Diverse suppliers are procurement partners that are majority owned and operated (51%+) by individuals belonging to underrepresented or historically marginalized groups, including women, people of color, veterans, people with disabilities, and members of the LGBTQ+ community. These businesses offer organizations convenient and profitable paths towards building more robust, agile, and competitive supply chains. Diverse suppliers can also have an outsized impact on your organization’s bottom line and the strength, unity, and success of your local community. 

Supplier Diversity and Your Bottom Line

Sure, smaller businesses benefit from partnerships with larger organizations, including increased revenue and higher visibility. However, supplier diversity also helps larger, more established businesses improve their innovation, revenue, and brand reputation. Let’s dive deeper into the business case for supplier diversity by examining exactly how these partnerships can boost your business’ success. 

1) Diversity Drives Valuable Competition in the Supply Chain

It’s no secret that competition breeds advancements, improvements, and innovation. Your supply chain is no different. 

When given the opportunity, diverse and small businesses are often able to compete with their larger competitors with advantageous pricing, new and innovative solutions to common inefficiencies, and boutique-style customer service, attentiveness, and care. These advantages also force more prominent players in your supply chain to improve their product quality, reduce costs, and increase the value of their offers to maintain their market share. 

2) Diverse Suppliers Introduce Flexibility, Resilience, and Adaptability to Your Supply Chain

The COVID-19 pandemic and ensuing supply chain disruptions have made a clear and compelling case for organizations around the globe to invest in building supply chains that are resilient, agile, and diversified. 

In fact, 93% of surveyed senior supply chain executives named improving the resiliency and agility of their supply chains as their number one tactic for returning to and maintaining normalcy in a post-pandemic business landscape. 

Why? Because supply chain resiliency is essential for minimizing unexpected disruptions and avoiding painful supply-and-demand shock cycles. 

Local businesses, small businesses, and other diverse suppliers often represent ideal fits for enhancing the resiliency and adaptability of an organization’s supply chain. Their nimbleness and agility make diverse suppliers ideal partners for organizations looking to avoid the unexpected disruptions, ballooning expenses, and unreliable quality that have become increasingly common among large, multinational suppliers in recent years.  

Even massive organizations like Coca-Cola are turning towards diverse suppliers to bolster their supply chain robustness. 

Terrez Thompson, Coca-Cola’s vice president of Global Supplier Diversity, told Harvard Business Review, “Diverse suppliers can turn on a dime and are now considered for contracts that they would not have been otherwise due to the imperative for flexibility. They have proven themselves to be agile in terms of responsiveness.”

3) Partnering with Diverse Suppliers Can Significantly Boost Your Organizational Reputation

Shining a spotlight on your diverse supply partners can be a boon for your organization’s reputation.

According to a recent report from McKinsey & Company, more than 65% of American consumers report using their social values to guide their shopping decisions and habits. Highlighting your organization’s commitment to creating a fair, equitable, and inclusive business landscape can help drive positive brand recognition, grow consumer loyalty, increase market share and support overall growth. 

Organizations like Target, BAYADA Home Health Care, and Clancy & Theys Construction have all leveraged the success of their supplier diversity initiatives to generate positive marketing buzz by spotlighting their business partners. 

These relationships can also help companies attract more diverse candidates during hiring and recruitment, as many job-seekers look for organizations that have a supplier diversity program. 

Supplier Diversity Certification

Verifying potential supply partners’ diversity status should be a non-negotiable step during your organization’s vetting process. 

Diversity certifications are granted by third-party certification firms that verify businesses’ diversity status using a combination of document reviews, employee and owner interviews, and even on-site visits. These certifications are invaluable for companies that want to ensure the advancement of their DEI goals and avoid unscrupulous organizations looking to drive business with inaccurate diversity claims.

The most common diverse business certification agencies include: 

• United State Hispanic Chamber of Commerce (USHCC)
• Women’s Business Enterprise National Council (WBENC)
• National Gay & Lesbian Chamber of Commerce (NGLCC)
• National Minority Supplier Development Council (NMSDC)
• U.S. Business Leadership Network (USBLN)
• Native American Chamber of Commerce (NACC)
• Vets First Certification Program (VFCP)
• And the Asian Pacific American Chamber of Commerce (APAAC)

Supplier Diversity and Your Community

If improving your bottom line isn’t enough to convince you to improve the diversity of your organization’s procurement partners, you’re in luck. The benefits, advantages, and perks of supporting supplier diversity extend well beyond your bottom line. 

According to U.S. Census data, roughly 18% or 1 million businesses are owned and operated by minorities in the United States; women own an additional 20% (1.1 million). Creating strong markets that empower these diverse business owners to compete, grow, and thrive is crucial for stimulating further business ownership growth within these historically disadvantaged communities. Partnering with talented, diverse business owners also represents a critical step toward tackling the racial wealth gap and supporting equitable and inclusive access to success.

Diverse suppliers also provide jobs, advancement opportunities, and professional development to underserved communities, creating valuable economic activity and providing sustainable paths toward financial security and freedom for millions of American workers. 

By partnering with diverse suppliers, organizations support veterans, women, minorities, individuals with disabilities, and members of the LGBTQ+ community in their missions to uplift and serve historically underserved communities and economically disadvantaged areas. Our world is growing more diverse by the day. Investing in business practices that minimize barriers to entry for minority and small business owners moves us all toward a more equitable, profitable, and inclusive future. 

We explore how one industry is diversifying its supply chain in our guidebook, How the Construction Industry is Putting Supplier Diversity at the Forefront. This resource explores best practices that can apply to many other industries and organizations. Curious about other ways to integrate DEI into your everyday business operations? Get expert guidance and practical advice with a subscription to DEI Navigator, powered by The Diversity Movement. DEI Navigator offers access to our award-winning team of proven business leaders and certified diversity executives, along with expert curated content, how-to guides, specialized training, and a community of peers.

Jamie Rose Ousterout, CDE, is Vice President of Client Success at The Diversity Movement and an expert in operational strategy, having spent more than a decade in creative, marketing, and digital companies, serving local, regional, and international clients. Connect with her on Linkedin.

The post Supplier Diversity: What it is and Why it Matters for Your Business appeared first on The Diversity Movement.

When organizations deliberately choose to source their goods and services from diverse vendors, there are bottom-line advantages and social benefits that help the wider community. The business also has an opportunity to demonstrate its values in a meaningful, visible way. By highlighting stories of its diverse vendors, the larger company earns brand credibility and the smaller business gains notoriety. Both companies win.

Target recently partnered with nearly 30 diverse, women-owned businesses to add innovative health and beauty products to store shelves. The retailer has been able to stock a wider variety of products and consumer goods, which appeal to an increasingly diverse customer base. 

Sharing the stories of its diverse partners enables Target to boost their visibility, bringing them more attention and customers. The retailer has also created Black Beyond Measure, a section of its online space to highlight Black owners and founders. These marketing efforts help Target’s partners, but they also publicly demonstrate the retailer’s values and commitment to diversity, equity, and inclusion – which resonates with customers who share those values. 

And telling these stories benefits all sorts of businesses, not just retailers. During the COVID-19 pandemic, BAYADA Home Health Care was able to highlight how clear face masks, made by Safe ‘N’ Clear, enabled staff to better serve clients. BAYADA provided staff with clear masks so people with hearing impairments could still read lips. They used a certified disability-owned company to source the masks, and then they created a video to promote the partnership.  

But supplier diversity shouldn’t only be a marketing strategy. Working with diverse suppliers can benefit organizations by driving costs down and accessing new ideas and markets. Many organizations intentionally tap diverse vendors as part of their corporate social responsibility (CSR) initiatives; environmental, social, and governance (ESG) goals; and diversity, equity, and inclusion (DEI) strategy. DEI is key to building better businesses, and supplier diversity is a cornerstone of any successful DEI initiative.

And in many industries, like construction, having a robust supplier diversity program can provide a competitive advantage when bidding for local, state, and federal contracts, which require supplier diversity. Increasingly, private companies are also expressing interest in – and looking favorably on – business partners with diverse supplier networks.  

Construction firm Clancy & Theys reported in 2021 that in some locations public sector projects represented 70% of revenue. But even in privately developed projects, the company has seen an increased push to “demonstrate a successful inclusion history on all projects and continued improvement strategies for our Diversity, Equity and Inclusion program,” according to a letter from the leadership team.

“The DEI program ensures our diverse employees feel like they are being heard and are on a team that cares about the issues they face on a daily basis. This is absolutely critical because it’s the right thing, but also because talent is so competitive right now, and we need to always think about retention,” says Baker Glasgow, President of Clancy & Theys.

“The world is not going to get less diverse or inclusive, just more and more, therefore we need to be a leader in educating our employees,” he says. “It’s not our job to change their minds overnight, but it is our job to provide them the information in some kind of steady drumbeat so they can make decisions for themselves.”

Finally, there is a broad social good realized when businesses with diverse founders succeed: the narrowing of the racial wealth gap. Nationally, the median net worth of Black and Latine business owners is more than ten times that of their peers who don’t own a business. Not only is business ownership a traditional path to greater wealth, but diverse businesses also employ more folks from underrepresented groups. In this way, companies can positively influence their community by helping diverse businesses succeed.

Making supplier diversity a priority has exponential benefits – for the organization, its vendors, and the community at large. Supplier diversity enables organizations to do the right thing while they are also doing the profitable thing.  

We explore how one industry is achieving success in our guidebook How the Construction Industry is Putting Supplier Diversity at the Forefront. This resource, and many other tools, are available with a subscription to DEI Navigator, powered by The Diversity Movement. DEI Navigator offers access to our award-winning team of proven business leaders and certified diversity executives, along with expert curated content, how-to guides, specialized training, and a community of peers.

Jamie Rose Ousterout, CDE, is Vice President of Client Success at The Diversity Movement and an expert in operational strategy, having spent more than a decade in creative, marketing, and digital companies, serving local, regional, and international clients. Connect with her on Linkedin.

The post Build Your Brand by Sharing Your Supplier Diversity Stories appeared first on The Diversity Movement.

The impact of COVID-19 has fundamentally shifted the business landscape, causing growing uncertainty for most industries; and the engineering and construction (E&C) marketplace is not exempt. While projects are beginning to come back online, construction managers are struggling to fill jobs. Contractors are experiencing challenges in accessing a steady labor force due to growing fear among workers of contracting the virus. Many employees receiving unemployment benefits feel that coming back to work does not make financial sense given the uncertainty of future wages. Numerous projects are being delayed, leading to challenges with cash flow and payments to employees and contractors.

In addition, construction managers are dealing with an uptick in internal human resources disputes involving the general workforce, craftsperson or subcontractor due to increasing uncertainty related to health, safety and the COVID-19 recovery timeline. With the rise of workplace tension, it is inevitable that the impact of bias will begin to impact the prospects of diverse suppliers. History shows that diverse suppliers experience the brunt of economic shifts as access to capital tightens. This phenomenon forces diverse suppliers to be resourceful and innovative in order to withstand difficult market conditions. Given this reality, E&C organizations should invest even more heavily in supporting supplier diversity programs. However, supplier diversity activity may be reduced as organizations recalibrate key initiatives in the face of pandemic-fueled changes. The reason for this is due to bias.

Bias is disproportionate weight in favor of or against an idea, person or thing; usually in a way that is closed-minded, prejudicial or unfair. People may develop biases for or against an individual, a group or a belief. Conscious bias, or explicit bias, refers to the attitudes and beliefs held about a person or group on a conscious level. Unconscious bias, also known as implicit bias, refers to the attitudes or stereotypes that affect understanding, actions and decisions in an unconscious manner. It is a bias that happens automatically and is triggered by the human brain, making quick judgments and assessments of people and situations – also influenced by background, cultural environment and personal experiences.

Biases within an organization create missed opportunities when people make decisions that are not objective and potentially contribute to a distrustful culture that will rob it of competitive advantage. An example of unconscious bias in a supplier diversity context is dismissing new solutions to problems because they do not fit the typical way solutions are presented. A study done by The Hackett Group shows that procurement organizations that embrace supplier diversity are able to generate up to 133% higher return on their investments versus organizations that don’t.

Organizations that do not have a robust supplier diversity program are missing opportunities to strengthen their overall brands with customers. A recent study done by Hootology, using its Supplier Diversity Impact Indicator (SDII), found that among those who are aware of UPS’s supplier diversity initiatives, they are 86% more likely to use UPS’s services than those who are not aware.

The key question to ask is how companies can reduce the impact of unconscious bias that could limit the focus on supplier diversity in organizations? In particular, what is the best approach to address biases that limit an organization’s ability to make sound business decisions, particularly in the area of supplier diversity? The first thing that must be done is to make the unconscious, conscious through education. It is critical to help members of an organization develop a mindset shift that embraces identifying and understanding biases so that they can be confronted and addressed. Next, the organization must examine the policies, practices and structures that cultivate bias. This systemic evaluation is not a one-time initiative, but rather, an ongoing process.

4 Steps to Confront Unconscious Bias in Supplier Diversity

Gather Facts

The key element of eliminating bias is to make data-based decisions rather than relying on gut, intuition or conjecture. This is particularly important when evaluating relationships with diverse suppliers. This requires creating a process that allows relationships with diverse suppliers to be measured like any other partnership. This should go beyond tracking diverse supplier spend and the number of relationships in order to evaluate the true relationship impact. Key metrics that should be evaluated include:

• Cost savings realized through the partnership
• New revenue opportunities created via partnership
• New ideas created through the partnership
• Engagement of the partner within organization

When data is collected on the success of supplier diversity that is at this level of depth, there is a much better connection to business value.

Create a Structure for Evaluating the Supplier Diversity Program

Define clear criteria to evaluate the merits of diverse supplier relationships and use them consistently. Using consistent standards can help to reduce bias. For example, create a supplier diversity partnership guide that can be used to objectively evaluate the organization’s current program and the effectiveness of all current and prospective suppliers’ relationships. WEConnect International has developed a tool that includes the following elements to guide program evaluation:

• Policy Assessment
• Planning
• Processes and Standards
• Measurement, Tracking and Reporting
• Accountability

Be Mindful of Subtle Cues

When meeting with diverse suppliers or attending recruiting events, be sure to be fully engaged. Invite diverse suppliers to events where all suppliers or partners are present including after-hours events. Be sure that communications who are sent to partners are also sent to diverse suppliers. This intentional inclusion will help to create higher levels of engagement with diverse suppliers and increase the likelihood of success.

Foster Awareness

In day-to-day interactions, be sure to hold yourself—and your colleagues— accountable. The key to identifying blind spots is to raise questions and opinions when key decisions are being made. For example, Google created a “bias busting checklist” to eliminate snap decisions and mitigate the consequences of unfair judgements. This same approach can be applied to interactions with diverse suppliers. When evaluating supplier diversity performance and putting together interventions to help build capacity, here are few questions or areas to address to identify blind spots in evaluation:

• Consider concrete examples of performance throughout the evaluation period
• Consider situational factors that affected performance (e.g. lacked access to resources or information)
• Consider if rating would change if supplier was in different cultural group
• Be an advocate for diverse suppliers in which you are invested

What Can Diverse Suppliers Do to Counteract Unconscious Bias?

While supplier diversity is increasing in importance for many organizations, diverse suppliers are continuing to experience challenges in getting connected to companies. In a recent report by CVM Solutions, diverse suppliers described challenges navigating portals and the application process required by many organizations. This creates resistance when trying to identify and pursue new opportunities. The report also highlighted the benefits that supplier diversity can deliver to partner organizations – workforce impact and interaction, supply chain impact, and ultimately increasing the diversity of the partner’s workforce. The next installment of this series will highlight an organization that has counteracted unconscious bias to create success.

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