The State of Supplier Diversity : Are you ready?

Supplier diversity, simply put, is a business strategy that ensures a diverse supplier base when dealing with procurement of goods and services for any organization. This includes private business, non-profit and governmental agencies. When we discuss supplier diversity, we emphasize its creation of a diverse supply chain that ensures inclusivity of diverse groups within the […]

Jackie
08/07/2019

Supplier diversity, simply put, is a business strategy that ensures a diverse supplier base when dealing with procurement of goods and services for any organization. This includes private business, non-profit and governmental agencies. When we discuss supplier diversity, we emphasize its creation of a diverse supply chain that ensures inclusivity of diverse groups within the above organizations. Companies who have embraced diversity are more profitable than companies who do not.

Why is Supplier Diversity Important 

It is commonly misunderstood that diversity is a quota system or a social program specifically targeting selected groups without adding anything to the business bottom-line. In fact, it is the opposite that rings true. Companies showing diversity are actually at a competitive advantage today. Benefits to this advantage exist because:

  • Innovation is promoted through market entries of new products, services and solutions
  • Creation or addition of multiple channels from which to procure goods and services
  • Driving competition on price and service levels between current and potential customers to a given company
  • Companies are allowed to take advantage of new opportunities for expansion with the emergence of new needs of a new consumer base that was not previously identified. This is due to shifting demographic realities finally recognized as important to business growth.
  • Companies can display their commitment to doing business beyond consumerism in diverse markets
  • Companies and organizations can showcase their interest in and commitment to the general economic growth of communities as a whole

Compliance

In the United States for example, Supplier Diversity programs are built around a compliance core. These diversity programs are designed to help companies meet compliance requirements as mandated by its public sector customers. The federal government in the U.S. requires any company providing goods and services to it, above a minimum level (mandated at anything over $700,000), meets aggressive goals of sub-contracting spend with a specified list of categories of underrepresented small businesses. These underrepresented businesses include ethnic-minority owned, women-owned, and veteran-owned businesses.

Walk first, run later: Moving towards a more diverse supplier pool

When looking at expanding their reach, companies must first try not to “go global” until maturing their domestic program first. Companies will need to have a clear understanding of their business case that articulates the value proposition for going global.

  • Identifying success metrics – Have a clear outline of the business benefits and quantify the ultimate goals
  • Reach out and qualify – Begin an outreach system that identifies and qualifies the appropriate diversity suppliers for the specific business goal(s)
  • Measuring and enhancing – Keep track of all successes and challenges. Look to constantly evolve the program to meet the unique goals as well as new goals identified.

Of critical importance when looking at a global move would be not to reinvent the wheel. Making use of established NGO’s will help companies expand their supplier diversity initiatives to build and implement global programs. 

Finding the perfect diverse supplier

While a Google search has its merits for certain searches, it was not designed to collate specific niche searches in order to find qualified, accredited and validated diverse supplier companies. Using Koble provides your team of SMEs with connections to millions of buyers looking for opportunities to work with verified suppliers globally. Koble sparks that conversation, ultimately forging new business relationships.

Final Thoughts

Minority, women and other underrepresented business owners in the United States are very strong, having benefited from a very mature supplier diversity infrastructure, creating opportunities for these businesses to equally compete for corporate contracts. The same cannot be said today of supplier diversity initiatives outside of the United States. It needs to be noted though that they are growing and there is great momentum, more than ever before.