Diversity drives dividends – it’s as simple as that. A diverse workforce and inclusive culture are essential to business success, especially in an increasingly global economy. If you are looking to build brand engagement and loyalty, supplier diversity can help you deliver on the promise of who you are and what you represent.
“Developing a diverse workforce and supply chain fosters innovation, creates economic opportunities, provides better access to talent and improves business performance,” said CVS Health President and CEO Larry Merlo in his opening remarks at the 2018 Billion Dollar Roundtable Summit and induction ceremony. “We call it purpose-driven growth. It’s what has led to CVS Health’s success in the past, and it’s what will continue to drive our business in the future.”
Billion Dollar Roundtable is an organization that recognizes and celebrates companies that achieve spending of at least $1 billion with certified diverse suppliers that are primarily minority- or woman-owned. Member companies include CVS, AT&T, NBC Comcast Universal, Apple and Walmart.
Just as a diverse workforce yields countless dividends, so does a robust supplier diversity program. Consider these tangible benefits:
Better ROI: From a financial perspective, a report from the Hackett Group, ROI Related Supplier Diversity, found that companies that participate in a long-term supplier diversity program generate a 133% greater ROI than those companies that use the suppliers they have traditionally relied upon. “On average, supplier diversity programs add $3.6 million to the bottom line for every $1 million in procurement operation costs.”
Lower operating costs and higher profits: Companies in the Hackett Group survey with supplier diversity programs spent an average of 20% less on their buying operations compared to similar companies operating without these programs. These “pro-diversity” organizations also drove an additional $3.6 million to their bottom lines for every $1 million spent in procurement operating costs.
Increased innovation: A Harvard Business review study reported that increased cultural diversity is a boon to innovation, and businesses run by culturally diverse leadership teams were more likely to develop new products than those with homogeneous leadership. As an added twist, a study conducted by Boston Consulting Group (BCG) showed that organizations with more than 20% of women in management positions are likely to see 10% more innovative revenue — revenue driven by radical new products or services– than their less-diverse peers.
Doing business with diverse suppliers not only impacts procurement spend – it stimulates the downstream economy. Diverse suppliers create a sustainable supply chain by positively impacting their local economies, creating jobs and generating revenue and taxes. These are important residuals to procurement spend that are often overlooked.
If you’re looking to stay at the forefront of diversity, another up-and-coming – and long-awaited – focus is impact sourcing. Think about what it means for individuals and their surrounding economies when employers have proactive programs to provide opportunities to mothers fleeing abusive relationships, job-seekers in the U.S. Rust Belt, military veterans or disadvantaged youth in Africa.
Meanwhile, keep in mind that if you’re looking to increase market share among emerging customer bases, develop faster innovation cycles or more intangible measures such as brand awareness and loyalty, consider selecting a certified Minority Business Enterprise (MBE) supplier like VXI. Contact me for more details.