With a growing diverse population, having a diverse workforce and supplier base is more important now than ever before. A strong Supplier Diversity program would benefit not only the suppliers but the business as well.
A Supplier Diversity program is defined by the U.S. Department of Commerce as, “a proactive business program which encourages the use of minority-owned, women owned, veteran owned, LGBT-owned, service disabled veteran owned, historically underutilized business, and Small Business Administration-defined small business concerns as suppliers.”
The Benefits Of A Strong Supplier Diversity Program On A Business
Companies have to connect with customers
A growing number of customers are considering the social responsibilities that companies have to the people they serve and the neighborhoods they operate in when deciding which product or service to buy. Many customers buy a service or product that aligns with their values. For example, to support Girl Scout Cookies, buyers will drive across town and pay more because the proceeds support the troop and program costs.
to a 2017 Cone Communications CSR study, 87% of consumers would purchase a
product that aligned to their own values, and 76% would boycott a brand that
supports an issue that went against their beliefs.
Diversity breeds innovation.
There are different ways to tackle a problem. The approach to developing solutions is often determined by an individual’s background, experience, and identity. Studies show that there is a positive relationship between increased levels of diversity in management and effective innovation at complex companies as well as suppliers.
diverse suppliers to the table improves the possibility of a company developing
new and creative solutions for their supply chain needs.
Greater brand awareness
are proud of who they work with, they inadvertently advertise their customers. In
fact, many companies are listing their most prominent customers on their
website or using them as a reference. This is free secondary marketing for the
a diverse supplier base, organizations diversify the audience they reach through
secondary marketing. It is a great way to build brand awareness.
When suppliers compete, buyers win. Competition drives higher quality at comparable costs. However, suppliers need consistent clientele to be able to grow, to improve their working knowledge and expertise and build their portfolio to improve their chances of providing more solutions to market needs.
Cultivates future customers
Lastly, investing in a Diverse Supplier program has the potential for cultivating future customers. A business supporting suppliers that wouldn’t normally get attention eventually gives opportunities to individuals who may otherwise have lacked them. This could lead to new innovators entering the field, sparks of interest by young professionals in the industry, or even contributing to the creation of businesses, entities, or individuals that become future customers.
How to Create a Strong Supplier Diversity Program
So, how is a strong supplier diversity program created? It’s a long topic but here are a few ways a business can get started:
Define Targets– Decide on an acceptable percentage for the supplier base to be defined as Diverse Suppliers. Define targets by tier.
Tier 1 – Suppliers that the business directly deals with
Tier 2 – Suppliers that the existing suppliers do business with
Track it – Identify which suppliers fall under the diverse supplier criteria and include the information in the company’s supplier database details
Encourage it – Build performance metrics
for supplier professionals that require a minimum number of Diverse Suppliers
to be included in RFPs.
Visit Source One to learn more or get help on how a company can develop a supplier diversity program.