Target aligns supplier diversity with key business goals
Certified suppliers can register to become vendors to this retail giant. Small diverse suppliers whose offerings parallel Target’s needs are more welcome than ever
Target Corporation (Minneapolis, MN) is a Fortune 50 organization and the second-largest retailer in the United States. The company’s supplier diversity strategy is designed to deliver business value, and over the years has been associated with different parts of the organization, depending on current business goals.
“Today, supplier diversity resides within the strategic sourcing side of the organization,” says Luke Witt, manager of supplier diversity. “Because of this business strategy, smaller diverse suppliers get access to opportunities in a way that they never have before.”
Target tracks the inclusion of diverse suppliers and diverse supplier spend with businesses owned by minorities, women, veterans, and those in the lesbian, gay, bisexual and transgender community, says Witt.
“Last year, our goal was to increase our spend with diverse suppliers by three percent,” he notes. “However, we had a really strong year, and spend with our diverse suppliers actually increased thirty-one percent to $1.3 billion. In 2018, we hope to increase our diverse spend by seven percent.”
More than seventy of Target’s tier 1 suppliers report their own diverse supplier spend quarterly, says Witt. “We continue to grow that strategy so we can have an even broader impact on the supply chain. We’re thinking about ways to create requirements and discuss options with our tier 1 contractors who are not currently reporting their supplier diversity spending.” Target spent nearly $500 million with tier 2 diverse vendors in 2013 and aims to grow that number in 2018.
Target has access to supplier databases of national organizations including the National Minority Supplier Development Council (NMSDC), the Women’s Business Enterprise National Council (WBENC), the National Gay and Lesbian Chamber of Commerce, and the National Veteran Owned Business Association.
“Our partnerships with these organizations help us understand the diverse supplier marketplace and better communicate our needs as a big box discount retailer,” Witt explains.
“In addition, we find the national conferences held throughout the year very valuable,” he adds. “Our supplier diversity team, along with internal buyers and decision makers, attend those events to meet face-to-face with potential suppliers. We often set up strategic matchmaking meetings during those conferences to focus on our current needs and how the potential supplier can help us meet them.”
How to get on board
Witt suggests that interested suppliers, even those who have connected with Target at a conference, register their businesses on its corporate website (corporate.target.com).
“Registering makes you more accessible as we work with the projects that are happening in real time,” Witt says. “Buyers are busy looking at the ‘now,’ and our database makes it easier to connect the right diverse suppliers to current projects at the right time.”
Suppliers who show promise may receive “capability calls” or get invited to supplier workshops, Witt adds. “With these initiatives, we try to determine how much they grasp our scope of work and how equipped they are to meet our needs.” While Target recognizes a variety of certifying bodies, the company prefers that suppliers have certification from national organizations like NMSDC and WBENC.
A competitive marketplace
Target has a process for diverse suppliers who are new to the game to provide coaching and feedback, and to make sure they understand what it takes to win business with Target.
“Being a Target supplier is quite competitive, but we take the time to mentor potential suppliers through the process. Mentoring takes place on an ad hoc basis. We work with the supplier in a way that is tailored to their needs and to the actual bid and opportunity,” says Witt. “We make sure our new diverse suppliers understand the process in the same way the incumbent(s) does. We make sure they are on an equal playing field.”
Target’s operations involve both merchandising and the procurement of indirect goods and services, Witt explains.
“On the merchandising side, our diverse suppliers are uniquely positioned to deliver an experience within our stores, down our aisles, and online, that helps drive more traffic, increase sales, and keep our organization headed in the right direction,” he says.
“The procurement of indirect goods and services drives our competitive position as well. Suppliers in this area must demonstrate the ability to bring innovation and provide cost savings. Our inclusion initiative can make suppliers aware of opportunities, but the suppliers must secure the business on their own merits.”
The demographics of Target’s customers are constantly changing, as is the technology environment, Witt points out. “Whether our guests shop our store within our four walls, from their computers, or on their mobile devices, we look to leverage diverse suppliers to make sure we’re meeting our guests’ needs. That’s something we continue to do and something we ask of all our suppliers.”
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