important that we support them
We wouldn’t be the country we are today if we didn’t encourage entrepreneurship from all parties, and by supporting supplier diversity you are ensuring that anyone who wants to run their own business has the best opportunity to do so.
KB: Supplier diversity has played a significant role in helping to boost local economies across the country. Can you explain exactly how that works?
AN: There have been case studies of different cities across the country heading for financial ruin. Instead of investing in large corporations, those cities invested in smaller diverse businesses. As those entrepreneurs started their companies they chose to hire locally, and as employees made more money they also spent more money locally, which ultimately led the other business owners in the area to hire more employees. This economic circle ends up creating revenues that benefit the entire community, and these local economies have been able to recover more quickly with this methodology.
KB: The benefits of supplier diversity on our overall economy is certainly profound. But how does it benefit business owners as well? Is there a way to measure the success of a supplier diversity program for them?
AN: Many companies struggle with their ROI and how they measure success, which doesn’t really fit into the supplier diversity world. Procurement is known to be a cost center because it cuts into profit to purchase all that is needed to run a business. This makes it hard to explain the benefits of supplier diversity when it’s seen more of as a cost to the company than a necessity for doing business. However, depending on what is most important to each company is really how success is measured. The values supplier diversity promotes need to be narrowed down into specific measurable items and that’s where we can come in and help.
We figure out what is most important to our client and how supplier diversity can fit into their company mission, vision, and values. Next, we determine how to measure it.
It’s important to understand what and how this success will be measured because that measurement will also become what motivates employees. We have to make sure it’s a goal our client wants them working towards. Ultimately, the goal becomes what the company stands for, so making sure this is in alignment is key.
KB: There are many reasons why supplier diversity programs benefit a corporation and its surrounding community. How do they specifically increase supplier competition?
AN: Corporations are wise to bring in diverse suppliers because these businesses can be a little more innovative with their structuring, products and services. This opens the door for the savvy consultant who can come in and offer cost reductions, and in doing so they can become more competitive. Knowing a corporation needs to meet a diverse supplier spend raises all competition because it requires all viable competitors to up their game and think outside the box, by either offering savings or doing affordability initiatives to reduce their own costs in order to better compete with diverse businesses that may be more agile. Supplier diversity forces people to get creative, which is a win all around.
KB: One of the services RLC offers when determining a corporation’s need is to provide a full cost reduction analysis. Can you tell us more about what this looks like?
AN: Of course, we analyze the current diversity spend and identify areas where it could be increased, as well as find areas for spend opportunities. With this analysis, we can suggest areas for competition and/or alternative suppliers. We also walk our clients through different opportunities for cost reduction initiatives, like process flows or material changes, or even how to create a competitive environment where the bidding suppliers are forced to maintain lean systems.
When we work with our clients the goal is to create affordability and cost reduction opportunities, and there are different ways we can do this based on their spend analysis and cost structure. We typically would walk them through each of those scenarios and see which opportunity is best to pursue, which ultimately depends on the client and what they see as most beneficial for them.
KB: Over the course of your career you have uncovered millions of dollars for clients in unrealized profit. Can you share with us more about what that process looks like?
AN: When a client receives a proposal from a supplier the cost and pricing data allows me to be able to see exactly where those savings opportunities are. If needed we can also do some outside-of-the-box research on a supplier to identify who has margins or a little extra cushion. We can come up with different ways of negotiating to receive further savings for them, where possible.
How long this takes really depends on the availability of the data. Sometimes more data is needed than we originally ask for, so on average it can be anywhere from a week to a month. However, if the data is not readily available, it can become a lengthier process as we research deeper. If needed, we can review our client’s historical data and create a cost structure that reflects an appropriate amount for them to charge for their products and services, and how much they would need to sell per year to hit their yearly financial goals. If this sounds complicated, don’t worry. We walk our clients through the process and only do what makes sense for them.