Building a diverse supply chain through education
Sharing knowledge suppliers need to succeed can pay off for both of you
5 minute read
- Many companies are diversifying their supply chain to improve business results and support their social responsibility goals
- Educating suppliers on your needs and learning about how their businesses work are essential to creating a successful supplier diversity program
- Diversifying your supply chain may help you build resilience, serve customers better and contribute to your community’s economy
The business case for building a more diverse supply chain is stronger than ever, and many companies have seen that doing so can help build operational resilience and make them more responsive to customers. The percentage of the U.S. population made up of minorities, including people of more than one race, is expected to reach 47% by 2030, according to the U.S. Census Bureau. Meanwhile, nearly 40% of all privately held firms are owned by women. Serving the needs of all of your customers well can bring tangible business results: Companies that dedicate 20% or more of their spending to diverse suppliers can attribute 10-15% of their sales to their supplier diversity program, according to research by The Hackett Group consultancy.
"So what’s the foundation of any program to increase supplier diversity? Education," says Mark Bennett, Southeast Region Executive for Bank of America. The more you do to reach out to suppliers from underrepresented groups to let them know what your company’s needs are — and the more efforts you put into understanding your suppliers’ businesses, the more successful your initiative will be. “It really is a two-way street,” Bennett says. Fortunately, there are many suppliers to tap. There are now 1 million minority-owned employer firms in the U.S., according to the U.S. Census Bureau.
Expanding your pool of suppliers can ultimately foster economic growth in the community and help you achieve your company’s corporate social responsibility goals. “It has a multiplier effect,” says Bennett. “It creates jobs and helps with job preservation in the local community. It also helps increase salaries and wages and improves the overall tax revenue in the community.” The more you educate diverse suppliers about your needs and respond to the insights they share with you, the more you can make a real difference.
Mark Bennett | Bank of America Business Banking Southeast Region Executive