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Supplier Diversity Blog by supplier.io

Supplier Diversity a Competitive Advantage? You Bet.

supplier-diversity-a-competitive-advantage-you-bet-689313-edited-713022-edited.jpgAccording to the US Census, reported by Marketing Charts, the US minority population (all groups other than non-Hispanic, single-race whites) climbed to almost 123.5 million people in 2015, accounting for 38.4 percent of the total population. By contrast, the non-Hispanic white-alone population grew by just 0.1 percent, totaling 198 million.

Unsurprisingly, minorities are also launching businesses at a faster rate than any other segment of the population. What does this mean for your organization? The company that taps into this expanding pool of diverse suppliers stands to gain a competitive advantage with an also increasing population of diverse customers.

Increased Competition for Your Business

Bringing new suppliers into the supply chain naturally promotes competition from potential and existing suppliers. Supplier diversity programs identify potential suppliers that can inject a high level of diverse goods and services into the supply chain, increasing vendor competition, increasing the quality of goods and services, and potentially cutting costs.

Promote Innovation

If you continually use the same suppliers, you risk creative stagnation. Adding new, diverse suppliers to the supply chain promotes innovation through the entrance of new products, services, and solutions.

Diverse suppliers are often small or medium-sized businesses, which may cause concern about the quality of goods and services or ability to meet your company's needs. However, minority-owned businesses are often more innovative, differentiating themselves from their competitors with disruptive technologies, fresh perspectives, and cutting-edge solutions. Small businesses, unlike their larger counterparts, are more agile and can create and innovate quickly in order to meet corporate and consumer needs.

Access a New, Growing Customer Base

Due to rapidly changing demographics, today's customers are different from customers of the 20th century. Immigration, differential birthrates, and the changing role of women have transformed the homogeneous marketplace of past generations. The US Census Bureau estimates that minority purchasing power reached $2 trillion in 2015 and is projected to increase to $3 trillion by 2030.

In order to access the spending power of increasingly diverse consumers, companies must understand and adapt to the different needs of today’s and tomorrow’s customers. Diverse suppliers can provide invaluable input about minorities, giving you the competitive edge with emerging markets. Additionally, partnering with minority business enterprises creates a favorable image with many minority groups, leading to customer loyalty and long-term relationships. The “Made in USA” and “Buy Local” campaigns resulted in increased sales and consumer loyalty. Similarly, many women like to buy products and services from women-owned businesses, and the Women’s Business Enterprise National Council is having increasing success in promoting this marketing initiative.

Attract Top-Tier Partners and Employees

Like attracts like, and a company that embeds supplier diversity into its business objectives can attract and retain top-level talent. Just as the consumer base is becoming more diverse, so is the workforce. A commitment to diversity in the workplace as well as the supply chain makes a company more attractive to the diverse talent entering the labor force.

A strong supplier diversity program also opens doors to potential business partnerships. Many Fortune 500 companies are committed to supplier diversity and look for partners with the same values and practices. In 2011, President Obama signed the Government-Wide Diversity and Inclusion Strategic Plan, an executive order directing all executive departments and agencies to create and implement a more comprehensive and strategic focus on diversity and inclusion in the federal workforce. Additionally, the order requires that any firm wishing to do business with the federal government must have a supplier diversity program in place.


In a 2015 report titled “ROI-Related Supplier Diversity,” The Hackett Group found companies that participate in a long-term supplier diversity program can generate a 133 percent greater ROI than those firms that look no further than the suppliers they traditionally rely upon. The companies surveyed reported that supplier diversity programs drive an additional $3.6 million to an organization’s bottom line for every $1 million spent in procurement operating costs.

Can you afford to ignore the competitive advantage 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.