What is Supplier
Diversity: A Profitable Strategy?
Supplier Diversity is a business strategy that ensures a diverse
supplier base in the procurement of goods and services for any business or organization.
Supplier Diversity emphasizes the creation of a diverse supply chain that
ensures the inclusion of diverse groups in the procurement plans for
government, not-for-profits, and private industry. Statistics show that
companies who embrace diversity are more profitable than companies who don’t.
“The reason diversity works is that on
almost every measure, greater racially, ethnically, and culturally diverse
workplace teams function more effectively than more
homogenous teams. Members from diverse backgrounds, experiences, and
perspectives avoid “groupthink,” whereas non-diverse teams get mired in it. …In
short, the business case for diversity is overwhelming.”
What is a Diverse Supplier?
There are approximately sixteen categories used to identify diverse
businesses. Common examples include Small Micro or Medium Enterprises (SMME), Black
owned enterprises (BO), Black-Women Owned Enterprise (BW0) and Designated
Groups Owned Enterprise (DGO). In order to report diverse spend; it is
important to ensure suppliers are certified.
Diversity Certification is an important milestone in the life of a
supplier because it authenticates that the business is owned, managed, and
controlled by a qualifying diverse group. Organizations such as BBBEE verification
agencies focus on assuring that businesses are appropriately categorized by
offering third-party certification services on behalf of private industry.
State and local governments also offer certification services the CIPC.
Diversity certification by a governmental agency positions a supplier well to
do business in the public sector.
Why is Supplier Diversity important?
A common misconception is that diversity is a quota system or social
program designed to benefit selected groups while adding little to no value to
the bottom-line. The fact is that a competitive advantage exists, as
progressive organizations who have already implemented an effective strategy
have realized. A Supplier Diversity commitment benefits a company because it:
- Promotes innovation through the entrance of
new products, services, and solutions
- Provides multiple channels from which to
procure goods and services
- Drives competition (on price and service
levels) between the company’s existing and potential vendors
- Allows a company to take advantage of new
opportunities for business expansion with the emergence of new consumer
needs based upon shifting demographic realities
- Displays an organization’s commitment to doing
business, beyond consumerism, in diverse markets
- Showcases the company’s interest in and
commitment to the economic growth of all communities
Supplier diversity is beneficial to all stakeholders, not just to the
companies with programs. First and foremost, supplier diversity programming
adds economic value because it encourages the growth of diverse businesses.
Diverse businesses typically encounter barriers that challenge their start-up
and sustainability, so effective supplier diversity strategies can alleviate
these pain points.
As small businesses grow, so will our nation’s economy. Since most
diverse businesses are small businesses, they aid in the economic recovery and
sustainability of their communities. In addition, supplier diversity is
important because it provides products and services to emerging consumer markets.
While traditional products and services remain available to consumers,
demographic shifts create opportunities for diverse suppliers to meet the needs
of emerging and/or shifting populations in the South Africa, Africa and across
the globe.
Supplier diversity is also important because it assists our country in
job creation. South African statistics show that over 50% of the workforce is
employed by small businesses. In December 2014, the U.S. Small Business
Administration reported 57 consecutive months of new jobs added back to the national
workforce after the worst recession in recent history. SBA Administrator,
reported “…this new trajectory is
attributable to the success of entrepreneurs and the resurgence of our nation’s
small businesses. About 7 million of the 10.9 million jobs added back were
created not by large corporation, but by start-ups and small enterprises.”
Supplier Diversity Thought Leadership
Thought leadership in supplier diversity is important because it
provides a forum for sharing information, resources, tools, methodologies, and
experiences to assist in the growth, expansion, and development of the
industry. It is also important because it provides information to companies
that are attempting to develop effective supplier diversity initiatives. As
organizations share their experiences, they enable success within other
organizations and in-turn build a stronger industry and stronger communities
with stronger diverse businesses.
As the premier provider of Enterprise and Supplier Development (ESD) services
and solutions, I am positioned as a thought leader in the industry. I
offer resources and solutions that enable supplier diversity success for my
clients. My team is comprised of Enterprise and Supplier Development (ESD)
experts and supplier diversity leaders from the corporate, government,
non-profit, and technology sectors. With over 40 years of combined Enterprise
and Supplier Development (ESD) and supplier diversity experience, our solutions
are designed to solve real-life Enterprise and Supplier Development (ESD) challenges
that can help our clients achieve their operational objectives.
For reliable Expert service on Supplier Diversity, Preferential
Procurement, Enterprise Development and Supplier Development contact Nelson
Sebati, Pr.EAd today or visit www.enterprisesupplierdevelopment.co.za
for more information.
