By: ProcurementIQ Staff Writer, Ashley McKay
As the world becomes more diverse and socially responsible, more organizations are recognizing the importance of supplier diversity programs. According to an article from ConnXus, a supplier management software provider, “In 2007 alone, Wal-Mart spent more than $3.9 billion with nearly 2,000 minority-owned suppliers, using community outreach to help develop their network.”
Wal-Mart is not alone. There are several companies that have relied on their diverse partners for decades. According to Dun & Bradstreet,
- “The AT&T Global Supplier Diversity Program was launched in 1968…The company has continued to build on this groundbreaking initiative, and has a yearly goal of spending 15 percent* of its total procurement resources with minority-owned businesses.
- American Airlines has spent over $4 billion dollars with diverse suppliers (including minority-, women- and LGBT-owned vendors) since 1989…
- In 1968, General Motors became the first automaker to form a supplier diversity program. The company currently spends over $1 billion every year on products sourced from minority- or women-owned vendors…”
What Are The Benefits?
There are several benefits that come with working with diverse suppliers and implementing an actual program. ProcurementIQ writer, Kiera Outlaw, highlights several, including:
- Promoting Innovation: Diverse vendors are often smaller and more agile than their larger counterparts, allowing them to move and maneuver with greater flexibility and ease. As a result, this allows companies to benefit from greater innovative leaps.
- Corporate Reputation: A company committed to developing a diverse supply chain displays its commitment to doing business with and supporting the economic growth of all communities.
In a recent article (“Supplier Diversity: I Don’t Have Time For That!”) published by Procurious, ConnXus Founder and CEO, Rod Robinson is asked about the benefits. Here are some that he mentions:
- Sustainability: “Vetting diverse suppliers requires the same process and time as vetting non-diverse suppliers, but procuring with purpose and intention yields a more sustainable business model, supply chain and economy.”
- Costs: “Corporate supplier diversity programs yield proven, measurable results in improved innovation, quality and value.”
- New Opportunities: “…Those new [diverse] suppliers will not only have a chance to offer competitive pricing, but they can expose the organisation to new avenues of revenue growth, including access to new markets.”
Implementing a program may not be an easy task, but it can only help procurement departments and their organizations. And, the benefits mentioned above are only a few of several. As the procurement continues to evolve, there is no better time to start.
To read Procurious’s full article and to learn more about supplier diversity programs and how they can bring value to your organization, click here.