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Supplier Diversity Starts at the Top

Updated: Nov 5, 2018

Supplier diversity is on every company's radar, but where does it begin and why is it important?

Supplier diversity is important for a number of reasons, including economic growth. But,

sometimes it's easy to lose site of how it really works - and why supplier diversity programs have been adopted by a large percentage of businesses. In fact, for many companies, a percentage of the annual spend must be centered on diverse suppliers, which include minority-owned, women-owned, veteran-owned, LGBT-owned, service disabled veteran-owned and other historically marginalized businesses. So, why does it matter?

First and foremost, supplier diversity programming adds economic value because it encourages the growth of diverse businesses. Diverse businesses are typically small to mid-sized companies and they aid in the economic recovery and sustainability of their communities. Second, CEOs recognize that major customer/buying groups include diverse clients that also own businesses.

As such, we are seeing more diverse suppliers in the marketplace. In fact, according to Fortune Magazine, the top 50 women owned companies generated a combined $7.2 billion last year, up from $74 million in 2007, the first year the list was compiled. This is incredible growth and companies plan to continue the effort on both the supply side and the demand side.

Supplier Diversity programs typically begins at the “C” level, however it takes a company wide effort to meet these lofty goals. While procurement will often take the lead on supplier diversity, we are now seeing more divisions of the company, such as HR, partnering in meeting these goals. Leadership, as well, remains engaged.

In fact, below are some important quotes from some of the top CEOs in the country:

“At PHI, Supplier Diversity is a key strategic initiative. We understand that when we help companies grow, they hire people; those people buy our products and services and that helps fuel the growth of PHI and the economy.” – Joe Rigby, Chairman, President, and CEO of Pepco Holdings

“AT Walmart, we believe we’re at our best when we promote diversity across our supply chain.” – Doug McMillon, President & CEO Walmart Stores

“Through our Supplier Diversity Program, we’re not only strengthening our bond with minority and women-owned companies, but helping them grow their businesses, as well.” – Shira Goodman, CEO Staples

“This program provides minority and women-owned and operated companies equal footing to effectively work with us and grow their businesses at the same time. While we work with many different kinds of companies from grocery products to office suppliers these companies all have one thing in common. They share our passion for serving customers.” – Sam Duncan, President and CEO, SUPERVALU Inc.

“At Pfizer, we are committed to developing and sustaining relationships with a diverse set of partners, including minority, women, veteran, and LGBT owned suppliers to support our business.” – Ian C. Read, CEO Pfizer

There are hundreds of national, regional, local non-profit and government organizations that certify diverse suppliers as well as new Chambers of Commerce’ committed to growing and networking suppliers together. The list is too large to include on this post but they include The Women’s Business Enterprise National Council (WBENC), The National Minority Supplier Development Council (NMSDC) and The National Gay & Lesbian Chamber of Commerce (just to name a few).

We’ve only just scratched the surface here but fear not, we will be back to cover the difference between Tier 1 and Tier 2 spend programs.

Does your organization have a supplier diversity program?


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