Supplier Diversity: No Matter Your Size, Your Spending Matters

From a Michigan lure manufacturer, to a local printer, to Macy’s, to Chrysler­–a diverse supplier base is equal in its effect, no matter the size of a company. Its benefits to a business are as fetching as its absence is debilitating.

Basically, when we talk about supplier diversity we are speaking of a business practice of procuring supplies and services from a pool of companies owned by minorities–from women, to LGBTs, to ethnic minorities.

Although purchasing from such suppliers supports their mission of employing a diverse workforce, it just as importantly enriches the purchasing company. The National Minority Supplier Diversity Council (NMSDC) reported in 2014 that NMSDC-certified businesses produced more than $400 billion in output and drove the creation as well as the preservation of more than 2.2 million jobs. These are mostly small MBE (Minority Owned Business Enterprise) businesses, which proved to be a substantial force in the employment recovery after the country’s worst recession in modern times.

In fact, the Small Business Administration reported that around 7 million of the nearly 11 million jobs added back to the economy after the 2007-2008 recession were generated by start-ups and small enterprises, rather than large corporations.

By purchasing from suppliers who adopt a mission to hire minorities, a business is developing an inter-commerce vein that not only speaks to the economic power of these groups, but shows that the business values supplier diversity as a survival strategy. By maintaining diverse suppliers, your business sustains its vitality in the following ways:

— By reducing the risk of dependence on only a small handful of suppliers whose prices might raise in concert.

—  By pressuring your established suppliers to compete with up and coming start-ups, largely comprised by MBE enterprises.

— By avoiding the stagnancy of supplies which can result from a very concentrated source of suppliers.

— By enjoying the cost and efficiency benefits of new innovative approaches introduced by small MBEs.

— By demonstrating that the business stays abreast of the sociological evolution of its surroundings–your customer base included.

Overall, a business that adopts a supplier diversity strategy is not only ensuring its future in an economic landscape that continues to shift toward diversity, but the future of the country’s very own socio-economics.

As the presiding leader of the U.S. during one of its greatest economic booms in its history, President Bill Clinton opined:

“It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty, and ignorance restrict growth, while investments in education, infrastructure, and scientific and technological research increase it . . . creating new wealth for all of us.”

How to Identify Diverse Suppliers

A business just developing its supply chain, but wanting to adopt a principle of supporting diverse suppliers, may wonder how to know which suppliers are MBEs or employers of minorities in general.

The NMSDC is one means. It conducts a certification process that identifies an MBE based on specific criteria.

In all, there are more than a dozen categories used to identify diverse businesses or suppliers. Joining NMSDC in defining and identifying diverse suppliers are the Women’s Business Enterprise, the MBE itself, and the Small Business Enterprise. In addition, the U.S. Department of Veterans Affairs Vets First Program offers third party certification services as a reference for those businesses developing their supply chain.

A company in the throes of establishing its suppliers can also resort to regional councils as well as state and local governments for rosters of certified MBEs and other diverse suppliers. By adopting a supplier diversity strategy, companies help all stakeholders, not just themselves and their suppliers.


April 14, 2017




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