What is supplier diversity? And why is it important to your business? This article will answer these questions by providing an overview of what supplier diversity means for companies. We’ll also discuss five significant reasons why it’s so crucial that companies have a diverse set of suppliers.
Many companies are striving to become more diverse and inclusive. One area that is often overlooked is the diversity of suppliers a company relies on.
Supplier diversity includes suppliers from diverse backgrounds in a company’s supply chain, including but not limited to gender, race, and nationality. Supplier diversity has been shown to improve business performance by increasing profitability and market share because it enables companies to better respond to changes in customer demand and drive innovation through increased knowledge sharing.
Studies show that supplier diversity can provide an important competitive advantage for businesses with more external relationships than their counterparts without supplier diversity. In asking the question, what is supplier diversity, your business gains a competitive advantage in the market.
Supplier diversity is important because it ensures that you are exposed to more innovations and ideas. Supplier diversification leads to greater creativity which ultimately drives innovation. Diversity in suppliers can help with the problem of ‘groupthink’. Groupthink is redundant and not a productive way to run a business. It is generally a situation where everyone at a company agrees on one way of doing things, which leads to stagnation.
It also means the company will have a more balanced view of markets and suppliers. This leads to better decisions on what products are being bought, leading to more profit for the business and helping avoid any discrimination lawsuits that might arise from not including diverse suppliers in their supply chain. What is supplier diversity in your business if you are not opening up opportunities for everyone?
The last reason is about managing risk. By using diverse suppliers, there’s less chance of having an interruption or shortage with one supplier because you’re relying on many different ones instead.
Supplier diversity is an important business strategy that can help you manage risk. When we talk about supplier diversity, what exactly are we talking about, and how does it work? As a company, it’s good to have suppliers with different skills or specialized products on your team so that if one of them goes out of business unexpectedly, there will be others who can take their place in fulfilling your needs and services.
You want to make sure each supplier has niche talents for your operations across the board. For example, if someone is handling manufacturing processes for you and they decide they want to retire, then you’ll need another expert ready to step up before anything starts going wrong down the line. If this person only had manual labor responsibilities while also being in charge of managing inventory levels.
Diverse suppliers make for more competitive bids and offer better pricing than if all your suppliers were from the same country or region.
This gives even smaller companies an edge when competing with larger ones because they have more options as potential manufacturers or distributors without having to worry about being discriminated against due to their size. Besides price competitiveness, diverse suppliers provide different types of products; this gives customers more value.
The competition will also lead companies (both yours and theirs) to offer higher quality items. A supplier might have an established relationship with a customer they would like assistance connecting them with, increasing international relationships without having employees who speak foreign languages themselves. Having diverse suppliers allows other people’s cultures into your company, enriching employee interactions as well as opportunities.
Integrated Systems Design is a national supplier diversity reporting, tracking, and validation system. Our company was founded in 1993 with the goal of helping companies to integrate diverse suppliers into their business practices. In 1994 we developed a national supplier diversity database that has helped thousands of firms successfully meet their supplier diversity goals.