Diversity has never not been important. The population is only becoming more diverse which also leads to an exchange of different ideas and improved innovations. Diversity, equity, and inclusion have been a major focus in recent years and with good reason.
If not already, organizations should be prioritizing tracking supplier diversity to make a greater impact. Understanding what supplier diversity is and why it’s important is key. If you’ve ever wondered ‘what is supplier diversity?’ or ‘how can my organization implement this into our AP processes’, you’re not alone. The following insights on supplier diversity can help professional teams understand the importance of this asset. Also, we’ll discuss why and how it’s important to monitor your diverse supplier spend activity.
Simply put, supplier diversity means utilizing a diverse range of suppliers that may be underrepresented, underutilized, or economically disadvantaged to a certain extent otherwise. It’s a very proactive business approach that encourages the use of businesses that fall under some of these classifications:
In order to be named a diverse supplier, the business must be at least 51% owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group. Many organizations establish supplier diversity programs. This helps maintain certain ethical and moral standards that align with their values and mission.
Tracking supplier diversity is important for a variety of reasons. Everyone wants to leave their footprint and make a difference in their communities in some aspect. What better way to do this than by supporting businesses that are economically disadvantaged or minority-owned?
Depending on your organization’s monthly and annual spend, establishing a supplier diversity program can make a huge difference in the lives of many people.
For one, spending with a diverse supplier supports the business itself. In addition, it also supports that business’ employees as well as their outgoing spend. Therefore, the effects continue to trickle out toward various communities that may be disadvantaged in some way or have fewer resources. This then helps drive community and generational growth.
Job growth along with increased economic growth and access are just some of the benefits that come with supplier diversity initiatives.
Companies that do business with diverse suppliers can often expect diverse products and ideas as well as meaningful innovation that helps the organization progress with the current times. More often than not, innovation can lead to increased revenue as more companies embrace diverse ideas and developments[1].
Diverse suppliers may be small to medium-sized businesses. Yet, this shouldn’t cause concern regarding the quality of the products or services. According to a study from The Hackett Group, more than 76% of diverse suppliers meet buyers’ expectations and another 25% exceed them [2].
Many organizations have values that align with matters like inclusivity, diversity, and ethics. Embracing supplier diversity is the perfect way to practice what you preach in a sense and use the organization’s spending power to make a difference.
Diversity programs can also help customers, clients, and employees think more favorably about a brand. More important, it’s an exceptional way to establish accountability and begin to measure the impact of supporting diverse suppliers.
Additionally, another benefit of supplier diversity is that it widens the pool of potential suppliers that procurement departments can work with. This promotes healthy competition for the supply chain. As a result, competition can improve the quality of products and services while also maintaining a reasonable cost.
There are plenty of reasons to invest the time into establishing a supplier diversity program. However, don’t just stop there. Once you begin doing business with diverse suppliers, it’s important to track your activity and progress to better measure the results of your effort.
In 2020, Coca-Cola spent $800 million with diverse suppliers in the U.S. and has goals to increase that annual amount to $1 billion[3]. UPS has had a supplier diversity program for several years now and currently spends $2.6 billion annually with around 6,000 small and diverse suppliers.
Even if your organization doesn’t have the spending power of these big companies, it’s important to track your diverse supplier spend regularly. Whether you need to submit reports, share figures with shareholders, or perform internal tracking efforts, Card Integrity can help monitor your diverse supplier spend consistently.
Our advanced expense monitoring tool tracks DBE (Disadvantaged Business Enterprise) and HUB (Historically Underutilized Business) spend and more across different departments and types of suppliers. Now, you can see all your diverse supplier spending and key factors in one comprehensive report. These reports are fully customizable if there are certain insights or categories you wish to prioritize over others. This add-on feature is included for existing clients who are already using our DataWISE tool and service to monitor purchasing and T&E card spend.
Tracking supplier diversity is more than just the right thing to do. Tracking the spend ensures your purchasing goals align with the vision and mission of many organizations today that wish to prioritize serving others and their communities.
Diverse supplier spend will only increase in the years to come. Organizations that don’t recognize diverse suppliers may get left behind when it comes to keeping up with innovation and managing supply chain costs. If you’re looking to get better insights for your inclusive procurement efforts, consider exploring Card Integrity’s supplier diversity expense monitoring tool. Learn more here about tracking supplier diversity and request a free demonstration today.