Revealing the Truth about Supplier Diversity Program Benefits
Supplier diversity programs have been a hot topic for some time now. However, the need for minority-owned and diverse supplier programs at most companies has only recently begun to take shape, but this growth has been astronomical. In fact, a study done by CAPS Research states that 71.79% of organizations expect their total supplier diversity program spend to increase greatly within the next two years.
Even though support for diversity programs has been rising, there is still some hesitancy from businesses to develop them. This reluctance is often due to inaccurate perceptions regarding the value they can offer a company. However, these myths are often easy to debunk. Below, I outline a few of the most common misconceptions:
Myth 1: Diverse suppliers are expensive.
The idea that you will pay a premium price for access to a historically underutilized business is false. These suppliers offer the same goods and services as anyone else. In fact, supporting supplier diversity programs help infuse your existing supplier pool with more options, developing a healthy competitive landscape amongst the group.
Additionally, by developing a supplier diversity program, you help foster an environment of brand loyalty within the community. Diverse suppliers are more likely to be flexible and support your business goals because they appreciate your investment and clients or customers will likely purchase more from you because of your enhanced corporate reputation.
Myth 2: I already work with minority-owned suppliers, so I don’t need to create a program.
Just because your supplier is part of a recognized minority class, does not mean their business is certified. To become a diverse supplier, a company must go through a certification process with a regulatory agency. Typically the agency requires the company to be at least 51% owned and controlled by one or more individuals within a historically underutilized demographic. Well-known agencies include:
- Women Business Enterprise National Council (WBENC)
- U.S. Business Leadership Network (USBLN)
- National Gay and Lesbian Chamber of Commerce (NGLCC)
- National Association of Women Business Owners (NAWBO)
- Small Business Administration (SBA)
- Canadian Aboriginal and Minority Supplier Development Council (CAMSC)
- Minority Supplier Development Council–UK (MSDUK)
- Minority Supplier Development Council (MSD-China)
- South Africa Supplier Development Council (SASDC)
Also, just because you already work with a diverse supplier does not mean you are truly getting all the benefits from an actual program. Developing a program that you can market increases the chances that suppliers will find you.
Myth 3: I will drive away non-diverse suppliers I like if I enact a supplier diversity program.
When you create a supplier diversity program for your company, you define the goals, and you make the selections. If you are sourcing for a particular project and a non-certified supplier is the best fit, then hire them! Diversity programs are there to promote social responsibility, not to eradicate competition.
Another benefit of diversity programs that is often unrecognized is that they can help your existing supplier base get certified. Developed correctly, your program will not just be about hiring, but about educating uncertified suppliers. Some may not realize they qualify, and some may not know where to start. Your program can be the lynchpin that helps a supplier reap the benefits of certification.
If you are considering creating or enhancing your supplier diversity programs, but do not know where to start, there is help. Companies like Source One specialize in understanding the nuances of minority purchasing, such as geographical segmentation, market trends, and supplier minority qualifications. With an existing program, Source One can help refine minority spend initiatives, helping you strengthen relationships and community bonds while increasing your savings.
Supplier diversity myths are just that—myths. The truth is, using historically underutilized businesses will make a huge impact on your business, your community and your bottom line.