Building a company’s reputation is more than just a strategy; it is an imperative in today’s climate. Walking the talk of being sustainable and inclusive can push a business’s integrity and credibility. Part of putting together this reputation is realizing the strategic value of inclusive supply chains. Supplier diversity, which involves purchasing products and services from companies run by underrepresented groups, fosters creativity, resiliency, and long-term value. Adopting a cost-effective supplier diversity guide can lead to new opportunities, improved community relations, and even a competitive edge.
Supplier diversity is the deliberate integration of companies in an organization’s supply chain that are owned by underrepresented groups, including women, minorities, veterans, LGBTQ+ persons, and people with disabilities. With customers being more and more involved with ethical purchasing and social issues, businesses can boost their brand loyalty by being more inclusive and supportive of minorities. According to research, 41% of consumers have switched at least 10% of their purchases from stores that do not share their values of diversity and inclusion.
But how does a business set up a cost-effective supplier diversity strategy?
Prior to the fulfillment of this supplier diversity strategy, it is important to make sure that inclusivity and diversity are aligned with the business’s mission and vision. Including these in the company’s sustainable and ethical goals can build the brand’s integrity and innovation.
Define which qualifications are needed for suppliers, what processes they will undergo, and guidelines for procurement teams.
Make use of free directories and databases, such as those offered by chambers of commerce or local governments. To meet new suppliers and vendors without spending money on outreach activities, go to regional expos or community trade fairs.
Businesses or small and medium enterprises owned by underrepresented groups often encounter more barriers than the dominant communities. Simplifying tender documentation and providing transparency in supplier selection can encourage these vendors.
It is important to teach the staff, especially the procurement team, the importance of supplier diversity and its effects on business. Aside from fostering support within the company, when the team starts instilling this value in supplier selection, it will reflect on the company’s reputation.
A pilot program would be a good place to start. Track outcomes with KPIs such as vendor satisfaction or expenditure percentage. After having achieved success that is supported by data, it’s time to expand.
Establish KPIs like the number of new and varied vendors onboarded or the percentage of spending with diverse suppliers. Track success, evaluate, and tweak continuously for long-term impact.
More than just a social responsibility, supplier diversity is an intelligent entrepreneurial strategy. Aside from making the business’s procurement practice inclusive, this can also contribute to the company’s resilience with supply chain disruptions or other various challenges. It also doesn’t need a costly investment—just intention, strategy, and willingness.
Using the appropriate frameworks and tools, procurement experts can create supply chains that are more sustainable, flexible, and inclusive while also generating economic impact in marginalized groups.