Supplier diversity has a host of business advantages, apart from being moral and ethical.
Supplier diversity is becoming an important DEI goal for many organizations. An initiative that aims to support any business which is 51% owned by an underrepresented section or an individual– women, queer community, or persons with disabilities—supplier diversity looks to introduce new products, services, and solutions through inclusive procurement.
There is a moral and ethical argument for a supplier diversity program as it supports groups that have a long road of challenges ahead due to many factors.
The history
In the US, supplier diversity programs came into being following the civil rights movement in the 50s and 60s. General Motors kicked off its first such initiative in Detroit.
Since then, more have followed suit and have launched their programs-robust and focused.
However, the program is relatively new in India, with some organizations taking them up to play their part in eliminating systemic imbalance for equitable growth. According to the 2022 Most Inclusive Companies Index (MICI), a study by Avtar in association with Seramount measuring the intentionality across diversity strands in companies, 90% of the MICI champions had supplier diversity programs.
The advantages
While moral and ethical reasons make supplier diversity an integral part of the organization’s business commitment. Apart from the feel-good factor, there are other reasons that add commercial advantages for the businesses pursuing them:
- Supplier diversity means bringing more businesses into the fray and this can increase competition. It consequently improves quality and brings down costs. It results in a wider procurement channel
- Covid has shown how uncertain and volatile the world and times can be. In such a scenario, the diversity adds to the much-needed agility and resilience.
- A diverse group means innovation—a definite plus for businesses looking to excel.
- Broader network access means the opening of avenues to a more group of clients, penetrating new markets.
- Reaching out to a community, which has been underrepresented through the program, can boost the brand image of the company.
