Wherever there are people, there is unconscious bias. That one fact means the supply chain is likely being negatively impacted at every stage of operation in some manner and to some degree. It is an element of potential conflict.
By Valerie Gomez

Unconscious bias has no barriers. Where there are people, unconscious bias exists. As related to supply chains, the unconscious bias is found in supplier diversity executives who influence staff members and other executives and managers, stymying the development of a truly diverse and inclusive supply chain.

The decision-making that is driven by unconscious bias against diverse business owners can also impact supplier relationships even (or especially when) diverse suppliers are utilized. Negative leadership begets negative relationships, meaning suppliers are less likely to develop collaborative partnerships. If non–diverse–owned suppliers also have unconscious bias against the utilization of MWBEs, the negative impacts are multiplied.

When this type of organizational culture develops, supplier diversity programs are seldom successful because they lack real effort and support.

Signs of Conflict
Effective relationship building of any kind requires trust and transparency between people. When supplier diversity executives have an unconscious bias that says "I am being forced to add less than qualified MWBEs to the supply chain for the sake of diversity," or they are slow to provide the tools and resources suppliers need to succeed, organizational behaviors are influenced. Division or functional executives are not held accountable for selecting diverse suppliers or feel forced to do so. The supplier diversity team is likely not motivated to make a sincere effort to expand supplier diversity and inclusion because they are not guided by strong, motivated leaders. When suppliers attend workshops or other meetings, there is resentment among suppliers. Prime suppliers may believe they are forced to utilize diverse suppliers and non-diverse-owned suppliers believe they are losing business to less qualified MWBEs.

Unconscious bias in supply chain management and among suppliers damages the corporate culture and prevents decision-makers from making objective decisions about sourcing and procurement. Though people do not recognize they have unconscious bias, its impacts are fairly easy to discover in the processes and statistics.

Does the supplier diversity executive require a diverse supplier always be included on the list of potential suppliers considered for a contract? Is there a system in place for holding managers accountable for utilizing diverse suppliers? Are data analytics generated and managers and top leaders kept informed? Is spend at multiple tier levels tracked?

In fact, unconscious bias influences the hiring and promotion of people in the sourcing and procurement departments who then perpetuate bias in developing and managing the suppliers. As some leading men in supply chain so aptly said, "Today, you don't have overt cases of people saying, 'I don't want women on the team.’"

Unconscious Bias Subtly at Work
Among the more obvious signs that unconscious bias is at work in the supplier diversity program are lack of effort, tracking and accountability. Unconscious bias can also be embedded in the supplier evaluation process.

Bias can take many forms. A supplier diversity executive is familiar with a supplier and claims the reputation and prior experience with the company make the vendor a good choice. This excludes the diverse suppliers who have never contracted with the corporation. Unconscious bias is expressed when RFPs are written in a way that excludes certain suppliers, despite believing the requirements are fair. Companies with clearly written criteria that gives all qualified vendors an opportunity to fairly compete will develop a reputation for having an inclusive culture.

There are less obvious indications, like suppliers who seem to always have good reasons for not partnering with a diverse supplier or frequent conflict in meetings where diverse and non-diverse suppliers are present. When internal managers believe they are being forced to accept diverse vendors or believe diverse suppliers are given special treatment without meeting minimum requirements, conflict will ensue.

Unconscious bias creates conflict. It is conflict due to different perspectives, but it leads to emotional triggers. C-suite leadership has to provide the top-down direction needed to create a diverse supply chain. Without the top-down direction, biased management can continue until it harms the company's reputation and competitive position. Even with top-down support, there may be disputes at the lower levels, some of which are prompted by the consequences of management decisions made through the lens of unconscious bias.

Conflicts could be between suppliers or between the buyer and a particular supplier. They can be due to unconscious bias that impacts the ability of supplier diversity managers to build and maintain supplier relationships. Dysfunction in the supply chain and in supplier relationships will impact the corporate bottom line.

Finding Resolution in a Transparent Manner
Eliminating unconscious bias is one step. Repairing and strengthening supplier relationships is another step and requires a willingness to collaborate, improve information sharing, and provide feedback.

One of the reasons there may be conflict between suppliers is because managers have not established a clear process for vendor selection that makes unbiased decisions. This is related to lack of transparency and poor communication. Suppliers that should be collaborative but are in conflict with each other or the corporate buyer's managers are challenged for some reason, and it is up to the corporate leaders to find resolution while acting in a way that adheres to the company's values.

Just recently, it was reported the auto industry is experiencing a decline in supplier relationships. Suppliers feel pressured to reduce prices while not getting paid in a timely manner. The automakers with the better supplier relations were the ones that indicated they received the better benefits from suppliers.

Ignoring conflicts in the supply chain, whether through unconscious bias or intentional behavior, is harmful to the company's reputation and success. There should be a dispute resolution process in place that includes assessing options and embracing input from all parties involved in the conflict, all within a culture of diversity and inclusion.