Why Supplier Diversity is Important
Consumers of today are getting more and more educated & informed about their purchases – they are buying more socially and environmentally conscious products. Companies are also stepping up to meet those expectations of diversity, sustainability, and ethical procurement practices. Many organizations are embracing the trend and are looking at diverse suppliers that can bring in the much-needed talent, innovation, and customer loyalty than ever before. Why is that important?
Meeting Ethical Business Expectations
To meet consumer expectations for corporate social responsibility, companies are looking to decrease waste and emissions, work with greater efficiency, and increase their business with diversified suppliers. Global companies such as Walmart and IBM, the first information technology company to spend over $1 billion with minority businesses, have increasingly made their social responsibility commitments a focal point in both shareholder reports and their public branding.
Growing Profits and Economic Impact
The power of that economic growth can transfer to the organizations incorporating diverse suppliers into their supply chain procurement strategy. The 2017 Supplier Diversity Study from The Hackett Group found that companies that dedicate 20% or more of their spending to diverse suppliers can attribute as much as 15% of their annual sales to supplier diversity programs. Depending on annual sales numbers, previous studies have put the ROI of a supplier diversity program as high as 133%. Organizations are recognizing that investing in diverse suppliers can provide exponential returns.
Their typically smaller size can provide the advantage of being able to adapt more quickly to market changes and business fluctuations. This all makes diversely-owned businesses prime candidates for strategic relationships with larger companies. Larger organizations have found that their smaller, diverse business partners can help them improve their own efficiencies and drive innovation.
Diverse suppliers can be a cornerstone of any organization’s success, helping companies to ethically and efficiently source products and services while maintaining profits, growing customers, improving the economy, and encouraging innovation.
This blog article is a short summary of “The Importance of Diverse Suppliers Within the Supply Chain”. Find the link to the article here: