The Business Benefits of Implementing a Supplier Diversity Program in Your School or University

The Business Benefits of Implementing a Supplier Diversity Program in Your School or University

This blog was originally published in May 2023 but has been updated in December 2024 to reflect updated data and to underscore the growing momentum of supplier diversity in higher education.

Have you considered implementing a supplier diversity program in your organization? What type of impact are your current suppliers making in the community? Are you embracing supplier diversity?

These important questions were asked by Titus Martin and Mike Mast of E&I Cooperative Services at PaymentWorks’ recent live event. We’ve pulled together highlights from that event and summarized them below. We’ve also included some compelling data and key points from recent research to highlight the sentiment toward supplier diversity and to underscore its benefits.
Enjoy!

What is Supplier Diversity?

Before we get into the value of implementing a supplier diversity program, let’s define a key term. 

Supplier diversity, also known as vendor diversity, is the practice of promoting and utilizing a diverse range of suppliers in the procurement process.

Diverse suppliers, or vendors, are defined as businesses that are owned at least 51% by a disadvantaged or minority group.

In other words, “supplier diversity is about driving value into communities of color,” said Titus. “That includes minority-owned, women-owned, veteran-owned, disabled, etc.”

This means that businesses owned by minorities, women, veterans, and disabled individuals are given an equal opportunity to participate in the procurement process.

When organizations embrace supplier diversity, all parties flourish–including your bottom line, as Titus explains.

Companies That Have Successful Supplier Diversity Programs

The importance of implementing a supplier diversity program has deep roots in American history.

Dating back to the Civil Rights movement, supplier diversity has been an important topic in business, with many companies implementing programs to promote and support the use of diverse suppliers. 

Below are two famous examples.

UPS

UPS has been an advocate of supplier diversity for some time, launching their own program in 1992. Today, their annual supplier diversity spend is about $2.6 billion and they partner with about 6,000 diverse vendors

IBM

IBM is known as an early leader in supporting and acting upon supplier diversity, launching their program in the Civil Rights Era of the 1960s. By 2020, the company’s global supplier diversity spend was $2.6 billion. IBM also committed to dedicating 15% of its first-tier spend on black-owned vendors by 2025.

Supplier Diversity in Higher Education

The practice of supplier diversity is not limited to the private sector. Higher education institutions, as Titus and Mike discussed, also have a social and ethical responsibility to implement a supplier diversity program in their vendor management strategy.

By supporting diverse suppliers, higher education institutions can ensure that they support businesses that may otherwise face discrimination in the procurement process.

According to a research report by Northeastern University, colleges and universities face unique challenges as well as opportunities when it comes to supplier diversity. This is especially true when it comes to aligning policy and implementation. Namely, the report highlights the following key findings: 

• Disparity between commitment and practice: The report highlights that a significant number of respondents said their institution faces discrepancies between their stated commitments to supplier diversity and the actual implementation.
• Challenges: A shortage of resources, intricate procurement procedures, and challenges in locating qualified, diverse suppliers present significant hurdles.
• Strategic Efforts: Certain organizations are advancing by implementing both strategic and practical methods to improve supplier diversity.
• Educational Needs: There is an evident demand for expanded training and awareness initiatives tailored for procurement teams and other key participants.
• Supplier Development: Success stories with diverse suppliers illustrate their potential to compete more successfully when provided with proper support and access to opportunities.

Colleges and universities stand to benefit greatly—both for themselves and their communities—from prioritizing supplier diversity. Consider the following: 

Boosted Innovation and Quality: Bringing in diverse suppliers means colleges and universities can access fresh ideas and unique perspectives, which can lead to better solutions for campus needs. Diverse suppliers often introduce creative approaches, which helps raise the quality of products and services offered.

Positive Economic and Community Impact: Working with a range of suppliers allows institutions to invest directly in underserved communities, strengthening the local economy. This can create goodwill and foster strong, lasting connections with the surrounding area, showing that the institution cares about giving back.

Improved Reputation and Appeal: Prioritizing supplier diversity can greatly enhance an institution’s image. It demonstrates a genuine commitment to equity and inclusion, which can be a big draw for students, faculty, and community partners who value social responsibility and fairness.

Expanded Supplier Options for Greater Resilience: A diverse supplier base means less dependence on a few big vendors, which is especially valuable during disruptions or supply chain issues. With a wider network of suppliers, colleges and universities are better prepared to adapt to changing circumstances and keep operations running smoothly.

Access to Funding and Grants: Many grants and funding opportunities give preference to institutions that prioritize supplier diversity. This focus can make it easier for colleges and universities to qualify for special funds, helping them secure resources for other important projects.

Increased Campus Satisfaction: Building a diverse supplier network aligns with values of diversity, equity, and inclusion, which resonates with students, faculty, and staff. When the institution’s practices reflect these values, it can lead to greater satisfaction and a stronger sense of belonging across campus.

Skilled and Future-Ready Procurement Teams: Tackling supplier diversity challenges pushes procurement teams to strengthen their skills in areas like relationship-building and innovative sourcing. These efforts create a more flexible, skilled team that’s well-equipped to meet the needs of the institution as they evolve.

Addressing challenges and embracing the benefits of supplier diversity empowers the higher education sector to drive positive changes on their campuses and in their communities. It’s a win-win that reinforces both the institution’s mission and its impact.

The Responsibility of Investing in Minority Suppliers

Think about supplier diversity this way. If you’re a higher education institution, you want to promote your school as the organization of choice. 

But promoting your school as the organization of choice comes with an important responsibility to the community in which your school resides–especially because your institution is powered by precious community resources.

Namely, you have an obligation to bring economic impact, such as job creation, to that community. What happens when you invest in your community? The local economy flourishes. 

For example, certified minority-owned businesses make an immediate, direct impact by hiring at their firms from within the community.

As a result, more workplaces and supply chains become more inclusive and therefore more innovative, thanks to the diversity of thought available.

When the local economy flourishes thanks to more diverse and innovative businesses, your school becomes more attractive to students and faculty seeking professional and social opportunities to go–and stay–there.

The Financial Incentive of Investing in Minority Suppliers

By diversifying your suppliers, you can also benefit from the financial incentive of investing in suppliers from minority markets. 

Minority markets are driving business expansion in many areas. According to recent data from the U.S. Census, the largest consumer markets in the country have the highest representation of ethnic minorities. 

Additionally, combined buying power of Black, Hispanic, and Native Americans have expanded from $671 billion in 1990 to $4.9 trillion in 2020.

Companies are Waking Up to the Financial Benefits of Implementing a Supplier Diversity Program

When we originally published this article, alignment with corporate culture and workforce inclusiveness was the primary driver for supplier diversity programs, according to 2022 data.

Source: Supplier IO 2022 State of Supplier Diversity Report

An updated 2024 report from that same source reflects evolving attitudes toward supplier diversity. While the primary driver remains the same, a new category has emerged this year: win new business (RFP). The report highlights that nearly half (48%) of supplier diversity leaders are leveraging supplier diversity programs as a business development strategy.

The reasons for companies investing in diverse vendors are shifting. In 2017, almost 50% of companies implemented supplier diversity programs to comply with government regulations.

In 2024, only about 37% of companies cited government compliance as their primary driver, while 76% of companies were driven by a desire for better workplace culture and more inclusiveness as their main reason for supporting minority vendors.

Many businesses are also recognizing the bottom-line results that diversifying their supply chain can deliver, such as improved competitiveness, achieving Corporate Social Responsibility (CSR) initiatives, and improving brand image.

The 2024 report boiled its findings down to three key points: 

1. There is greater executive engagement and focus on outcomes: There’s a growing emphasis on supplier diversity at the executive level, with leaders spending more time with business units and exploring new ways to enhance value. Awareness and results tracking are expanding among top-level executives and across various departments.
2. Companies are exploring enhanced data usage and new tools to show impact: Data has always played a crucial role in supplier diversity programs, but the focus is now shifting from merely tracking expenditures to demonstrating broader value and tangible impact. Rising business demands are pushing for clearer, data-backed outcomes.
3. Companies are expanding plans for international reach and ESG integration: Companies are increasingly seeking broader contributions from their supplier diversity teams, including expansion beyond U.S. borders and closer collaboration with ESG teams to assess diversity and sustainability across their supply chains.

These highlight the importance of having processes and tools in place that allow organizations to vet and track their progress with supplier diversity. For example, how can organizations most effectively vet vendors based on ESG ratings or whether or not they are women-owned businesses? Organizations that rely on manual tasks to do this face a daunting uphill battle. Those that leverage automated systems can allow those systems to do the heavy lifting. 

How to Begin Diversifying Your Suppliers

Implementing a supplier diversity program may seem complex, but it can be done. Below are a few things you can do to begin this work at your institution.

• Gather your team and review your suppliers. Do they represent the community in which your organization resides? If not, research diverse suppliers in your area and start having conversations with them.
• Establish a supplier diversity policy. Work with your team to develop a clear policy that outlines your goals and objectives for implementing a supplier diversity program. Your policy should include a statement of your commitment to working with diverse vendors and a description of the vendors you’d like to onboard.
• Identify performance metrics. Key metrics to measure the success of your supplier diversity program include: supplier diversity spend, number of diverse suppliers, supplier performance, supplier retention, and community impact, such as job creation. 
• Communicate your policy to internal staff, leadership, and key stakeholders. Share your policy far and wide in your organization–in internal messaging, during meetings, and with your community. Doing this will help you stay accountable to your goals. Additionally, if you’re looking for more support for the vendor desk from your leadership, demonstrating how you’re contributing to the organization’s DEI and ESG initiatives is a great way to get the attention of executives.
• Consider using VERVE. This is E&I’s e-Procurement service that makes it easy for you to use more diverse suppliers.

Want Help Aligning Teams On Implementing a Supplier Diversity Program?

Supplier diversity is a non-negotiable. We want you to have everything you need to start investing in minority vendors. Below are a couple of additional resources.

Stephen F. Austin University: More Efficiency, Security, and Time to Focus on Strategic Tasks

University of Kentucky: 50% Increase in Staff Efficiency and Vendor Onboarding Time Reduced

How E&I Can Help You

Want More UVA? Their Vendor Management Tips

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