Supplier Diversity is when you source and procure goods from diverse supplier base. Diverse suppliers are businesses that are majority-owned by people in traditionally under-represented groups. Such groups come from cultural, ethnic, immigrant, health and gender sectors, or from other minorities. Diverse-owned businesses also tend to be smaller businesses, which also often puts them at a disadvantage when seeking purchasing opportunities.
Supplier Diversity Facts: Societies and workplaces increasingly value diversity and inclusion. The importance of supplier diversity is clear when you consider the demographic change. In the United States, for example, by 2045, minorities will make up more than 50% of the U.S. population – the so-called majority minority. Their purchasing power and economic impact will increase significantly.
Similarly, diversity is a powerful contributor of income and jobs. The US Census Bureau estimates nearly 20% of employer businesses are owned by women, and 18.5% are minority-owned. Small and medium-sized enterprises (SMEs), which have fewer than 250 employees, employ nearly half of the nation’s workforce. Furthermore they generate roughly a third of exports, according to the US Small Business Administration. Figures from the OECD show that globally 60% -70% of business are SMEs.
Are “Supplier Diversity” and “Supplier Diversification” the Same? Not quite. When you diversify your supplier base, you source from your partners who offer various unique traits, as a way to hedge against risk. Traditionally, supplier diversification is selecting suppliers based on factors such as location, size, cost, flexibility, time-to-deliver, innovation, or technologies, for example. Diversifying your supplier base to include diverse suppliers is a sound sourcing strategy for making your supply chain more agile and resilient.