Back to Hub

Increasing your supplier diversity is easier than you think

Diversity, equity and inclusion (DE&I) initiatives have been a major focus for businesses in recent years. The unique leverage large organizations have to promote positive change in our society has come to the forefront of conversation, and many companies now consider it a responsibility to make a meaningful contribution.

In most cases, the discussions around diversity in businesses center on equitable and inclusive hiring and management practices. What often goes overlooked in the broader conversation is supplier diversity.

When we say supplier diversity, we don’t simply mean having a variety of suppliers — that’s just smart business, as it spreads out risk and builds resiliency in the supply chain. A diverse supplier is one that is over 50% owned by someone part of a traditionally underrepresented group (e.g., race, gender or disability).

Why should your company invest in a supplier diversity program?

Not having a diversity program will close off many avenues to a business. Some potential partners and customers won’t want to work with a company without such an initiative in place, and companies need to report on their diversity in order to put in a bid for government contracts.

Supplier diversity programs also help improve a company’s reputation and image; it’s ‘putting your money where your mouth is,’ not just paying lip service to social change. Putting diversity and inclusion out front will attract more customers, clients and partners. It also helps build company morale and retention, as a more inclusive and equitable workplace helps everyone feel seen and valued. Proactively diversifying supplier bases can also allow companies to access a wider range of goods and services, keeping them competitive and high-performing.

And also — it’s just the plain right thing to do.

There are challenges to building supplier diversity …

Too many companies take a reactive approach to supplier diversity or see it as a simple box-checking exercise they have to do for reporting purposes.

It can be hard to implement these types of initiatives — especially if all a company has done so far is reported and there’s no groundwork for actually improving diversity. It might also be the case that many of a company’s current suppliers are already diverse, but they can’t be counted because they don’t know how to be certified as one and recognized by the government.

There’s further difficulties on the employee side as well, as it can be a challenge for them to find diverse suppliers, help them get certified and so on. And none of that makes the average employee’s day-to-day job any easier; it’s just more work for them. You can get them on the same page with regard to the overall benefits of supplier diversity, but that’s not helping them at the moment. The toolsets they work with are often reactive in nature, not proactive, which means a lot of heavy lifting for little tangible benefit.

… but also solutions!

Fortunately, proactive solutions for building supplier diversity are available through comprehensive supplier management systems. Such systems can enable spend decision-makers to easily filter by diverse suppliers and check for alternatives before purchasing any order. Some even enable business policy enforcement to help encourage using diverse suppliers. For example, a check for any purchases below a certain dollar threshold can prompt a spend team to provide a justification for why they can’t use a small or diverse supplier.

Some management platforms, such as Certa, can provide a guided process on the supplier’s end showing them how to get certified as a diverse supplier — taking that burden off the employees.

Reporting becomes easier and more accurate with supplier management systems, as real-time reports can be made and data sources like TealBook and can automatically check the diversity certifications of a supplier base. Suppliers can even self-service and annually rectify their information to maintain data quality.

Spend teams that prioritize a diverse supplier base with proactive tools could easily find themselves in a competitively advantageous position thanks to broadened supplier reach, customer and partner goodwill and improved employee morale. Companies that stick to a more reactive approach to diversity will have a harder job ahead justifying their actions — or rather, their lack of action.