Why Supplier Diversity is Critical to Modern Procurement

Most people and organisations believe that creating a fairer and more diverse and equitable world is a worthy cause and that promoting these ideals has far reaching benefits, both in terms of societal harmony and economic success. Supplier diversity programs have a significant role to play in this mission as it provides a means through which the procurement teams of small, medium, and large businesses to support other members of their value chain which are owned and operated by a diverse spectrum of people – whether that be along lines of gender, sexuality, ethnicity, or something else.

Supplier Diversity

The racial tensions experienced around the globe in recent years have highlighted just how far we still need to go when it comes to equality and make the case for why supplier diversity initiatives need to go beyond tokenistic box-checking exercises or insincere marketing tools – think of those brands which change their social media profile pictures to rainbows during Pride month but otherwise offer no meaningful support to LGBT+ causes.

“A handful of socially conscious major companies have long played a role in addressing racial injustice through supplier diversity programs that promote an inclusive approach to procurement,” reports Harvard Business Review. “As the spotlight on systemic racism roils the United States, these programs are more important than ever, yet too few companies have them and many of those who do have allowed their diversity initiatives to become token gestures.”

Commercial Advantages

The moral and ethical arguments for supplier diversity are clear and apparent and it is not the role of this article to convince you of their validity one way or the other. However, the commercial advantages of making supplier diversity a priority for your business are perhaps less well understood and bear going into in a little detail here.

Inclusive procurement strategies inflate the pool of potential suppliers an organisation has access to and promotes competition among the supply base. Not only does this improve productivity and drive down costs but also provides procurement teams with more options when it comes to sourcing goods for their business.

This allows procurement to become more agile and resilient – especially critical during, say, a global pandemic which makes supply chains more unreliable than ever before – meaning purchasers can quickly pivot to an alternative supplier, should their first choice not be able to meet demand for some reason. Because of this increased focus on flexibility, diverse suppliers are seeing a new lease of life thanks to their ability to adapt and quickly respond to a rapidly shifting landscape.

Final Thoughts

Supplier diversity has clear advantages, both in terms of creating a fairer and more equitable world and allowing procurement teams to better maintain the flow of goods necessary to meeting their organisation’s core mission. “We prefer variety in our pastimes, biodiversity in our ecosystems and diversified holdings in our portfolios,” says CIPS. “Yet we unconsciously resist diversity in our social and professional communities.

This attitude has become a liability in today’s marketplace, costing companies talent, growth, and innovative solutions. Forward-thinking organisations are truly embracing and committing to diversity as an integral part of improving profitability and profits and outperforming the competition.

” Those brands which are best able to make sincere and policy driven roads into supplier diversity are the ones which are going to be the most adaptable and thus successful in the post COVID world.