It's time to stop tossing crumbs to historically underutilized businesses as part of a particular supplier "set aside" clause of a customer's contract or a vague policy on social responsibility.
In the past, the overriding sourcing strategy was to use the HUB supplier "with all things being equal" — an easy way to avoid the work of inclusion. For buyer and supplier alike, it was often a patronizing experience that resulted in little or no long-term engagement, save for an obligatory quote.
Engagement with HUB suppliers often fell to the most junior of buyers, with the focus on non-critical indirect spend. The buyer may have accessed HUB or minority supplier directories or visited a HUB exhibition or conference.
But now, pandemic-related supply gaps and updated sourcing strategies have resulted in a domestic-oriented supply chain, and it's prime time to actively work with HUB suppliers.
Don't treat them as an afterthought or burden. Incorporate them into your critical operations.
5 ways to incorporate HUB suppliers
Proudly announce your HUB strategy
Create a clear and actionable procurement strategy that includes active support for HUB suppliers. Make this strategy clear to your company, the extended supplier community and your customers. Embrace the process to eliminate any threat of buyer or seller stigma.
Procurement has the responsibility to lead this effort. And yes, you may have to deal with some uncomfortable social and political issues in your workplace and beyond. Departmental and organizational metrics may help to convince skeptics or naysayers, as would strong executive support.
Open the lines of communication
A strong HUB sourcing strategy will bring communication to the forefront. Many state governments also provide definitions of HUBs and HUB zones, but it can be an uneasy conversation for the seller and the buyer to determine if the supplier is considered a HUB.
The buyer would often depend on a supplier survey or questionnaire to determine ownership, not actively asking the questions out of some inherent discomfort. And the supplier may not indicate they are indeed a HUB supplier, perhaps assuming the buyer may unfairly judge them.
For many, an insignia on their business card or sales literature will passively identify them as a HUB supplier. Too many HUB suppliers keep their designation to themselves, not actively using their designation as part of their marketing strategy.
Neither party should feel uncomfortable in this discussion as it may lead to a deeper discussion about the inclusion and support of HUB suppliers throughout the supply chain.
Baseline your HUB suppliers
How many HUB suppliers do you already have on your approved supplier list? Based on the broad definition of this supplier segment, there are probably more than expected. Survey your suppliers as to their HUB status, and don't hide the question in an overall survey document.
That strategy should extend to your extended supply chain as well. At minimum, reach out to all critical first tier suppliers and ask them to identify the number of HUB suppliers in their supply chain. An inclusive supplier strategy should not end at your desk but cascade throughout your supply base.
Embrace the social supply chain
Perhaps the newest generation of buyers has a greater appreciation for diversity in the workplace, and that includes diversity in their sourcing strategy. The social supply chain is broad in scope and can include the Triple Bottom Line methodology of environmental stewardship, social responsibility and economic impact. The inclusion of HUB suppliers fits squarely within the construct of the social supply chain.
Seek new relationships
We are in a period of supply chain constraints and shortages that are forecasted to exist for at least the next year. Prior to COVID-19, many companies had tight lines of supply with single source suppliers. It was next to impossible to bring on any new suppliers into this process, including HUB suppliers. Our strategic sourcing strategy was often focused on supplier relationship management, and companies were remiss to upend those relationships.
But now those long-term relationships are secondary to continuity of supply. Buyers are on the search for products that are in short supply, actively seeking new sources and relationships. This is a perfect opportunity to give HUB suppliers a chance at fulfilling those needs. And you may find that a new HUB supplier will become an important part of your supply chain. As a bonus, HUB suppliers often have deep connections to other HUB suppliers, creating a multiplier effect for your supplier inclusion efforts.
This story was first published in our weekly newsletter, Supply Chain Dive: Procurement. Sign up here.