Many companies have been hearing the term supplier diversity as of late, but their representatives may not be sure what it means exactly; indeed, as with many business terms, the definition and implementation of the words can vary by industry or organization, so the best place to begin is with the general definition before moving on to explaining the ins and outs of more complex elements.
In a proverbial nutshell, supplier diversity is a business strategy that ensures a “diverse supplier” – that is, an organization that is at least 15-percent owned and controlled by a person(s) of a diverse category – base in the procurement of goods and services for any business or organization. There is an emphasis here on the creation of a diverse supply chain that works to secure the inclusion of diverse groups in the appropriation plans for non-profits, private industry and government.
Put succinctly, supplier diversity refers to a supply chain that incorporates businesses owned by diverse groups or individuals, and this reference to “diverse” can include everything from woman-owned business enterprises to service-disabled veteran-owned small companies.
Diverse Suppliers in the Supply Chain
We can thank the advent of the internet for allowing consumers access to the complexities and weaknesses of an organization’s supply chain – after all, we find ourselves in an age when consumers expect their purchases to reflect their values and where they use social media to share these values (and purchasing habits). Modern companies have seen this and are stepping up to meet those expectations of diversity, sustainability and ethical appropriation practices.
The bottom line here is this: savvy companies are acknowledging that shrinking their corporate social responsibility can cut into profits and cost them highly critical innovation and customer loyalty…all of which suppliers of a diverse nature can provide.
iQuantum Fun Fact
Millennials and Generation Z represent the most diverse generation in U.S. history, and they’re also two of the largest. In fact, diversity is a vital value in this generational demographic group, and they are more likely to shop at and work for organizations that reflect their own values.
Okay, so what does diversity have to do with procuring? As companies look to improve appropriation efforts, finding cost-savings opportunities and building stronger relationships with vendors is important. With the myriad of benefits that come from diverse appropriation, companies of all sizes should look to add more diversity to their client bases – and this applies to B2B/B2C companies alike. Embracing diverse vendors can spark innovation, improve employee and customer experiences, expand access to high-quality products and more.
One way to increase supplier diversity is to work with other minority business enterprises and choose products and services from a growing network of diverse vendors. Additionally, businesses can start to pass the word along about their supplier diversity programs or ask for related recommendations for free via social media while studying examples of how larger organizations have established and promoted theirs.
As a supplier management and diversity spend tracking solution company that enables corporations to manage their suppliers and automate the accurate and real-time reporting of their diverse and non-diverse supplier spend, iQuantum can answer any and all questions about this topic. To learn more, visit the website at www.iquantum.ai. We can help you with Tier 1 and Tier 2 Diversity Spend reporting, provide leadership dashboards, and provide an RFP concierge service to increase the number of diverse suppliers you reach for new business initiatives.