Unlock the Benefits of Supplier Diversity: Maximise Profits, Create an Inclusive Environment, and Access Fresh Ideas and Perspectives
Businesses are now more aware of the significance of Diversity, Equity and Inclusion (DEI) initiatives as part of their ESG objectives; not only for internal policies but also in terms of building sustainability and resilience within their supply chain. Companies should be held accountable for both company-wide practices internally, whilst also making a conscious effort to illustrate transparency regarding social impact externally – thus showcasing that DEI is a priority on their corporate agenda.
Supplier diversity has become more critical in recent years as companies worldwide seek to create an environment of opportunity and inclusion for all, regardless of gender, sexuality, ethnicity or ability. To that end, larger companies have made firm commitments to support smaller companies owned and managed by different groups of people to ensure an equal chance of being chosen as a diversity supplier. This allows these minorities a greater chance of success while empowering them to realise their fullest potential without facing discrimination or other inhibitors.
As Hootology’s Corporate Diversity Index confirms, consumers who view a brand as devoted to diversity and inclusion are three times more likely to consider their products or services compared with those who do not. Consequently, supplier diversity is becoming essential for businesses’ enhancing their recruiting and procuring tactics.
With laws and regulations passed in both the US and UK to promote supplier diversity and make companies more inclusive, businesses are now reaping the rewards of diversifying their supply chains. It’s become part of their business strategy as it incorporates increased innovation and access to new markets.
For example, UPS has been dedicated to promoting the success of female-owned and diverse businesses. In 1992, they launched their Supplier Diversity Program with an annual budget of $2.6 billion—a testament to their unwavering commitment to helping small companies worldwide thrive. With its mission “to deliver what matters”, it’s no wonder that UPS elevated these initiatives further in 2021 by raising awareness about sustainable and inclusive recruitment practices.
In a 2021, a Statista survey of senior executives in the Asia Pacific region stated that 53% considered inclusion and diversity very important within an organisation. This suggests how essential it is for APAC companies to prioritise diversity and inclusion and to take advantage of fostering relationships with suppliers of all backgrounds and perspectives.
In 2003, Motorola began to expand its supplier diversity programs internationally, actively targeting suppliers in China, India, Malaysia, Singapore and South Africa. However, establishing a supplier diversity program in countries without pre-defined definitions of minority groups can be daunting; for example, laws or culture may prohibit asking about business owners’ ethnicity or gender. Additionally, some countries have no agreement on how to define a minority group, while others may have large numbers of different minority groups. For example, China has 55 ethnic minorities.
To identify the various minority groups in these countries, Motorola works with local diversity organisations and provides seed funding for certification bodies such as the Minority Supplier Development (MSD) China, which certifies ethnic minority-owned businesses in China. (click on the link to read the )
Businesses stand to benefit tremendously. Not only does supplier diversity increase a business’s market share – studies found that companies allocating 20% or more of their expenditure to diverse vendors saw 10-15% of their annual sales attributed to the program. And according to McKinsey, 64% of millennials are clear that they will not work for a company lacking in corporate social responsibility. Investors have also made it known that companies with a sound DEI strategy take priority over others when evaluating potential investments.
Beyond the commercial benefits, supplier diversity can also bring positive press and show customers and stakeholders that your company is committed to supporting the broader community.
Not only do they provide more opportunities for minority-owned businesses to thrive, but they can also create an influx of jobs, skills and capital that can support the local economy. Furthermore, these programs often involve company-sponsored training and mentorship, which help empower minority business owners with the knowledge and skills to succeed.
Companies should ensure their staff are aware of cultural differences so they can create an inclusive environment for all employees, regardless of race, gender, or any other protected attribute. This will help foster respect and trust between co-workers and ultimately lead to better collaboration and productivity.
Supplier diversity programs can demonstrate a company’s dedication to supporting minority-owned businesses in their local community. This is a great way to attract customers and investors and build goodwill with other stakeholders.
Businesses can access a more diverse customer base and tap into markets that may have previously been untapped. In addition, companies are able to position themselves as ethical brands, thus improving their public image and corporate reputation – ultimately leading to increased customer loyalty and sales.
When people of varied backgrounds come together to work towards a common goal, there is greater potential for creative and innovative problem-solving. This can lead to stronger relationships between organisations and their suppliers and create more productive work cultures within the company.
Supplier diversity programs have a wide range of benefits to both businesses and the communities they serve. Companies that take advantage of these opportunities stand to gain an edge in their industry through access to new markets, innovative perspectives on products and services, increased customer loyalty and positive press for their corporate brand reputation.
While it can be difficult for companies without pre-defined definitions of minority groups, local diversity organisations and certification bodies can help with this process. Ultimately, investing in diverse suppliers is the right thing to do ethically and makes good business sense in terms of increasing sales revenue, improving market share and gaining a competitive advantage.
At Lim-Loges & Masters, we believe in the power of diversity. We are a female-owned company, with more than 50% of our employees, associates and partners being female. We are proud to be an inclusive organisation that values different perspectives and experiences. Our team is made up of experts from a variety of backgrounds, each bringing their unique skills and insights to our work. Diversity is not only central to our identity, but it also makes us stronger and more creative in our approach to problem-solving. It allows us to better understand and serve our international clients. In today’s competitive business landscape, companies that embrace diversity are the ones that will thrive. At Lim-Loges & Masters, we are committed to building a more diverse and inclusive world.