Many people ask me, “What is the benefit of increasing the diversity in your suppliers?” Is it just another way of giving people a handout? In fact, there is a proven business case for a diverse supply chain.
Much like the argument for a diverse workforce, the business case for establishing programs that source minority and women-owned suppliers is that it’s good for my company’s bottom line. Market share among Hispanic, African American, Asian and LGBT populations continues to grow, changing the market for most organizations.
According to Minority Business Development Agency (MBDA), 46 percent of the U.S. population will be made up of what we now consider minorities by 2045. This trend alone represents 86 percent of the country’s total population growth. Last year, minority buying power totaled approximately $4.3 trillion. To be relevant in today’s market, it is critical to reflect the demographics of our customers on our internal teams and with our suppliers. Additionally, half of the American workforce is employed by these small, diverse businesses. Economists believe that the best way to encourage a strong economy is to provide this business group with the opportunity to grow in size and capacity.
For most companies – mine included – 30 to 70 percent of total spending is with suppliers. Bama’s sourcing team has found that smaller suppliers can often be more adaptive and creative than larger suppliers. For these smaller vendors, a large order motivates them deliver quality goods and services. As large companies examine their supply chains to maximize efficiency and decrease costs, diverse suppliers offer a leverage point.
I feel passionately about the importance of paying it forward and giving equal opportunities to compete for our business. What business owner doesn’t want to build strong community relationships, increase new business opportunities and enhance quality through a diverse and qualified supply chain?