A Basic Framework for Supplier Diversity Economic Impact

January 11, 2019

By Daryle Johnson, Manager of Strategic Business Development and Data Management and Visualization

In last week’s supplier diversity blog, I introduced the basics of an economic impact analysis and why it can add an extra boost to your supplier diversity program reporting beyond simple spend analysis. This week I want to touch on the basics of creating an economic impact analysis—how do businesses usually organize the information? What might your first analysis look like?

Luckily, with many other businesses and even the National Minority Supplier Development Council (NMSDC) leading the way in evaluating economic impact, there are some tried and true models to pull from. There are typically three core categories for your analysis:

Output Effect

This category includes direct revenue diverse suppliers have earned. Remember, this is for overall economic impact so these numbers aren’t limited to what the supplier earned strictly through partnership with you. This is where you would place the revenue and tax numbers you gather from your diverse suppliers.

Income Effect

This refers to the income (salaries and benefits) generated by your diverse suppliers, which makes its way into the economy through retail sales, housing, banking, medical services, etc.

Employment Effect

This refers to the number of jobs created thanks to the activities of your diverse suppliers.

Try your hand at creating the best analysis you can based on the information you have, even if you’ve only been able to collect reliable info from a few suppliers. Think of it as a first draft – make it sloppy and experiment with different ways of looking at or categorizing your information. Every business is unique – you may only be able to capture a few of the measures here, but as you start working the process you may identify new questions to ask of your data that you hadn’t thought to ask before. Start to imagine the possibilities of what you could learn if your data processes were upgraded.

Next week, I’ll touch base and address some of the pain points you’ll experience as you try to put this report together—or any kind of supplier diversity data report. Don’t forget that I will be attending the NMSDC Conference in October at Booth #1245. Come to the show or contact us now to chat with me about how Onebridge can streamline your supplier diversity reporting process and help you demonstrate the impact that your work is making.

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