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8 Things Everyone Needs to Understand About Supplier Diversity


Supplier diversity has many benefits for the supplier and the company using it.


Supplier diversity is a business program that encourages the use of previously underutilized minority-owned vendors as suppliers. Many companies have put supplier diversity programs in place to ensure that the diversity of their supply chain reflects their local community or business community population. Here are some things everyone should understand about supplier diversity. 1. Supplier diversity programs refer to supply agreements with minority-owned, women-owned, veteran-owned, LGBTQ-owned, and service-disabled veteran-owned businesses. These populations have historically been less-often considered as suppliers for both large and smaller businesses. 2. Supplier diversity is beneficial to companies' bottom line in many instances. A study reported in Graziadio Business Review showed a return on investment of 133% on average for companies that had adopted supplier diversity programs. Minority businesses have grown at double the rate of all businesses over the past 10 years, so it makes sense that using diverse suppliers could be more profitable. 3. The best way for suppliers to join supplier diversity programs is to register with the potential client company. Most companies have a certain number of suppliers they want to work with and need to complete documentation in order to be sure they are meeting their numbers. Some companies are required to report their supplier diversity efforts to the government and need suppliers' help to document these efforts.


4. New product growth and development, innovation and new ideas result from supplier diversity as new and different people and organizations become involved in the supply process. This innovation in turn leads to more profitability and business growth. It is in every company's best interest to have a supplier diversity program. 5. Supplier diversity is not directly correlated with supply chain diversification, although using more vendors may lead to more supply chain diversification. Supplier diversity is intentional on the part of a business as a way to be socially responsible and ensure diversity within the supply chain. 6. Supplier diversity creates jobs in underserved areas, including inner cities, and can lead to business expansion into these areas. Inner city markets are estimated have about 30% or more of retail demand unmet, and with possible sales potential totalling up to $25 billion. Tapping this demand cannot help but improve the bottom line of a business. 7. Major companies like Walmart have seen success with supplier diversity. Walmart spent nearly 4 billion dollars per year as of 2007 with minority-owned suppliers and has held many meetings for minority suppliers on how to do business with Walmart. Walmart's efforts have made many minority-owned businesses more successful, and they have benefited as a result. 8. Businesses that receive federal help, support and contracts may be required to institute supplier diversity programs and report their efforts to the government. Other companies may choose to have supplier diversity programs on a voluntary basis. The California Black Chamber of Commerce actively assists suppliers in finding companies interested in supplier diversity programs. Contact us for more information about our services and programs and how we can help you grow your business.



Tara Lynn Gray

Chamber Foundation Board of Directors

President & CEO YADARI Enterprises

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