Have you been hearing the term “supplier diversity” but aren’t sure what it means? As with many business terms, the definition and implementation of the words can vary by company. Let’s start with the general definition, then we’ll dig a little deeper.
In general, “Supplier Diversity” is a business strategy that ensures a diverse supplier base in the procurement of goods and services for any business or organization. It emphasizes the creation of a diverse supply chain that works to secure the inclusion of diverse groups in the procurement plans for government, not-for-profits, and private industry.
In other words, supplier diversity refers to a supply chain that incorporates businesses owned by diverse individuals or groups.
A diverse supplier is, in the broadest sense, a business owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group. In the United States for example, there are approximately 16 categories used to identify a diverse business. Common examples are small-business enterprises (SBEs), minority-owned business enterprises (MBEs), and woman-owned business enterprises (WBEs). For an organization to record and report diverse supplier spend, it is important to ensure that its suppliers are certified through third-party certification agencies.
Diverse 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. Certification also opens the door for opportunities to contract with the federal government, which has the mandate to increase the number of diverse suppliers within an organization’s supply chain.
We assist organizations at both ends of the supplier diversity spectrum. We assist them in navigating the complex certification process to get certified on one end of the spectrum. We also assist organizations’ procurement departments in creating a simple and sustainable diverse vendor management and use verification process to potentially capture funds able for using diverse suppliers.