2020 was quite a year and 2021 so far is a mixed bag. I would be the first to tell you that the topics I write about – supporting businesses owned by the New Majority – are not political. It’s about business. I wrote this primer on the business case for supplier diversity in 2017. It’s a roundup of reasons why companies look for diverse suppliers, all of which contribute to their bottom lines.
Instability is bad for business
After armed rioters violently attacked the Capitol building on January 6, leaving 5 people dead, corporations with political skin in the game froze their PAC money. Some to both parties’ elected officials and some to just those who fanned the flames of the rioters by lying about the fact that Biden won a free and fair election. Looking at the list – from Northrup Grumman to JPMorgan Chase to Walmart. It’s not hard to see what these companies have in common. They believe violence, strife, and political instability are bad for business.
This happened in days after the Capitol was attacked. There were not focus groups, data, surveys. The government affairs divisions of these companies made a decision based on what was right. Yes, they have overarching data that will support their bottom line. But it’s hard to imagine that previous to January 6th they were asking consumers the following question: “If we supported elected officials who were complicit in an overthrow of our government and the democratic ideals of America, would that negatively affect our brand in your eyes?”
Supplier Diversity programs are good for business
Many of these companies are the same ones that have robust supplier diversity programs – the policies and procedures associated with looking at what major purchasing organizations buy and from whom. I am not the first person to notice how supplier diversity can have huge positive impacts on an organization and the economic community as a whole. Procurement trends are pointing to supplier diversity as business critical. They are critical to mitigate disruptions in the supply chain like we saw as a result of COVID-19. And they are necessary to respond and reflect the commitment of business leaders to the diversity, equity and inclusion claims during the racial justice protests this summer.
The need for resilience didn’t end with 2020
A theme throughout 2020 and as we enter 2021 in much the same position is resiliency, grit. I proposed last year that the small businesses who stay alive will be the ones who thrive once the pandemic is over. It’s not just small businesses that are recognizing this reality. Large institutions, multinational corporations, and even American democracy are challenged. We’re realizing many foundational things we took for granted are fragile after all.
Showcasing the commitment to diverse suppliers
Recently, I posted this article on LinkedIn about the sales impact from Giant’s initiative to highlight diverse suppliers on their shelves in the following categories – women, Black, Asian-Indian, Asian-Pacific, Hispanic, LGBT, or Veteran owned. It’s one of several moves to not only buy from diverse businesses but to make consumers aware of that commitment and participate. Another is the 15% pledge that many retailers have taken to devote 15% of shelf space to Black-owned brands.
One comment that stuck out to me was how supplier diversity will also drive resiliency among brands. The data certainly supports that.
Several people weighed in and noted that the sales impact is certainly one metric to consider but there are others including brand loyalty. If the shelf labels drive people to the store but they ultimately buy different products, that’s still a win.
Know your target client
I coach my clients to know their target companies – the people and the corporate objectives – so they can respond to their needs and priorities with the right solutions. As I consider the events over the past several months, and weeks, it occurs to me that being a diverse supplier is a solution. Participating in these programs that diversify and strengthen corporate supply chains are – or should be – an integral part of their strategic plans. Doing business with diverse suppliers will make the procurement organizations, and the companies overall, more resilient.