For some, supplier diversity is viewed largely as a way to promote social equity by supporting businesses owned by underrepresented groups. And while this is certainly true, there are also economic impacts associated with this strategic approach. These are experienced not only by the company choosing to implement this type of program, but the broader economy as well. Among the benefits are job creation and greater economic growth, increased innovation, enhanced market competition, strengthened resilience, market access and stronger relationships.
Job creation and economic growth
When businesses engage with diverse suppliers, many of them are small-to-medium-sized enterprises (SME). Quite often, these are the backbone of job creation, with many of the positions being created in the local community, which is another benefit. Research has also shown that much of this job creation occurs in lower income areas. As a result, this helps to reduce unemployment and increase household income. Additionally, the unique company culture and opportunities for skills development can lead to greater job satisfaction.
Increased innovation and competition
Diverse suppliers bring unique perspectives and problem-solving approaches that often result in innovative products, services and solutions. This different way of looking at things can be useful for tackling various challenges and responding to clients’ needs. For example, a veteran-owned business may contribute knowledge in efficient processes that help to improve production techniques for a manufacturer. Or a minority-run supplier could provide a fresh approach to data analytics for a tech company. This innovation benefits not only the business itself, but has far-reaching effects on the industry as a whole. Also, by providing opportunities for a greater number of suppliers, diversity programs contribute to a more competitive marketplace. This, in turn, can lead to driving down costs and boosting quality.
Resilience
Another benefit of a company having a more diverse supply chain is that it allows them to better weather inventory shortages and other difficulties. By not relying on a small group, businesses have greater flexibility to be able to adapt to downturns, regardless of the cause. In fact, the suppliers themselves also have the agility to pivot in response to changing market condition. Additionally, as they are often smaller in size, there is less bureaucracy involved in decision-making. For both the companies and their suppliers, these characteristics can translate into long-term resilience and increase their odds of survival.
Revenue growth and market access
Consumers are increasingly placing an emphasis on diversity and social responsibility. Therefore, businesses that incorporate these priorities into their choice of suppliers and overall corporate philosophy are more likely to be chosen, given that they are more closely aligned with their clients’ values. Despite being a more ethical question, this has a direct impact on a company’s revenue. Also, by gaining insight from their diverse supplier chain into particular demographics or cultural groups, businesses have the capacity to access different markets. They also increase their possibility of bidding on government contracts. Indeed, supplier diversity is more and more commonly a requirement in RFPs. So for those looking to engage in this sector, it’s vital to consider.
Stronger supplier relationships
The relationship between companies and diverse suppliers tends to be different from that with more traditional suppliers. Given the significant barriers they often face regarding entry into the market, diverse suppliers are keen on securing long-term partnerships that will ensure their success and stability. As a result, there is the opportunity for greater loyalty, deeper collaboration and a stronger sense of trust. There is also the mutually beneficial side of the situation, where a larger company can mentor a supplier and thereby improve their competitiveness. At the end of the day, the positives include better products and services, lower costs and greater efficiency.
While supplier diversity is often considered to be a social issue, the economic aspect should not be overlooked. Businesses can benefit in a number of ways by implementing practices and programs that support inclusivity and fairness. They stand to increase their competitive advantage and to be more resilient during difficult conditions. This is also a result of the innovation provided by previously underrepresented suppliers with whom companies strengthen their relationships. There is also an opportunity to boost revenue and access untapped markets. This provides a different perspective on supplier diversity, as not only a question of doing good, but being good for the bottom line.
Maïa Inclusive Growth's role
As a project of the Quebec Business Women’s Network (QBWN/RFAQ), one of our main goals is building awareness and education through training and workshops on an array of topics. So, if you are a large business seeking to overcome challenges and engage with diverse suppliers, we are here to provide you with the information you need and to offer guidance. Maïa Connex is also a platform that serves as a hub for business opportunities across Canada, and we hold networking events along with our partners.
Regardless of where you are in your journey with supplier diversity, we encourage you to sign up for our training programs, which are offered online here :
To take your network of diverse suppliers to the next level, or to facilitate your integration into supply chains, join our platform. We also invite you to sign up to stay tuned for future blog posts. In addition, you will be notified of any updates and upcoming workshops.
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