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Apply DEI Principles to Your Supplier Pool and Watch Profits Grow

Apply DEI Principles to Your Supplier Pool and Watch Profits Grow

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:

  1. 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.
  2. 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.
  3. 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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