In recent years, diversity, equity, and inclusion (DE&I) initiatives have evolved from focusing solely on creating equitable employee environments to encompassing diverse and inclusive procurement practices. This shift is occurring because of the recognition that a diversified supply chain offers unique business advantages.
Understanding Supplier Diversity
Supplier diversity involves sourcing goods and services from small to medium-sized minority-owned businesses. These diverse classifications typically include minority-owned (MBEs), women-owned (WBEs), LGBTQ-owned, veteran-owned (VOSBs), and disability-owned (DOBEs) enterprises.
What Qualifies a Supplier as Diverse?
To qualify as diverse, a business must be at least 51% owned by minority individuals, or in the case of publicly owned businesses, such individuals must own at least 51% of the stock. Diverse suppliers must meet strict guidelines to obtain certification, ensuring their credibility. Key certifying organizations include:
NMSDC Minority Business
NAVOBA Veteran Business
SBA Small Business (SDB, 8A, HUB)
WBENC Women Business
NGLCC Lesbian Gay Business
Diversity Alliance for Science
The Benefits of Working with Diverse Suppliers
Developing an inclusive and diverse supply chain can unleash creativity and innovation. Diverse suppliers bring unique experiences, solutions, and thought leadership that can strengthen businesses in the ever-changing multicultural marketplace. These suppliers are often nimbler, offering more flexibility, faster turnarounds, and genuine collaboration compared to larger suppliers.
Reflecting Customer Demographics
A diverse supply base reflects the changing demographics of a customer base. Businesses can create more relevant products, programs, and services when the supply base mirrors the customers and patient population served. This alignment allows for better understanding and meeting customer needs, fostering mutually satisfying customer relationships.
Innovative Thinking and Diversity of Thought
Diverse suppliers often provide out-of-the-box thinking and innovative ideas that larger agencies may overlook. Their varied backgrounds and life experiences shape their thought processes, challenging the status quo and bringing fresh perspectives. This diversity of thought can drive significant improvements and breakthroughs in business strategies and operations.
Positive ROI and Economic Impact
There are often concerns about the cost of utilizing small or medium-sized diverse suppliers. However, research shows that inclusive procurement strategies expand the supplier pool and promote competition, which drives costs down. Partnering with diverse suppliers typically results in a positive ROI, expansion into new markets, and access to additional revenue opportunities.
Conclusion
Partnering with diverse suppliers is a proven strategy to expand into new markets and foster creativity, thought leadership, and innovation, making it a smart and strategic approach to procurement that needs to be more utilized.
Learn more about supplier diversity from Alejandro Serrudo (PG&E) and Christina Schueneman (E Source) during the U2030 Transformative Leadership Center of Excellence Meeting, “Leading Through Inclusive Supplier Diversity Programs,” on August 8, 2024, from 2:00 PM – 3:00 PM EST.
Comments