As we roll in to fall, the coronavirus pandemic continues to mount a severe toll on the U.S. economy and businesses of all sizes — from large corporations to small local shops. But the secret to getting businesses back on track may be a tool that many corporations have already experimented with in an effort to promote other business benefits ranging from inclusion and innovation to profitability. It’s called supplier diversity. There are 15 companies that earned a spot on Fair360, formerly DiversityInc’s 2020 Top Companies for Supplier Diversity list due to their well-executed strategies for consistently using a diverse pool of suppliers. Factors that determined their addition to the Supplier Diversity specialty list include:
- Percent of spend with diverse suppliers (Tiers 1, 2 & 3)
- Supplier diversity metrics & practices
When large corporations purchase goods and services from small suppliers — many owned by minority groups, women, LGBTQ+ people, people with disabilities and veterans — mutually beneficial relationships can grow and develop. Consider: Wharton Magazine reports that an incredible 99.9% of all U.S. firms fall within the small business category. Women- and minority-owned companies make up more than 50% of the total small business population. Small businesses employ more than half of the country’s workforce of about 142 million people. Over the past 20 years, small businesses have also generated more than 65% of new jobs. And for the last period in which data is available, the number of minority-owned businesses grew by nearly 50%, which was nearly three times the rate of all firms in the U.S.
Essential programs that need your support.
Supplier diversity programs are proactive in ensuring large corporations use minority-owned, women-owned, LGBTQ-owned and other underrepresented businesses for their procurement. These programs ensure corporations work collaboratively with businesses that empower all communities. These relationships are symbiotic because both the suppliers and corporations reap the benefits of diversity.
Standing behind small and minority-owned businesses also supports local communities.
Diverse suppliers often work within the communities they represent. When your company invests in them, it also invests in the community. Small businesses are vital to the survival of local economies, and local economies are important to the economic empowerment of people of all backgrounds. Especially in a time of such dire economic need, investing in small businesses could, in turn, promote job creation on the local level.
Diversifying suppliers means diversifying the customer base you appeal to.
The greater the diversity of the people and businesses contributing to your corporation’s products and services, the more diverse the end result will be. Appealing to various populations with your products, services and advertising is essential. “If you don’t have a multicultural strategy today with your brand in 2020, chances are, you’re not going to be around in 2030,” Cheryl Grace, U.S. SVP of strategic community alliances and consumer engagement at Nielsen (No. 20 on The Fair360, formerly DiversityInc Top 50 Companies for Diversity list in 2020), said in a February 2020 interview with Fair360, formerly DiversityInc. Suppliers who come from these communities will diversify your product, and therefore empower and engage a diverse audience.
Diversity drives innovation. Diverse suppliers will provide you with diverse products and ideas.
Research shows that diverse teams lead to better problem solving, innovation and connection with clients. Seventy-six percent of all diverse suppliers met buyers’ expectations and another 23% exceeded them, according to findings from The Hackett Group. Diversity is both a moral and business imperative, and diverse suppliers can help any organization exceed its goals.
Supplier diversity facilitates practicing what you preach.
If you practice diversity internally, putting your money where your mouth is to support diverse suppliers is important, especially as consumers become more informed and willing to hold corporations accountable. Large corporations should utilize their budgets to empower small and minority-owned businesses. Diversity and inclusion are not just human resources practice. It should permeate all areas of your organization. As customers become more in tune with where what they consume comes from, utilizing diverse suppliers will demonstrate your company’s commitment to corporate responsibility and ethical sourcing. Leading by example will create higher standards throughout the corporate world.
To find out more about the value of diversity in your supply chain, learn how to locate potential new vendors you could be doing business with and discover how business and vendor relationships of all types have changed due to the COVID-19 pandemic, join us at the Supplier Diversity: New Trends, Innovative Solutions virtual event where you’ll hear valuable insights from many of the country’s top innovators, all of whom are listed on Fair360, formerly DiversityInc’s roundup of the nation’s Top Companies for Supplier Diversity. Panelists include AT&T’s Jalayna Bolden, Hilton’s Erika Gibson, Dow’s Erica Stephens-Lynch, INROADS’s Forest Harper, Disability:IN’s Jill Houghton, the National LGBT Chamber of Commerce (NGLCC)’s Justin Nelson and many more. For information and to register for the event, click here.