As organizations strive to improve diversity and inclusion efforts by developing comprehensive strategies, their plans must also include supplier diversity. Supplier diversity, in the simplest form, focuses on purchasing from underrepresented groups such as minorities, women, veterans, persons with disabilities, and LGBTQ+.
Supplier diversity is critical to help underrepresented groups, especially communities of color, build generational wealth, create jobs in their communities, reduce racial economic disparities, and better serve evolving consumer bases. Population demographics are rapidly changing. According to a Brookings article, the Census projects that by the year 2045, the US will become “minority white”. Groups that were once the minority will become the majority sooner than some realize. Organizations benefit from creating and implementing a supplier diversity strategy by gaining access to fresh ideas and sometimes overlooked talent which could lead to both innovation and a competitive business advantage.
Facilitating Growth for Minority-Owned Businesses
The Michigan Minority Supplier Development Council (MMSDC) recently commissioned research from supplier.io, to assess the growth rate of minority business enterprises (MBEs) and determine the gap that remains in the revenue parity for MBEs relative to the number of minorities in the US. MBE certification requires that a minority business be at least 51 percent minority owned, operated, and controlled. The research findings were shared in the report Facilitating Growth for Minority-owned Businesses: How rethinking supplier diversity and creating results-driven processes will achieve revenue parity.
According to the report, minorities and MBEs continue to drive disproportionate economic growth in the US. In the five years from 2014 to 2018, MBEs created 14.2 percent of the new jobs in the US. However, MBEs continue to lag in receiving the equitable economic benefits of their contributions. MBEs collected only 7.3 percent of the revenue growth during this same period. MBEs were hit especially hard during the COVID-19 pandemic. Black-owned businesses experienced a 41 percent drop in revenues. Latinx business owners’ revenue fell by 32 percent, and Asian business owners’ revenue dropped by 26 percent. In contrast, White-owned firms fell by just 17 percent. Read the full report for additional data points and key findings.
- Organizations interested in best practices in minority supplier development can reference these guidelines from the National Minority Supplier Development Council.
- Additional resources are available in the Supplier Diversity category of PIVOT, Talent 2025’s free online D&I employer toolkit.
The University of South Florida’s Muma College of Business recently offered a free Diversity, Equity, and Inclusion in the Workplace Certificate. Module 3 of their training titled Understanding your organization covered Supplier Diversity. The session is available on YouTube.