Supplier diversity is top of mind for organizations in every sector. According to McKinsey, more than 80% of Fortune 200 companies have a formal supplier diversity program, and an increasing number of them are setting specific dollar amounts aside to increase diversity in their business networks. U.S. companies so far have dedicated more than $50 billion to these initiatives.
At the same time, consumers in the B2B and B2C spaces have made it clear that they’re paying attention to brands’ DEI and social responsibility efforts, and it impacts their purchase decisions.
If you don’t already have a supplier diversity strategy in place, the time is now to create one. In this article, we’ll explore the benefits of supplier diversity for your business and 5 steps to put it into practice right away.
- Supplier diversity includes a wide range of underrepresented groups, including women, minority groups, veterans, and those with physical disabilities.
- More than two-thirds of consumers say DEI is a key factor in their purchase decisions.
- Benefits of supplier diversity include enhanced brand reputation, innovation and creativity, access to untapped markets, and mitigated supply chain risk.
- DEI training for your procurement teams and other employees is essential to put supplier diversity into practice at your business.
What is Supplier Diversity and Why Does it Matter?
Supplier diversity is the practice of actively seeking and engaging suppliers from traditionally underrepresented groups, including minority-owned, women-owned, veteran-owned, smaller businesses, and those owned by or who employ disabled and disadvantaged groups.
Its aim is to promote economic opportunities and inclusivity by growing the participation of underrepresented groups in supply chains and business networks.
By providing opportunities, businesses can help to level the playing field and create equitable competition. This in turn stimulates greater innovation, entrepreneurship, and job creation within underrepresented communities.
Supplier diversity also contributes to a company’s overall corporate social responsibility and DEI strategy. It demonstrates a commitment to fairness, equality, and social progress. It brings in unique perspectives, skills, and expertise to the table to create a more diverse knowledge base across an organization.
Today, organizations that successfully embrace supplier diversity can differentiate themselves, attract a wider customer base, and gain a competitive advantage in the marketplace. Many government agencies and corporations have even implemented supplier diversity programs and require meeting specific diversity requirements in order to do business with them.
Let’s look at some of the specific benefits your business can experience from leveling up supplier diversity.
The Benefits of Supplier Diversity Enhanced Brand Reputation
In a socially conscious world, consumers and stakeholders are increasingly demanding that companies prioritize diversity and inclusion. In fact, 70% say it’s an important factor when they choose brands to purchase from, and 45% say they’re willing to pay more for a product that reflects and promotes DEI values.
By embracing supplier diversity, you demonstrate your commitment to these values, fostering a positive reputation for your brand. This can lead to increased customer loyalty, improved brand perception, stronger relationships with your stakeholders, and higher revenue growth.
Innovation and Creativity
Diverse suppliers provide unique perspectives, experiences, and ideas. By diversifying your supply chain, you also tap into a wealth of innovation and creativity that can drive better product and service development.
Collaborating with diverse suppliers can bring your internal teams fresh insights, access to new approaches, and more competitive offerings, all of which give your business a distinct advantage in the market.
Access to Untapped Markets
Supplier diversity opens doors to untapped markets. Diverse suppliers often have connections and insights into communities that may be difficult for traditional suppliers to reach.
By partnering with diverse suppliers, you can expand your customer base, access new markets, and tailor your offerings to meet the needs of a broader range of consumers. This can lead to increased sales, market share, and overall business growth.
Relying on a single source for your supplies can leave your business vulnerable to disruptions. Things like natural disasters, economic downturns, or supplier failures can severely impact your operations.
By diversifying your supplier base, you spread the risk and build greater resilience into your supply chain. Having multiple suppliers can provide alternative sources of goods and services in the case of a disruptive event, prevent supply chain delays, and ensure overall continuity.
5 Steps to Boost Supplier Diversity
Evaluate Your Current Suppliers
Start by evaluating your current supplier network. What is their current makeup? How do you compare with competitors and the market at large from a supplier diversity perspective? Where are their opportunities to increase supplier diversity in your current network?
Identify Gaps and Set Goals
Next, take note of diversity gaps that exist in your supplier network and set goals for the future. Depending on your location, your industry, and the type of organization you run, you might have unique supplier diversity priorities you want to pursue.
For example: You may want to hire companies owned by an underrepresented minority group in your own immediate community, or work to meet specific standards set by a government organization you want to work with. No matter what the specifics, outline your objectives clearly and begin creating a plan to reach them.
Build Relationships with Diverse Suppliers
Engage with diverse suppliers and build strong relationships based on trust and collaboration. If you need a place to start, try attending supplier diversity events, trade shows, and conferences to connect with potential partners.
Foster open lines of communication so you can understand the capabilities of diverse suppliers you connect with and explore opportunities to collaborate beyond just the transactional level.
Provide DEI Training
If you feel that your teams aren’t totally up to speed on today’s DEI standards, you aren’t alone. Only 4 in 10 workers attended a DEI training in 2022, and 40% said their employer doesn’t offer them at all. By implementing DEI programs now, you can put yourself ahead of the curve.
To promote supplier diversity specifically, foster awareness and understanding of supplier diversity among your procurement teams. Educate them on the benefits of DEI and provide training on how to identify and evaluate diverse suppliers.
Measure and Share Your Impact
Regularly evaluate the impact of your supplier diversity program using measurable metrics and KPIs, including spend with diverse suppliers, the number of contracts awarded, and the success stories of diverse suppliers within your supply chain.
Share these successes internally and externally to demonstrate the value and impact of supplier diversity on your organization.
How Televerde Can Enhance Your Supplier Diversity
At Televerde, we embrace a culture of inclusivity and teamwork, recognizing that every voice and experience adds to the richness of our collective narrative. We partner with forward thinking companies, turning disenfranchisement into empowerment. Our team, diverse in backgrounds and life experiences, powers our excellence.
When you partner with Televerde, you diversify your own network and corporate perspective. Visit our Virtual Roundtable to learn more about the impact of our DEI programs.