The Business Benefits of Implementing a Supplier Diversity Program in Your School or University
How Implementing a Supplier Diversity Program in Your School or University Provides Significant Benefits to Your Bottom Line
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We go places. We do things. Join us!How Implementing a Supplier Diversity Program in Your School or University Provides Significant Benefits to Your Bottom Line
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!
Companies That Have Successful Supplier Diversity Programs
Supplier Diversity in Higher Education
The Responsibility of Investing in Minority Suppliers
How to Begin Diversifying Your Suppliers
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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.
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 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 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.
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:
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.
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.
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.
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:
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.
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.
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
Want More UVA? Their Vendor Management Tips
We’d love to walk through your process with you and talk about security, compliance, efficiency and sleeping better at night.
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