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Supplier Diversity Blog by supplier.io

Why Fortune 1000 Companies Must Have a Supplier Diversity Program


A diverse group of successful businesspeople smiling at the camera

Fortune 1000 companies, which represent many of the world’s largest companies, know the value of establishing a supplier diversity program. Here are some key learnings from analyzing their supplier diversity programs

  • Bringing diverse suppliers into their supply chains increases resilience and sustainability. 
  • Engaging small, diverse suppliers spurs innovation and brings new ideas into the company.
  • It is good for business as Fortune-level companies seek to reach increasingly diverse consumer bases.

Sustainable Supply Chain

Supply chain sustainability is a broad, far-reaching issue—so much so that the United Nations has a program dedicated to assisting companies with continuously improving supply chains. 

Supplier diversity is a key component of a sustainable supply chain. In fact, many Fortune companies are combining their supplier diversity and corporate sustainability programs. Citi, AmerisourceBergen, Caesars Entertainment, and EY are just a few examples.

What do Fortune companies know about the value of a sustainable supply chain? 

They know that diverse suppliers add resilience to supply chains through innovation and agility, traits that were particularly important during the global pandemic in 2020. Supply chain disruption continues to impact the global economy more than two years after the pandemic began. It was small and diverse businesses that were able to pivot to meet the demand for new products. 

“Diverse suppliers can turn on a dime and are now considered for contracts that they would not have been otherwise due to the imperative for flexibility. They have proven themselves to be agile in terms of responsiveness,” Coca-Cola’s Terrez Thompson told the Harvard Business Review.

Fortunes also know that inclusive procurement widens the supplier pool, which in turn promotes competition in the supply base, leading to better product quality and reduced costs. In fact, the supplier.io 2021 State of Supplier Diversity report reveals that improving supply chain competitiveness is one of the top three drivers of supplier diversity programs.

Economic Equality

Around 10 years ago, executives and supplier diversity professionals at Fortune companies began focusing on inclusive procurement practices as a significant driver of economic growth.

In a UPS Longitudes blog post quoted by the Harvard Business Review, Kris Oswold, vice president of global supplier diversity, wrote, “To truly drive toward economic equality, supplier diversity can’t feel like a secret tucked away in the procurement function; it has to hit the main stage.”

Now we see companies such as CVS and Macy’s including economic impact metrics in their supplier diversity reports. Measuring the economic impact of a supplier diversity program means looking beyond the amount spent with diverse suppliers. It measures the jobs created, the indirect spend, and the tax revenue generated in communities where diverse suppliers do business. 

These metrics show the real-world impact of supplier diversity, giving Fortune companies insight into the value-add of their programs as well as information to share with consumers about the pursuit of economic equality.

Consumer Demand

Fortune companies are successful because they give customers what they want and need. Diverse populations are an emerging market force with increasing purchasing power and economic activities in their communities. In addition, more and more customers want to do business with companies that are aligned with their own values. Successful corporations are stepping up to meet these new consumers through supplier diversity.

In the supplier.io 2021 State of Supplier Diversity report, respondents named “corporate social responsibility” and “alignment with corporate culture and workforce inclusiveness” as the top two drivers of supplier diversity programs. 

Hootology, a diverse business that conducts deep consumer research, reports that even a 1 percent increase in awareness about a brand’s supplier diversity program can bring 2.5 million new people into the consideration and purchasing funnel. 

Leading the Way

In a 2018 post on his blog, Seth Godin wrote: 

“... value isn’t created by filling a slot, it’s created by connection. By the combinations created by people. By the magic that comes from diversity of opinion, background and motivation. Connection leads to ideas, to solutions, to breakthroughs.”

Fortune companies know this to be true. 

The earliest supplier diversity programs were established by some of the biggest corporate names in the world—IBM, AT&T, and ExxonMobil all have programs at least 50 years old. Fortune 1000 companies need to continue to lead the way in supplier diversity, continuously improving on inclusive procurement best practices.

Is your company ready to establish or improve a supplier diversity program? Learn more by downloading our 2021 State of Supplier Diversity report, and contact us today.

State of Supplier Diversity

 

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The team has a long history in driving innovative solutions in supplier diversity. We believe that companies deserve solutions that are effective and provide measurable value and results. Started more than a decade ago, supplier.io has rapidly become a prominent provider of supplier diversity solutions to leading corporations. We currently support customers in automotive, healthcare, insurance, retail, manufacturing, education, and banking. One in five Fortune 50 company relies on supplier.io.