Supplier Diversity Programs: What They Are and How They Help Enterprise Businesses
If you’re unfamiliar with the term, a Supplier Diversity Program is a program that private corporations and government entities set up to find certified minority-owned businesses to hire as contractors. The minority-owned businesses are the “suppliers” for the organization that contracts them. While it is required for government entities to have supplier diversity programs, it is optional for private companies.
These businesses must be 51% owned by a minority, such as women, BIPOC people, members of the LGBTQ+ community, disabled proprietors, or veterans. Keep in mind that not any company can claim they fill the needs of a supplier diversity program. It takes a rigorous application process and a high level of qualifications to become one. We know how hard it can be, as we’re certified ourselves!
Companies can apply for many different types of certifications, and each certification has its own requirements. Some are issued through the government, such as the U.S. Small Business Association (SBA) or Department of Veteran Affairs (VA), while others are from third-party organizations, such as The National LGBT Chamber of Commerce, and The National Minority Supplier Development Council, to name a few.
The key takeaway to understand is that not anyone can call themselves a qualified diverse supplier simply because they are minority-owned. All companies eligible for supplier diversity programs have been vetted and approved.
Why Should You Hire Diverse Suppliers?
Having diverse suppliers and supplier diversity programs are ultimately just good business practices. From the return on investment, market share, and brand image, here are a few ways your brand can benefit from contracting diverse supplies:
- A study from the Hackett Group found that companies with longstanding supplier diversity programs generate a 133% greater ROI compared to businesses that continued to outsource through the same companies they traditionally use
- Operating costs were found to decrease by 20% in the same study for companies that use diverse suppliers
- Increased Market Share
- This same study found that supplier diversity programs increase a company’s market share by appealing to a more diverse consumer base
- A U.S. Department of Commerce study predicts the purchasing power of the growing minority population will increase by 70 percent from 2000 to 2045
- Having differing and unique viewpoints in the boardrooms and marketing meetings is essential when trying to reach consumers are varying backgrounds
- Network Expansion
- Tapping into new entrepreneurs will naturally lead to meeting new connections, helping to ensure your company has the best resources available
- Increases Consumer Trust
- When Hoothology did a study on how Coca-Cola’s supplier diversity program, people were 45% more likely to perceive the brand as valuing diversity, 25% were more likely to think favorably about the brand, and 49% were more likely to use the brand’s products
- Ever since the social awakening in 2020, more consumers have been interested in the ethical values that a company has, especially younger consumers. Supporting and uplifting different minority business owners helps to prove where your brand stands. Especially nowadays, with so much performative allyship and virtu signal, supplier diversity literally puts your money where your mouth is.
- Economic Growth
- Because so many certified diverse supplier companies are small businesses, investing in diverse supplies is an investment in these communities.
B3 Media Solutions does not sell products but offers unique services. We are a digital analytics agency specializing in social media listening, media, and brand monitoring, digital analytics, social media & community management, and data visualization.
If you’re interested in learning more about how we can help your business, check out our website for a free-30 minute consultation.
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