Two Ways to Improve Supplier Diversity

Two Ways to Improve Supplier Diversity

How Children’s Mercy Kansas City more than doubled its diverse supplier spend in one year.

Gena Fitzgerald witnessed the power of a diverse supplier network firsthand during the COVID-19 pandemic. Children’s Mercy Kansas City had always sourced its medical-grade N95 facemasks from overseas. As demand for the masks spiked and disrupted existing supply chains, they became much harder to obtain. That’s when a minority-owned company based in Texas offered to manufacture the masks for Children’s Mercy.

“With diverse suppliers, you bring new competition to the table,” said Fitzgerald, vice president of supply chain services at Children’s Mercy. “They may be small. Many times, they're local. But they're hungrier for the business, so they'll bring you services or deliver things that you might not get from an established supplier.”

Like many organizations, Children’s Mercy is actively working to diversify its supply chain. Its focus is part of a larger hospital-wide diversity, equity, and inclusion (DEI) strategy. Typically, a business is considered diverse when it’s at least 51% owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group. These can include minorities, women, veterans, members of the LGBTQ+ community, disabled persons, historically underutilized business (HUB) zones, and small businesses. 

During the first year of the supplier diversity policy, Children’s Mercy’s contracts with diverse suppliers more than doubled — from 1.3% of its total spend in the 2021 fiscal year to 2.9% in fiscal year 2022. Fitzgerald said two primary factors led to the dramatic increase.

Expanding bids  

Most of the hospital’s supplier contracts come through an RFP (request for proposal) process. Increasing diverse supplier spend meant finding more firms to include in the bidding. Children’s Mercy cast a wider net through several methods:

  • Certification. The hospital requires diverse suppliers be certified through a third-party agency, such as the Women’s Business Enterprise National Council (WBENC) or the National Minority Supplier Development Council (NMSDC). Not only does this requirement lend credibility to the process, but working with these organizations provides Children’s Mercy access to databases of diverse suppliers.
  • Self-registration. Suppliers can register directly on the Children’s Mercy website to be considered.
  • Networking. Fitzgerald and her team leverage relationships with other organizations both within and outside the health care industry.
  • Recognition. Children’s Mercy scrubs its database of thousands of vendors to determine where opportunities lie and, in some cases, helps suppliers achieve certification. “One of my colleagues mentioned he used a supplier that was owned by a woman but wasn’t certified, so we spent about six months working with her to gain certification,” Fitzgerald said. “Once they were certified, we were able to count the dollars we spend with them. It was a significant boost for us, but it also gets them on the databases for other companies to use as well.”

Expanding impact

Beyond Children’s Mercy’s efforts to increase supplier diversity internally, the hospital encourages its primary suppliers to use diverse companies as well. The subcontractors of Children’s Mercy’s primary suppliers are referred to as Tier 2 suppliers, and they are just as much a part of supplier diversity as Tier 1 suppliers. For example, Children’s Mercy ensured the general contractor hired for a recent large-scale construction project was in lockstep with its diverse supplier policy.

“We told them that we wanted a certain percentage of their work to be done with diverse suppliers, so it's incumbent upon them to go out and identify them,” Fitzgerald said. “And when those dollars are spent directly on behalf of Children’s Mercy, we can count them as well. It’s another good way to build our diverse supplier network.”

Empowering suppliers

Along with efforts to locate vendors and expand diversity among second-tier suppliers, Children’s Mercy provides feedback to companies who fall short in the bidding process to better their chances of qualifying for future opportunities.  

Although the work requires dedicated focus and intentionality, the fruits of that labor are rewarding. “You’ve got to be motivated and get creative, because if you just hope it's going to happen, it won't,” Fitzgerald said. “If you put in the work, you can find some very exciting new relationships and opportunities to grow that you don't want to miss.”

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