More and more organizations 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.
What is Supplier Diversity?
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.
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
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. Companies with a supplier diversity program generate a 133% greater return-on-investment and generate new revenue streams.
Agility and Reduced Risk
As we learned during the pandemic, 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 and Maintaining 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 requirements of your diversity and inclusion program. However, maintaining records on your diverse suppliers is where the difficulty arises. Luckily, there are supplier diversity enrichment solutions to help with that.
Enhancing Supplier Diversity with Supplier Data Solutions
The challenges of managing supplier diversity often stem from outdated or incomplete data. Traditional methods, such as spreadsheets or supplier portals, are prone to inaccuracies and inefficiencies. However, supplier master data solutions that specialize in supplier diversity can enrich your supplier data and flag certifications that have expired or are close to expiring.
Why Invest in a Supplier Diversity Solution?
Increased Diverse Spend: A supplier diversity solution enables organizations to easily identify and partner with certified diverse suppliers, allowing for an intentional increase in spend with women-owned, minority-owned, and other underrepresented businesses. This not only strengthens supply chain resilience but also drives meaningful contributions to diversity goals.
Improved Community Impact: By supporting diverse and small businesses, companies directly contribute to local economic growth, job creation, and community empowerment. Investing in supplier diversity fosters a positive social and economic ripple effect, enhancing your company’s reputation as a socially responsible leader.
Improved Data Quality: Enhanced data consistency and real-time insights help organizations quickly identify certified and potentially diverse suppliers. Accurate, up-to-date supplier data ensures informed decision-making and streamlined diversity reporting.
Efficiency Gains: Automating supplier data updates, certification tracking, and onboarding processes reduces manual effort and operational costs. This allows teams to focus on strategic procurement activities while ensuring compliance with diversity standards.
Return on Investment (ROI): Supplier diversity solutions unlock new opportunities by connecting you to innovative suppliers that bring fresh perspectives and unique capabilities. These partnerships can lead to improved supply chain agility, increased customer loyalty, and stronger financial performance over time.
Taking the Next Steps
By embedding supplier diversity into the core of your operations, organizations can drive meaningful change while reaping tangible benefits such as increased innovation, community impact, and enhanced ESG performance.
Supplier data plays a crucial role in making this vision a reality. Advanced supplier diversity data solutions provide the insights and automation needed to identify, engage, and track diverse suppliers effectively. These solutions simplify the complexities of managing certifications, compliance, and reporting, while also uncovering new opportunities to increase diverse spend and strengthen supplier relationships.
When supplier diversity is supported by the right technology solution and a clear business strategy, organizations can build a more inclusive, agile, and resilient supply chain—one that not only meets today’s demands but also drives long-term growth and positive social impact.
