Supplier Diversity is Good for Your Bottom Line
More and more large corporations are establishing supplier diversity programs—and for good reason. Supplier diversity is mutually beneficial and delivers significant benefits for large organizations, small and diverse suppliers, and local and global economies.
With a global pandemic hampering the economy and increased attention to social movements and societal marketing, supplier diversity is even more crucial for businesses and communities.
What is supplier diversity?
A diverse supplier is a business that is 51% or more owned and operated by someone who is part of a traditionally marginalized or underrepresented group.
Diverse suppliers may be
- Small-business enterprises (SBEs)
- Minority-owned enterprises (MBEs)
- Black-owned businesses
- Women-owned enterprises (WBEs)
- LGBTQ+-owned businesses
- Veteran-owned businesses
- Businesses owned by people with disabilities
Supplier diversity is a strategic business commitment to economic equality. It means your organization is focused on ensuring historically underutilized and underrepresented groups have market access and fair opportunity to participate in the corporate supply chain.
Why should your organization seek diversity in your suppliers?
Working with diverse suppliers toward a more equitable supply chain is the right thing to do, both ethically and economically.
While many supplier diversity programs were initiated to improve company reputation, they positively impact your bottom line. Comapanies with a supplier diversity program generate a 133% greater return-on-investment, drive an additional $3.6 million to the bottom line for every $1 million spent in procurement operating costs and generate new revenue streams.
Representation, Reputation, and Retention
When customers think favorably of a corporation, and especially when they feel better represented, they are more likely to support that business. And in today’s world, customers care that the companies they spend their money with are ethical and socially conscious.
A commitment to working with diverse suppliers also opens more opportunities to reach emerging and untapped markets and positively impact communities.
When employees feel a company values their diverse background, they’re more likely to be satisfied at the job and to continue working there. More than half (52%) of people want to work for a company that has a supplier diversity and inclusion program.
Both of these situations enhance company reputation and positively impact the budget.
Agility and Reduced Risk
As the pandemic has shown, agility is sometimes incredibly necessary. Small and diverse suppliers are much more likely to be able to pivot quickly.
Working with a range of diverse suppliers contributes to a more robust supply chain by providing multiple channels for goods and services, reducing the risk that comes from a concentrated supply chain.
Competition and Innovation
Increasing your supplier diversity adds more supplier options to your supply chain. More supplier choices mean greater competition and better pricing, product quality, and service levels.
Working with a broader range of supplier backgrounds leads to more innovation in products, services, and solutions.
Finding Diverse Suppliers
Finding qualified diverse suppliers isn’t as difficult or expensive as many people think. Diversity certifications can help you identify suppliers who meet the elements in your diversity and inclusion program.
Tealbook provides all the supplier information you could need, from what products or services they provide, the regions where they work, trust and risk data, financial information, contact information, and diversity certifications. Contact us to learn more about starting or expanding your diversity program.