What should you expect from your vendor of choice? Most organizations have a short-list of qualities that distinguish the best from the rest. Top vendors are often praised for their dependability, speed of delivery, or mastery of their clients’ industries. Yet for companies with supplier diversity programs, one of the undervalued traits of so many incredible vendors that takes their ROI further is a dedication to diversity and inclusion best practices throughout the supplier’s organization.
From Ford Motor Company to JP Morgan, large enterprises are eager to procure products and services from businesses that are owned by diverse leaders. In fact, the 28 Fortune 500 companies that make up the Billion Dollar Roundtable have all committed to spend $1 billion annually with minority-owned and women-owned suppliers.
More than just creating parity in the business world, their supplier diversity programs have a positive impact on their own capabilities and revenue stream. As a Supplier Diversity Achievement award winner, here is some insight into the advantages organizations that work with them experience.
Expand Your Perspective
One of the main reasons any organization reaches out to a third-party vendor is to shore up the deficiencies in their current capabilities. It’s a bridge that can unlock new experiences and mindsets without the time it takes to build those advantages in-house. That’s especially desirable when diverse perspectives have the potential to save your organization from some serious pitfalls.
Here’s one example. During the wake of the financial crisis, economic researchers found that female-led banks had 5% to 6% more equity capital than male-led banks and were less likely to fail during the turmoil. Diversifying their decision makers helped female-led banks eliminate echo chambers and foster greater resiliency.
Creating a wide perspective is essential for any supplier diversity program. At w3r Consulting, we have cultivated what we describe internally as a mini United Nations. In that spirit, inclusive hiring across gender, ethnicity, age, and sexuality is only part of the equation. We are drawn to multifaceted people across backgrounds and life experiences who are open to new ideas and concepts. As a result, our people are better at recognizing what works, what doesn’t work, and when to take a chance on game-changing technology or practices.
Improve Adaptability
Is my business prepared to survive the next big bump in the road? That’s the question every executive needs to be ready to answer. Events like the COVID-19 pandemic, the 2008 financial crisis, or even the Dot Com Bubble can give you a rough ride or total your business – depending on the adaptability of your team and partners. With greater types of diversity comes a higher ability to combine novel ideas, thinking in creative ways to accelerate projects.
Boston Consulting Group (BCG) lends support to this idea in their report “How Diverse Leadership Teams Boost Innovation.” In their findings, companies that reported above-average levels of diversity in their management team also reported revenue from innovative products and services that was 19% higher than organizations with below-average diversity. The only challenge is that it can take substantial time and effort to build that diversity in-house.
Organizations with a supplier diversity program can unlock innovative products and services on-demand and for less than in-house creation. More than just what’s promised, diverse suppliers are better equipped to adapt on-the-spot when new challenges arise.
When one of our clients came to us to implement a greater data governance framework, we agreed to audit their systems, but when we identified a systemic issue with their top-down approach to data governance, we pivoted to provide a more suitable response. Working with the right diverse suppliers gives you additional brainpower when you need to readjust and move onward.
Provide a Bigger Bang for Your Buck
More than just checking a box, diversity and inclusion is good for business. Over the years, McKinsey & Company has evaluated and reevaluated the return on investment of hiring with diversity and inclusion in mind. In their third report, they found that companies ranked in the upper quartile for gender diversity and ethnic diversity were 25% and 36% more likely to have above-average profitability compared to those in the lower quartile of both categories.
What about diverse suppliers specifically? The right partner that pairs exceptional services, high technical aptitudes, and diverse perspectives can boost your revenue twofold. One, their heightened resources compared to competitors with below-average diversity allows them to hire better talent and leverage higher tech tools, boosting their output and your resulting profitability. Two, their ability to attract top people enables a greater culture of adapting to challenges in real time and reducing your need for costly fixes down the road.
Give Back to the Community
As with any organization, your decisions about who to work with do not exist in a bubble. The suppliers you choose to work with not only have an impact on your business but on the communities you serve. For those companies with supplier diversity programs, there is a much higher chance that they are contributing the health and prosperity of the communities where they operate.
Jill Davis, Vice President and Marketing Manager of Global Supplier Diversity at JPMorgan Chase, had this to say about the impact of diverse suppliers on local communities: “Diverse companies tend to hire in the local communities where they operate. Their success creates wealth in communities and helps to support the overall economy, which is a good thing for everyone.”
Our own team is deeply engaged in the community. The w3r Consulting team is adamant about giving back to causes that speak to them, whether it is to the Children’s Center of Detroit or the Alzheimer’s Association. We work to build the future of technical talent through our STEM education scholarships, giving people of diverse background a chance to follow their passions. Moreover, we identify other exceptional diverse suppliers in our areas of operation and make them part of our network for success as we deliver the best results to our clients.
How Can I Tell Who Is a Diverse Supplier?
It’s no surprise that diversity comes in all shapes and sizes, but it’s important to understand what comprises a diverse supplier. Diversity ownership can cover a wide variety of different qualities ranging from gender, ethnicity, and sexual orientation to veteran status or physical disability. For a business to be designated a diverse supplier, they must receive accreditation from a governing body.
For example, organizations that are certified by the National Minority Supplier Development Council (NMSDC) must fit the following criteria:
- The business must be for-profit
- The owner must be a U.S. citizen and the business physically located in the U.S. or its trusts
- Businesses must be 51% owned, operated, and controlled by an individual who is a minority group member
Suppliers that meet the NMSDC criteria must then apply with mandatory documentation, submit to an audit and site visit, and receive approval from their Board of Directors. Whatever the verification process or certifying entity, you’ll know that organizations that have gone through the certification process are a minority-owned, women-owned, LGBQT-owned, veteran-owned, and disabled-person owned businesses can deliver on the above results and make a lasting difference for their clients.
Want to learn why companies with supplier diversity programs choose w3r Consulting as one of their trusted partners? Connect with our team to learn what sets us apart.
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