Supplier diversity is rapidly gaining momentum in the global business community. By bridging the historic discriminatory gap in business communities, supplier diversity expands the merits of conducting business while economically empowering historically disadvantaged populations.
Supplier diversity is defined as 51% (or more) ownership of a respective business by a historically underrepresented individual. There are 16 divisions of diversified businesses in the US. Some of the most common certifications include:
- Women-owned business enterprises (WBEs)
- Minority-owned business enterprises (MBEs)
- LGBTQ+-owned business enterprises (LGBTBEs)
- Veteran-owned business enterprises (VOSB)
It is critically important for a diverse owned business to acquire the appropriate certifications from a third party in order to be considered for supplier diversity opportunities. Some of the most utilized third-party certification organizations include:
- Women’s Business Enterprise National Council (WBENC)
- National Minority Supplier Development Council (NMSDC)
- The National LGBT Chamber of Commerce (NGLCC)
- US Department of Veterans Affairs
Supplier Diversity creates access to business opportunities for diverse populations that have long been unavailable, underutilized or unwelcoming to them previously. Considering the ongoing wage gaps that continue to suppress the earning power of diverse individuals, it is imperative that corporations adopt Supplier Diversity practices to create a more equitable economy.
PayScale analysed differences in earnings between white men and men of color using data from a sample of 1.8 million employees surveyed between January 2017 and February 2019. Its findings were alarming. For every $1 earned by a white male in America:
- Pacific Islander men earn $0.95
- Native American men earn $0.91
- Hispanic men earn $0.91
- African American men earn $0.87
Among women, the wage gap is even more prevalent. In a study conducted by the National Partnership for Women & Families, it was found that for every $1 earned by a white male in America:
- Asian American, Native Hawaiian and Pacific Islander women earn $0.75
- White women earn $0.73
- African American women earn $0.58
- Native American women earn $0.50
- Hispanic women earn $0.49
With wage gaps still prevalent in 2022 and entrepreneurship among diverse populations on the rise, Supplier Diversity levels the playing field for those who continue to be affected by discriminatory pay discrepancies.
Due to the prevalence of corporate social responsibilities (CSR), global firms now understand the critical importance of an inclusive business environment which, in return, helps them to procure talented and innovative employees, contribute to the growth and development of their communities, and maintain a competitive status in their field. 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.
Supplier Diversity not only directly impacts the businesses involved, but also has a tremendous positive impact on society at large. In 2018, the diverse expenditure preserved 31,085 jobs in the US, alongside an incredible $5.5 billion addition to the national economy. With increased focus on rebuilding America’s domestic business community, Supplier Diversity must be a priority to ensure we rebuild a stronger, more inclusive foundation for all.