Successful businesses are proactive businesses, always on the lookout for opportunities that give them a step up on the competition. Supplier diversity, as part of a DEI (Diversity/Equity/Inclusion) program, delivers a competitive advantage. When your organization institutes a procurement program that reaches out to minority-owned, veteran-owned, women-owned, or other diversity-related businesses, you’ll discover an array of benefits that directly or indirectly improve your bottom line.
Here’s how supplier diversity pays you back:
- Innovative solutions – Big suppliers are like big ships. They don’t move quickly. Minority-owned businesses tend to be smaller and more agile. They can offer alternate perspectives and quick-response solutions to your supply problems. This lets you respond to your customers faster, with more innovative options.
- Diverse suppliers drive brand awareness – Diverse businesses are proud of the companies they supply. Whether they name you on their website or as a referral, it’s free marketing for your business. And supplier diversity is a good look for your brand, now that many customers are looking to do business with companies whose values align with theirs.
- More competition, lower prices – When you expand your procurement pool, you create competition among the suppliers. Diverse businesses, often more nimble than the big suppliers, can pass their high-productivity cost savings along to you. In turn, you can more easily compete on your own customer pricing, or hit your internal cost-savings goals. Everyone wins.
More and more nowadays, public sector and private sector businesses are instituting supplier-diversity policies, recognizing the positive impact on the communities they serve. “Buy Local” or “Buy American” procurement policies can be challenging to achieve using large multi-national suppliers. Those goals are more easily accomplished by diversifying your suppliers to include American minority-owned businesses.
The Hackett Group recently published a study showing that companies that allocate 20% or more of their spend to diverse suppliers can attribute 10%–15% of their annual sales to supplier diversity programs. That’s a nice addition to any company’s revenues.
Supplier diversity costs little or nothing, and it provides a big payoff. So what are you waiting for?
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