Diversity, equity and inclusion (DEI) may be the most foundational words guiding supplier decisions. Supplier diversity strategy can signal to competitors your commitment to quality and modern thinking by creating a more thoughtful, forward-thinking sector.

Hiring diverse talent is critical, but it’s crucial to expand your perception of diversity strategies by seeing how you can incorporate them into every facet of your business. Proper DEI implementation comes with a broad perspective, understanding the value of applying it within your business from the ground up.

Ways to Diversify Procurement
Small-medium-sized and minority business enterprises (MBEs) already experience resistance trying to accelerate in their market. The best way to start creating your strategy is to solidify a mission statement. It’s essential to hone in on the intention behind diversification and the goals your company has to engage with for more diverse business practices.

Then, it’s time to assess your current list of suppliers. Are any of them already diverse? Ask yourself how your business can continue developing positive relationships with them. However, the effort doesn’t stop there because it’s time to add more to your roster for more comprehensive diversity.

Fortunately, there are plenty of organizations that have directories of resources, so you can find the suppliers that fit all target demographics you wish to support:

  • Asian Pacific American Chamber of Commerce (APAAC)
  • National Minority Supplier Development Council (NMSDC)
  • Women’s Business Enterprise National Council (WBENC)
  • U.S. Business Leadership Network (USBLN, for small businesses owned by people with disabilities)
  • National Gay & Lesbian Chamber of Commerce (NGLCC)
  • Native American Chamber of Commerce (NACC)
  • United States Hispanic Chamber of Commerce (USHCC)
  • National Veteran-Owned Business Association (NaVOBA)

Though the benefits will speak for themselves, the primary goal should be to embolden marginalized suppliers to create an equal industry. You can action this by creating ways to gather appropriate KPIs for self-assessment and creating realistic expectations for your achievements. The more measurable they are, the more effective they will be.

How DEI Strategies Help Suppliers
Industries that take the time to invest in a supplier diversity strategy more exhaustively level the success of the sector. These partnerships amplify voices from diverse individuals, and supporting them could foster visionary ideas the industry has never seen before.

Homogenous initiatives fail due to a lack of imaginative thinking — diverse suppliers can prevent stagnation. Varied backgrounds and experiences among professionals create solidity for everyone, including your own business.

The initiative to boost the strength of diverse suppliers helps you, but most importantly, it helps them. Offering mentorship to empower them to overcome roadblocks provides an additional competitive edge to your company. It makes their businesses more robust and yours a thought leader.

It will also deliver insight for industries that haven’t familiarized themselves with minority groups. Conversations with diverse suppliers will create more empathy for faster and friendlier business interactions.

It also closes the gap between perception and action. Many industries reach out to diverse suppliers, but the amount of product they obtain isn’t as high as it could be. Around 85% of Fortune 100 companies have initiatives to encourage supplier diversity. However, only 10% of their supplies come from diverse procurement — and over half choose not to report their product’s source anyway

Why You Need a Supplier Diversity Strategy
Strategic implementation is motivated by strong ROIs. You may perceive adding more suppliers to your log will only increase expenses — making supply base rationalization the answer for raising a bottom line. However, data backs the success of supplier diversity on a company’s pocket — and 94% of companies say forming clear development goals is most effective.

There are also tax incentives for those investing in their supplier diversity strategy. Minority and women-owned companies could provide benefits on the state and federal levels for supporting diverse suppliers.

One of the ways it does this is by developing a more inclusive reputation and increasing partnership and business opportunities. It raises more suppliers as top competitors in their field, boosting competition while reducing overall prices.

It also encourages diversification in more ways than one. It is crucial to have diverse assets — like an investment portfolio — if one crashes. Various suppliers equate to a broader range of price options, customized areas of expertise for similar products and potentially faster deliverables.

How DEI Strategies Help Overcome Shortages
Suppliers have struggled for several years since they are highly susceptible to widespread change, including surges in demand and prices, the pandemic, influx of cybercrime and international conflict. These elements drastically alter the effectiveness of suppliers maintaining expectations for clients, causing shortages.

These shortages are an issue many companies currently face due to increased demand placing challenges on a still-recovering workforce. Diverse suppliers equal diverse markets. Though you may already have a solid target audience, it can expand to extraordinary lengths with connections from minority suppliers.

Choosing established, diverse suppliers helps companies achieve stability. If supply shortages affect significant players in a chain, there are alternatives for continuing business as usual.

Creating various connections increases brand loyalty to diverse suppliers and encourages more substantial relationships with others in your supply chain, making it more agile. No matter the supplier’s tier — though these strategies notably help Tier 1 suppliers more — they can assist in building repertoire and experience for more direct operations.

The shortages will cease to be a concern as diversity increases resilience — not just for a single organization. Knowing how many crises and influences could disrupt them allows companies to prepare strategies for upcoming threats. Investing in partnerships also helps raise awareness of available resources, providing insight into valuable, diverse partners in the industry for continued patronage and support. This helps control prices while spreading the word.

Top Competitors Have Supplier Diversity
Supplier diversity strategies help companies increase revenue and stability in their supply chain. However, it has a more significant impact on diverse communities. Investing in them can perpetuate inclusion, shifting the mindsets of antiquated organizations for a better future.