It is officially the biggest shopping season of the year. Many of us are being intentional about socially conscious gift-giving by shopping at companies owned by women, indigenous, Black, and Brown owners. Can you imagine how this intentionality could extend to your organization’s purchasing power?
“Companies with diverse partner business strategies claim around $3.6 million in re-investable funds for their company bottom lines for every $1 million spent in procurement costs,” according to a study conducted by Ernst & Young (Media Village “The Proven ROI of Supplier Diversity”).
Supporting small businesses in a variety of sectors should be part of a comprehensive plan to advance equity, inclusion, and diversity in your organization. In addition to a demographically diverse workforce, eco-friendly products and services, and inclusive practices and policies, it’s important to consider how your organization engages suppliers and vendors.
”Having diverse suppliers is an essential (and too often overlooked) strategy that systematically impacts equity and inclusion.
For decades, white-owned and white-led businesses – both private and public – have gotten the largest share of contracts from the organizations they do work for. In the last couple of years, though, the conversation has slowly been shifting to ensuring that minority-owned and -led businesses can scale, grow, and thrive.
Across sectors – whether public, private, nonprofit, or beyond – there’s a bias in favor of the idea that if your organization’s mission is “for the public good”, it creates equity by default. As a result, organizations, including philanthropic foundations, don’t always think about who their suppliers are or how that effects their work, impact, and the communities they serve. The notion that there isn’t enough “pie” to go around is a myth; competition in the business world will always exist, so this widely-held belief is fundamentally dangerous to the ability of minority-run companies to thrive.
Be intentional about purchasing services from companies owned by women, indigenous, Black, and Brown owners. Do the work of assessing your current spend, enlist consulting support, and enhance your organization’s DEI strategy with a focused supplier-diversity program.
- Look at the organizational spend and examine areas of opportunity for renewal or new suppliers. Are some renewals on auto-pilot? Has your work expanded and created a need for more bandwidth that new suppliers could provide?
- Plant a flag: Commit a percentage or dollar amount to spend with new and minority-owned firms. Invest in partnership with these firms. If you’ve already been working with small and minority-owned businesses, make it a point to reaffirm the work you’re doing with them, and consider where they have room to grow in this work.
- Every CEO, every director, every department leader, and every person responsible for budgets can impact the diversity of the supply chain. Where can we diversify? Where can we benefit from a new perspective? What impacts do we have, that we haven’t been considering?
Supplier diversity has far-reaching benefits for your organization beyond just what’s outlined above. Intentional supplier diversity uplifts communities by encouraging the growth of diverse businesses; promotes innovation through diverse perspectives and new solutions; creates new supply options for your organization; and ultimately, builds representation for the communities in which your organization is based.
As year-end planning cycle countdown continues, consider how you can elevate your organization’s commitment to equity, inclusion, and diversity through analyzing opportunities to increase its diverse vendors and suppliers. Supplier diversity initiatives build company growth and loyalty and it’s important that everyone in the company understands that value proposition.
Interested in working with us on your company’s equity, inclusion, and diversity (EID) journey? Click here to learn more about how VEGA Partners can support you in this work.