Economic trends shape procurement decisions. From inflation rates to tariffs to global supply chain disruptions, shifts in the economy influence how companies allocate their procurement budgets.
Over the years, these trends have not only affected overall corporate spending but have also significantly impacted procurement with small and diverse suppliers. As businesses navigate economic uncertainty, resilient sourcing strategies that integrate small and diverse suppliers prove to be critical for sustainability, cost efficiency, and market expansion.
We discussed these changing economic trends and procurement spending with several industry experts in a recent webinar. Below is a brief summary of their observations that include analyzing over $168 billion in spend from 398 companies.
Economic Trends and Their Evolution
Since 2022, economic volatility has played a significant role in shaping procurement strategies. Inflationary pressures, shifting interest rates, and supply chain disruptions have forced businesses to adapt quickly.
Economist Laura Boyd, Head of M&A and Capital Markets at Norwest Venture Partners, notes, “Inflationary pressures have forced companies to rethink their supplier strategies. Many have realized that diversifying their supplier base can provide significant cost advantages over time.”
Over the last few years we’ve seen significant change and volatility in the market:
Inflation and Cost Pressures (2022-Present)
- Inflation surged in 2022, increasing costs across industries and prompting procurement teams to seek cost-containment strategies.
- Many organizations turned to small and diverse suppliers to improve cost efficiency and enhance supply chain flexibility.
Rising Interest Rates and Economic Uncertainty (2023-Present)
- Higher interest rates increased the cost of capital, impacting procurement budgets and supplier financing.
- Businesses sought alternate sourcing strategies to mitigate risks, leading to increased investment in small and diverse suppliers for greater resilience.
Supply Chain Risk Management and Adaptation (2022-Present)
- Global supply chain disruptions underscored the importance of supplier diversification and proactive risk management.
- Companies have increasingly integrated small and diverse suppliers to mitigate supply chain risk and build more agile supply networks.
- Alternate sourcing strategies have become essential for ensuring supply continuity and reducing reliance on single-source suppliers.
Laura Boyd adds, “Supply chain risk is no longer an abstract concept—it’s a daily operational concern. Businesses that build redundancy through supplier diversification are proving to be more resilient in uncertain times.”
Procurement Spend with Small and Diverse Suppliers
“It’s encouraging to see that certain industries are expanding their investments in small and diverse suppliers despite economic pressures,” says Gladys Dreiling, VP of Data Operations at Supplier.io. “This underscores the long-term value and resilience these suppliers bring to the table.”
Despite economic fluctuations, responsible sourcing programs have continued to grow. Recent data from Supplier.io’s economic impact analysis highlights key trends:
- Overall procurement spend with small and diverse suppliers exceeded $168 billion in 2023, supporting over 1.4 million jobs.
- Certain industries increased their spending, such as retail and distribution, which saw an 11% growth in spend with small and diverse suppliers.
- Manufacturing, however, experienced a decline of over 9%, likely due to shifting cost pressures and supply chain realignments.
Even with economic headwinds, small and diverse supplier spend has remained resilient. Companies are recognizing that investing in these suppliers contributes to long-term stability and economic growth.
The Economic Impact of Responsible Sourcing
The procurement spend allocated to small and diverse suppliers creates significant ripple effects across the economy.
“The economic impact of responsible sourcing goes beyond just the businesses involved. It strengthens local communities, generates jobs, and fuels economic growth,” states Laura Boyd.
According to Supplier.io’s analysis:
- Every $1 spent with a small or diverse supplier generates $1.80 in economic impact, demonstrating the broader community benefits of responsible sourcing.
- Jobs created through responsible sourcing initiatives contribute to tax revenue, wages, and local business growth.
- Small and diverse suppliers introduce innovation and cost-saving opportunities, increasing market competitiveness.
The Future of Procurement and Small & Diverse Suppliers
Looking ahead, procurement teams must navigate ongoing economic uncertainties while balancing cost efficiencies and responsible sourcing.
“As companies look to the future, responsible sourcing will no longer be an option—it will be a necessity,” says Laura Boyd. “The combination of technology, data insights, and supplier diversification will be key to navigating an increasingly complex economic landscape.”
Procurement leaders should expect continued volatility and the need for alternate sourcing options. Many are already focusing on:
- Enhancing spend cost reduction strategies while ensuring supply continuity.
- Strengthening alternate sourcing strategies to reduce supply chain risk and increase supplier diversity.
- Emphasizing sustainability and responsible procurement, integrating small and diverse suppliers into broader ESG initiatives.
- Leveraging AI and digital procurement tools to improve supplier intelligence and decision-making.
With technology advancements and increased corporate commitment to responsible sourcing, small and diverse suppliers are poised to play an even more significant role in supply chains.
Economic trends will continue to evolve, shaping procurement strategies. However, the long-term value of responsible sourcing remains clear. Companies that invest in small and diverse suppliers benefit from increased supply chain resilience, cost efficiencies, and community impact.
By leveraging accurate supplier intelligence and data-driven insights, businesses can ensure that their procurement strategies align with economic realities while driving meaningful progress for all stakeholders. Learn more about Supplier.io’s supplier intelligence platform by scheduling a demo with our experts today.
et with our experts.