Why Organizations Should Care About Supplier Diversity
Supplier diversity is a management practice that ensures a diverse supplier base for goods and services for an organization. When implemented as a best practice, supplier diversity emphasizes the development of a diverse supply chain encouraging the sourcing of supplies and services from minority-owned, women-owned, veteran-owned, LGBT-owned, service disabled veteran-owned, historically underutilized businesses, and SBA-defined small business vendors.
According to research from Atlanta business consultant Hackett Group, companies that ‘focus heavily on supplier diversity’ generate a 133 percent greater ROI than those firms that look no further than their traditional suppliers. The companies surveyed also reported that supplier diversity programs drive an additional $3.6 million to an organization’s bottom line for every $1 million spent in procurement operating costs.
Benefits of Having a Diverse Supplier Base
- Promote innovation through the introduction of new products, services and solutions
- Open up multiple channels from which to procure goods and services
- Increase competition (on both price and service) from both existing and potential vendors
- Access a new, growing customer base
- Attract top-tier partners and talent
- Give a company the opportunity to leverage new paths to growth
- Demonstrate your organization’s commitment to doing business with diverse markets
- Showcase your company’s interest in the economic growth of all communities
MBEs are part of the nation’s growth equation. NMSDC (National Minority Supplier Development Council) prepared a study in 2014 that illustrated the economic impact of certified MBEs. The study found that MBEs in the U.S. generate more than $1 billion in economic output every day – equating to nearly $401 billion annually.
Not only have many progressive and international corporations recognized the value of supplier diversity, the U.S. government has as well. In 2011, President Obama signed the Government-Wide Diversity and Inclusion Strategic Plan, an executive order directing all executive departments and agencies to create and implement a more comprehensive and strategic focus on diversity and inclusion in the federal workforce. The order also requires that any firm wishing to do business with the federal government must have a supplier diversity program in place.
Ready to diversify your supply chain? These are organization’s that list MBEs and/or WBEs:
- Women’s Business Enterprise National Council
- US Business Leadership Network
- National Minority Supplier Development Council
At CREDO, diversity and inclusion is part of our culture. We are proud to be a certified Minority Business Enterprise (MBE). To learn more, read our Commitment to Diversity.
Missy Flexman Senior Account Manager, IT Staffing Division