Supplier diversity is one of the most important topics in supply chain management today. It’s not just about finding new suppliers, but also ensuring that your suppliers are diverse. When you make sure to have a group of different suppliers with various backgrounds and cultures, you help the economy of local communities, reduce risk and increase profitability.
Supplier Diversity Defined by the World Resource Institute (WRI) as “the degree to which a company’s suppliers reflect its diverse customer base,” this principle can be applied in both business-to-business (BtB) and business-to-consumer (BtC) contexts. The goal of supplier diversity, according to WRI, is for organizations to have access to an array of new perspectives from different parts of society that will help them innovate more effectively. Companies are increasingly recognizing the importance in developing supply chains based on good human rights standards—including respect for workers’ right not just pay but also their total compensation and by providing decent working conditions.
Supplier diversity means giving consideration to suppliers that are different than the company’s traditional vendor base and/or larger competitors in order to access new opportunities. In this case, it may be beneficial for an organization with more experience and resources (e.g., deep pockets) not only to consider suppliers based on price but also factors such as quality of service or expertise in niche areas like sustainability or green technology which can broaden their competitive advantage over smaller companies who lack these capabilities.
Supplier diversity is more than just about doing the right thing. It’s also a strategic business imperative, providing access to new opportunities and innovation in order to maintain competitive advantage over rivals.
The bottom line: Supplier diversity is not only the right thing to do; it can be good for business too.
A company that embraces supplier diversity will see benefits such as greater creativity and competitiveness among its suppliers, increased buying power with your vendors due to lower prices or better terms of service (such as faster delivery) from those who are less well known but more innovative, while still following fair labor practices– including respect for workers’ rights by paying them fairly and providing safe working conditions.
Supply chains within organizations are competitive and it is essential that your organization has a diverse supplier base.