The global pandemic reminded us of the value of diversity, equity, and inclusion (DEI) in every sphere of our society. The world of business is not an exception. Businesses that prioritize DEI are in a good position to benefit more from their workers, clients, suppliers, and the communities where they live and work.
Supplier diversity is more important than ever and is also a necessity. Due to federal responsibilities to demonstrate inclusivity and equal opportunity, it has now been a corporate focus. Through supplier diversity programs that support inclusion and diversity in the procurement process, businesses hold themselves accountable for their overall commitment to diversity.
Although some may believe ethics and profit are inherently incompatible, smart businesses realize that ignoring their ESG obligations can reduce their revenue and prevent them from attracting the talent, innovation, and customer loyalty that diverse suppliers can provide. This is why many businesses are specifically developing supplier diversity programs to uphold strong moral and ethical standards and give their company a competitive edge.
What is Supplier Diversity?
Supplier diversity refers to using diverse-owned businesses as service providers/suppliers. It can also be defined as a strategic commitment by businesses to promote economic equality. It implies that your company is committed to ensuring that under-represented and under-utilized groups have access to the market and an equal chance to participate in the corporate supply chain.
Diverse suppliers involve minority-owned, service-disabled veteran-owned, women-owned enterprises, LGBT-owned, and Small Business Administration (SBA).
Corporations have a crucial role in supporting small firms’ expansion. At the same time, small businesses play a vital role in assisting large corporations in becoming innovative, agile, and sensitive to market developments.
Why is supplier diversity important for any business?
- Diverse Businesses boost the economy: Diverse suppliers, which are frequently smaller companies, significantly impact the neighbourhoods in which they operate. According to the U.S. Small Business Administration, eight million minority business enterprises (MBEs) were anticipated to exist in the United States as of 2018.Certified MBEs generate $400 billion in economic output, according to the National Minority Supplier Diversity Council. This contributes to creating over a million job opportunities and billions in yearly revenue for local, state, and federal tax authorities.
- Diverse supplier portfolios help businesses grow overall: By investing in a diverse pool of suppliers, businesses can foster healthy competition that improves product quality and may even drive down costs. The supply chain may become more flexible and resilient with more sourcing options, which is crucial in difficult times.
- Drive Innovation: Every organization depends on innovation to survive. Also, many businesses look for new sources by examining their supplier’s innovations. By inviting diverse suppliers, a business can access fresh viewpoints, ideas, and ways of thinking. Bringing fresh perspectives and experiences to the table encourages creative approaches to satisfying client demands.
It is simple to understand why business teams should have a supplier diversity mandate when considering supplier diversity’s internal and external advantages.
Supplier diversity initiatives are a great method to entice brand champions who may support a company for years or even decades, maintaining businesses’ competitiveness and our communities’ vibrancy.
How can LOCOMeX help?
LOCOMeX, with its AI-Powered Data-driven solutions, can help you meet the Supplier Diversity goals for your organization. DivedIn Tier-2 is a cloud-based and AI-Powered Invoice to Pay automated tracking tool which can help you track your Tier-2 diverse spend.
Our unique solutions help you have predictive analysis and compliance analytics, all in one place. The Team Optimizer feature recommends the best possible changes to your category spending with matching suppliers to achieve the most optimum results for your Diversity goals.Conclusion
Customers are increasingly becoming more conscious of businesses’ social obligations. Businesses are now expected to stand up for important causes of ESG, like racial and gender equality and environmental sustainability. It has been repeatedly demonstrated that companies grow when they diversify and uplift others. For this reason, Supplier Diversity Programs must go beyond platitudes and box-ticking to implement real change. Speak to our LOCOMeX experts and explore the multitudes of solutions we can offer.