Remembering the ‘Why’ Behind Supplier Diversity

Small & diverse suppliers can thrive with predictability.

In 2021, companies spent an average of 5.9 percent with certified diverse-owned businesses. Reducing this spend is unlikely to help the buying company meet its earnings expectations or fuel future growth, but cutting or reducing it will have a substantially negative impact on those suppliers.

Supplier diversity programs always want to do more. Keeping spend the same—and making clear to suppliers that current business will be maintained—may be as valuable as increased spending in uncertain times such as these.

There are benefits to the buying company as well. By reestablishing relationships with diverse suppliers, one potential source of risk can be crossed off the list of circumstances to monitor.

Shared values lead to increased consumer loyalty.

Brand loyalty is one of the first conditions to come into question when spending power decreases. If consumer decisions are based on shared values rather than just product and service preferences, their loyalty is made stickier.

In many cases, supplier diversity programs have wisely emphasized partnering with suppliers owned by members of their core demographic. For instance, women make 70-80 percent of all household buying decisions, according to data reported on by Inc. Consumer packaged goods companies can shore up their consumer loyalty through supplier diversity, continuing to visibly partner with women-owned suppliers.

The top line and bottom line in companies are closely connected. The executive team should articulate their own “why” for supplier diversity, one that recognizes the contributions these partners make to profitability from the top line and the bottom.