The history of supplier diversity programs in the U.S. is rooted in the civil rights movement in the 1950s and 1960s. The first such program was set up by General Motors in 1968. IBM launched its own program at around the same time.
A diverse supplier is defined as a business at least 51% owned and operated by a member of a traditionally underserved or underrepresented group. These include small businesses and those owned by women, minorities, veterans, LGBTQ and people with disabilities.
A supplier diversity program can help companies maintain high ethical and moral standards. It also delivers societal benefits because it generates an economic opportunity for disadvantaged communities. According to available data, there were 8 million minority-owned companies in the U.S. in 2018 that generated $400 billion in economic output and created or preserved 2.2 million jobs.
Supplier diversity programs also have many commercial benefits. These programs can help attract a wider and more diverse talent pool. A Hootology survey found that 52% of respondents prefer to work for companies that have a supplier diversity and inclusion program. In addition, an inclusive procurement strategy can promote competition in the supply and thereby improve product quality and reduce costs. It also makes supply chains more agile and resilient. Kris Oswold, vice president of global supplier diversity at UPS, commented that supplier diversity should not be kept like a secret tucked away in the procurement function and hit the main stage to truly drive economic equality.