Supplier Diversity
Definition:
Supplier diversity refers to the proactive effort by an organization to include and promote businesses owned by traditionally underrepresented or disadvantaged groups in its supply chain. These groups may include minorities, women, veterans, LGBTQ+ individuals, and people with disabilities. The goal of supplier diversity is to create a more inclusive and equitable supply chain that reflects the diversity of the communities and customers served by the organization.
Example:
Acme Corporation implements a supplier diversity program to increase the participation of minority- and women-owned businesses in its supply chain. The procurement team sets specific targets for the percentage of spend allocated to diverse suppliers and works to identify and develop relationships with qualified diverse suppliers in key categories. For example, they may partner with a minority-owned IT services firm or a woman-owned marketing agency. The team also provides training and mentoring to help diverse suppliers navigate the procurement process and compete effectively for business opportunities.
Why is Supplier Diversity important to Procurement?
Supplier diversity is important for several reasons. First, it helps organizations to promote social and economic equity by creating opportunities for underrepresented businesses to grow and succeed. Second, it can help organizations to tap into new sources of innovation and value by leveraging the unique perspectives and capabilities of diverse suppliers. Third, it can enhance an organization's reputation and brand by demonstrating a commitment to diversity, inclusion, and corporate social responsibility. Finally, supplier diversity can also help organizations to comply with legal and regulatory requirements, such as those related to government contracting. Procurement teams play a critical role in driving supplier diversity by setting goals, identifying diverse suppliers, and creating a level playing field for all suppliers to compete.