Supplier diversity has become a crucial part of corporate strategies in the quickly changing business environment of today. This strategy entails buying products and services from companies run and controlled by at least 51% members of historically underrepresented or underserved groups, including women, minorities, veterans, and others.
Beyond achieving diversity objectives, supplier diversity is important for supporting innovation, economic success, and a more inclusive society. Let's delve into the impact and importance of supplier diversity in greater detail.
I. What is Supplier Diversity?
Supplier diversity is a proactive business strategy aimed at creating equal opportunities for underrepresented groups in the supply chain. It involves actively seeking out and partnering with diverse suppliers to foster economic growth and social inclusion. This initiative emerged as a response to historical disadvantages faced by certain communities and aims to level the playing field for them in the business world.
The 1960s civil rights movements, which aimed to end discrimination in all walks of life, including business, was where the idea of supplier diversity first emerged. Companies can contribute to social transformation and economic empowerment by sourcing from and supporting minority-owned enterprises.
II. The Significance of Supplier Diversity and its Implementation Benefits
Recognizing the significance of supplier diversity goes beyond fulfilling corporate social responsibility. It serves as a catalyst for equity, inclusivity, and economic growth. Actively engaging diverse suppliers not only promotes economic opportunities but also uplifts marginalized communities.
McKinsey's research suggests that boosting expenditure on Minority and Women Business Enterprises (MWBEs) from $1 trillion to $2 trillion could potentially generate an extra $280 billion in income and create four million jobs.
Moreover, supplier diversity injects innovation into the supply chain, introducing fresh perspectives and novel concepts. This infusion translates into higher-quality products and services at competitive prices, benefiting both businesses and consumers. In addition, supplier diversity enhances supply chain resilience, mitigating risks associated with overreliance on a single source.
III. Companies that embrace supplier diversity programs unlock a range of benefits:
Enhanced Brand Image and Reputation: Supplier diversity initiatives spotlight a company's dedication to social responsibility and inclusiveness, attracting customers, investors, and prospective employees who prioritize collaboration with socially conscious entities.
Access to Diverse Perspectives and Innovation: Engagement with diverse suppliers opens doors to partners brimming with unique viewpoints and innovative solutions. Such collaborations foster breakthroughs in products and services, conferring a competitive edge in the market.
Strengthened Community Relationships: The implementation of a supplier diversity program showcases a company's commitment to community investment, fostering deeper bonds with various stakeholders.
Improved Employee Engagement: A company's active support for social justice through procurement policies enhances employees' sense of connection to the organizational mission, fuelling passion in their work.
Enhanced Supply Chain Performance: Successful supplier diversity initiatives correlate with improved supply chain performance and overall business operations.
Notable companies like
The Walt Disney Company and
PepsiCo have witnessed heightened supply chain performance and gained competitive advantages through robust supplier diversity programs. Embracing supplier diversity equips companies to harness these benefits, positioning themselves as socially responsible leaders and catalyzing positive transformation in the business realm.
IV. Implementing a Supplier Diversity Program: Key Steps and Examples
Creating a successful supplier diversity program involves several strategic steps to ensure meaningful engagement and achieve diversity goals. Here's how you can implement an effective supplier diversity program:
To kickstart your supplier diversity program, provide a user-friendly platform that enables suppliers to self-register. Tailor the registration process to capture essential diversity-related data. For instance, a client-branded module could allow suppliers to easily input information about their ownership status, certifications, and demographic details. This step simplifies onboarding while gathering crucial data for future engagement.
A real-world example is
Dell's supplier diversity program, which offers an online portal for suppliers to self-register and provide necessary diversity information.
Data Scrubbing & Enrichment:
To fortify the precision and trustworthiness of your supplier diversity data, employ automated processes that streamline the Data Scrubbing & Enrichment phase. This involves the implementation of data scrubbing techniques, which validate and standardize supplier information, ensuring consistency and authenticity.
For instance, industry leader
GE Appliances employs specialized data validation tools to elevate the caliber of their supplier diversity data. This meticulous approach not only refines the accuracy of supplier information but also ensures that diverse categories, such as Minority-Owned Business Enterprise (MBE), Women-Owned Business Enterprise (WBE), and Veteran-Owned Business (VOB), are meticulously validated and aligned with established criteria.
By adopting such techniques, companies are empowered to make well-informed decisions rooted in reliable and robust supplier diversity data, driving forward their commitment to inclusivity and equitable procurement practices.
Tier 2 Reporting:
Enhance transparency within your supply chain by implementing a system to track and report Tier 2 supplier spend data from prime suppliers. This involves both direct and indirect spending with diverse suppliers.
An example is
Cisco's supplier diversity program, which requires its prime suppliers to report Tier 2 spending with diverse suppliers, contributing to increased visibility and accountability throughout the supply chain.
Tier 1 Analytics:
Integrate and analyze Tier 1 data from your ERP/AP systems to extract valuable insights from your main suppliers. This information guides strategic decision-making and bolsters your supply chain's diversity efforts.
AARP leverages data analytics to assess spending patterns and identify opportunities to increase spend with diverse suppliers.
Supplier Sourcing Locator:
Implement a robust search mechanism to identify and locate registered diverse suppliers. Consider integrating an external supplier database that aggregates information from various government and agency platforms.
A notable example is
Salesforce's supplier diversity program, which offers a supplier portal with a comprehensive database of registered diverse suppliers.
VIVA USA Inc., we're committed to empowering your supplier diversity journey beyond technology – it's about driving meaningful change through your program.
In the journey to establish a successful supplier diversity program, every aspect matters. That's where
STARS by VIVA USA Inc. comes in. Beyond the key modules mentioned earlier, STARS offers an array of additional features seamlessly integrated into our platform. This means you can focus on driving meaningful engagement and achieving diversity goals without searching further.
V. A Collaborative Approach to Supplier Diversity Success
These modules, working in harmony, form the essence of a Supplier Diversity Management program. Beyond mere processes, they embrace data accuracy, supplier engagement, regulatory compliance, and economic empowerment. By harnessing these modules, you stimulate innovation, nurture inclusivity, and drive positive transformations within your business and the communities you engage with.
Internally, this collaborative approach fosters cross-functional teamwork, encouraging departments to share insights and align strategies. During periods of economic uncertainty, such as a recession, this cohesive framework provides resilience by optimizing supplier relationships, identifying cost-saving opportunities, and maintaining a commitment to diversity even amidst challenges.
Moreover, establishing a consistent and meaningful collaboration with Supplier Diversity companies and certifying agencies offers a wellspring of insights. This ongoing partnership facilitates a deeper understanding of industry trends, best practices, and evolving regulations.
VI. DEI Movement: An Aligned Path to Inclusive Progress
The Supplier Diversity Management program completely resonates with the broader Diversity, Equity, and Inclusion (DEI) movement, reflecting a shared commitment to fostering fairness, representation, and societal advancement. Much like DEI initiatives strive to cultivate an inclusive and equitable workplace, the supplier diversity program advances economic empowerment and opportunities for historically marginalized suppliers. By extending the principles of diversity, equity, and inclusion to supplier relationships, businesses contribute to cultivating a fairer economic landscape, amplifying their impact, and solidifying their role as agents of positive change.
In an increasingly interconnected world, supplier diversity has emerged as a pivotal business strategy. By sourcing from a diverse pool of suppliers, businesses can foster innovation, improve their brand image, and make a significant impact on local communities and the broader economy.
Moreover, supplier diversity yields a positive chain reaction, enhancing operational efficiency and value creation. It's more than supplier onboarding – it's an ongoing journey of engagement, partnership-building, and performance assessment, yielding enduring benefits for your business and the communities it touches.
Remember, implementing a successful supplier diversity program involves more than just onboarding diverse suppliers. It requires continuous engagement, building strong partnerships, and assessing supplier performance. Despite the potential challenges and obstacles, the long-term benefits—both for your business and the communities in which you operate—make it a worthy endeavour. At VIVA USA Inc., we're committed to helping you navigate this journey.
Supplier Diversity Management by VIVA
VIVA USA Inc. is at the forefront of providing comprehensive supplier diversity solutions. We stand at the forefront of supplier diversity solutions, offering a range of purpose-driven modules within our Supplier Diversity Management platform.