Within the supplier diversity industry, organizations may require certain Tier I Prime Suppliers (or subcontractors) to report their spend with diverse suppliers. The purpose of this report is to ensure Tier I Prime Suppliers are utilizing diverse suppliers to complete contracts. This allows organizations to influence purchasing dollars beyond their internal procurement operations and ultimately creates a stronger economy, expand opportunities for companies owned by previously underrepresented and growing populations (e.g. women-owned businesses)
A specific Tier II report may encompass any of the following data points:
- Tier I North American Sales
- Tier I North American Purchases
- Customer Spend
- Customer Purchases
- Indirect spend
- Direct spend
An organization may collect this information by way of:
- Excel
- Word Document or
- Online Portal created for the sole purpose of analyzing Tier II diverse spend
In addition to the data points and types of reports listed, organizations may mandate that Tier I Prime Suppliers report their information on a monthly, quarterly, bi-annual, or annual basis. These frequency requirements may also be tracked by a customer’s Fiscal Year. This means that a quarterly report that includes October, November, and December spend may be reported as Quarter 4 spend for one company, but Quarter 1 spend for an organization utilizing the US federal government fiscal year.
While Tier II reports may be different in terms of data required, type, and frequency, all reports are focused on collecting Diverse Spend from Tier I Prime Suppliers in an effort to determine the company’s overall Diverse Spend percentage
A Tier I Prime Supplier’s percentage of spend can be calculated in a number of ways depending on the organization requesting the spend. These calculations or Goal Methodologies include the following:
- Percent of Sales
- Percent of Purchases
- Percent of Addressable Spend
