Over the past year, I’ve witnessed a distinct uptick in Fortune 500 companies seeking advice on either how to grow to join the Billion Dollar Roundtable (BDR), or how to maintain their BDR status. Everyone wants a seat at this table, but getting into the club and staying there takes serious work.
With the BDR Annual Summit taking place this week, now seems like a ideal time to reflect on the state of supplier diversity and exactly how the BDR has impacted the purchasing industry.
Do you have what it takes?
I am often asked how I would measure a successful supplier diversity program. The answer of course is subjective. There are a number of factors to consider, but chief among them is how large is your annual spend, and what percentage of that is going towards diverse suppliers?
The nature of your industry plays a role in this — despite having high revenues, many industries simply don’t have the deepest supply chains with the largest spend numbers. But everyone can build a successful supplier diversity program by setting aggressive purchasing goals as a percentage of overall spend, and by employing a small team of diversity specialists who are dedicated to identifying and growing opportunities for diverse suppliers.
But the BDR is a bit of a different animal. It does not seek to honor merely successful supplier diversity programs — it reserves its prestige for those few, truly elite supplier diversity programs.
And more to the point, the BDR places a number on what makes a supplier diversity program elite: one billion dollars. That’s a rarified space that deserves our attention.
Now, getting to one billion in annual diverse spend is no small feat. And once you get into the club, it’s not easy staying there. The BDR gateway is more like a revolving door than a velvet rope. You need to work just as hard to maintain BDR status as you do to enter it — one lost contract or sale of company can thwart your entire diverse spend objective, and you could be back on the outside looking in.
What you can do to get into the BDR, and stay there
For those companies teetering on the edge of one billion, I strongly recommend wrapping diverse financing around your diverse purchasing efforts. This is a new innovation in supplier diversity that is quickly becoming a best practice among the Fortune 500.
Here at Supplier Success, we offer electronic supplier payment solutions that pack a few extra cents into every diverse dollar you spend. That might not sound like a lot, but when you’re spending upwards of one billion dollars, those extra cents quickly add up to millions. In fact, you can even do this with non-diverse spend, making every single supplier invoice in your supply chain a small diverse spend opportunity. Believe it or not, your accounts payable and corporate finance departments can now have a stake in your diversity efforts as well.
A second technique I recommend is the “strategic creation” of large, diverse suppliers. Increasingly, we are seeing that legitimate, diverse suppliers of scale are created to serve a specific purpose, not grown organically. In the past year alone, Supplier Success has helped create three new MBEs of this nature via our private equity practice.
If you are a Fortune 500 company looking to get into the BDR, and you have a very specific set of business needs you want filled by one or more suppliers, we can help you form vital new diverse businesses that offer the extra diverse spend benefits to achieve BDR status.
Congrats to all members of the BDR
One billion is a big number, but more and more Fortune 500 companies are taking incremental steps to join the club. I applaud all of the members who achieved this feat and eagerly await the newest group of BDR inductees.