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Supplier Diversity Blog by supplier.io

Leaning Towards the Future of Supplier Diversity

“Today supplier diversity programs have the enviable advantage of having executive leadership support and approval. Historically, this critical requirement was challenging to obtain from the executive level. These programs must now invest in acquiring the experience and the infrastructure necessary to grow into successful and impactful initiatives.”

- Neeraj Shah, CEO of supplier.io

 

2021 marked landmark shift in the supplier diversity movement. Brand new companies launched supplier diversity programs with full executive-level support. These teams are joining an already active community of leaders and companies who have been working to meet supplier diversity targets for a decade or more. They will have the opportunity to learn from the best practices of the most mature supplier diversity programs, potentially accelerating the time to results because of the internal support they enjoy.

Last week, supplier.io released their 2021 State of Supplier Diversity report. This year’s report is based on a new framework developed collaboratively with MSDUK and Accenture, and features trends and observations that leverage data going back to 2017. This makes it possible to chart the progress made so far, as well as to identify the key success factors associated with sustained supplier diversity program results.

177 companies participated in this year’s survey. They represent a range of industries, sizes, and maturity levels, and they offered both factual information about their programs as well as their hopes and vision for the future.

The key findings from the 2021 State of Supplier Diversity report include:

  • 40% of this year’s survey respondents are less than 3 years old. In 2019, this group represented 25% of the respondents – indicating a 60% increase in just 2 years. These new organizations have a journey ahead of them, but they bring new energy and enthusiasm – not to mention executive level commitment.
  • While 56% of companies have a formal supplier diversity program, 79% of companies are tracking their spend with diverse suppliers. This may serve as a sign that investing in diversity supplier partnerships is becoming a standard mode of operation for companies rather than being considered a ‘special’ initiative. 
  • On average, 5.9% of respondents’ spend goes to diverse suppliers. The top two categories are minority-owned businesses (3.1%) and woman-owned businesses (2.8%). By comparison, advanced programs spend over 15% with diverse businesses.

One of the most important indicators of where the supplier diversity movement is today are the comments offered up by the program leaders participating in the survey. Their perspective on the future reflects a mix of hope, enthusiasm, and nuances that will need to be addressed in the pursuit of supplier diversity program targets and objectives. Since procurement is the function tasked with this responsibility in over 70% of companies, it is critical that all procurement organizations be informed about the challenges and opportunities of purposefully welcoming diversity suppliers into the supply base.

98% of this year’s survey respondents measure the impact that spending with diversity suppliers has on local communities, and 81% believe engaging with diverse suppliers has a significant, measurable impact on their community. This impact is felt through workforce diversity as well as efforts to reach into Tier 2 of the supply chain – partnering with suppliers to increase their spending with diverse-owned businesses.

There is an overwhelming sense of positivity associated with supplier diversity programs, both in terms of what they are able to achieve for businesses and communities, and also in terms of how supplier diversity program managers feel about their work. This is absolutely critical, as there is much work still to be done, and success cannot be realized without passionate leaders who take full ownership over the need for continued partnership with diverse suppliers.

To read the full 2021 State of Supplier Diversity report, click here.

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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.