There is a reason why the smart folks at Coca-Cola, Starbucks, and Harvard have created Supplier Diversity programs, joining their public entity counterparts, which are federally mandated to do so. Supporting local, diverse, and disadvantaged businesses is not only a good thing to do, it also makes a lot of business sense.
What is supplier diversity? In practice, it means capitalizing on the opportunity to work with a new, growing, and diverse set of suppliers. Companies do this by proactively seeking out business relationships with all types of suppliers: large and small businesses, businesses owned by minority, women, veteran, persons with disabilities, LGBTQ, or socio-economically disadvantaged groups. It is improving results and profitability by promoting diversity of products, thoughts, people, and perspectives.
The benefits of a well structured Supplier Diversity Program, to both private businesses and public entities, include:
- Diversify your supplier base
- Tap into the rapidly growing minority business segment of the supplier population and the increasing spending power within those communities
- Increase the number and quality of bids
- Improve public perception and build goodwill
- Meet federal requirements
- Support the local economy
According to a Hackett Group 2017 study, "the risks to focusing on supplier diversity are quite low, and the potential upside is significant. In fact, up to 10 percent of sales come with supplier diversity requirements, suggesting that the lack of such a program can even result in lost revenue." It is clear that diverse companies are a significant part of economic growth and it's imperative that companies embrace them as we continue to transition to a more diverse economy.