Starting A Supplier Diversity Program

PurchTips - Edition #95 March 7, 2006

By Charles Dominick, SPSM

Should You Start A Supplier Diversity Program?

An increasingly popular purchasing practice is the implementation of supplier diversity programs.

Supplier diversity means using suppliers from different "categories." These categories are usually based on the ownership characteristics of suppliers.

Some organizations have categories such as veteran-owned businesses, woman-owned businesses, minority-owned businesses, and majority-owned businesses. Other categories can be based on supplier size (small vs. large businesses). A category for suppliers located in economically distressed areas is also common.

Organizations starting supplier diversity programs seek to include among their supplier base those suppliers who fall into certain categories that might have been historically disadvantaged for social or other reasons.

So why should you consider starting a supplier diversity program? Here are four reasons why others do:

1. Their organizations have a diverse customer base. By showing support for the demographic groups of its customers, an organization hopes to strengthen its appeal to them.
2. Their organizations serve customers that support supplier diversity. Companies that are committed to supplier diversity don't just select diverse suppliers. They require their suppliers to support supplier diversity.
3. The government may require it. When an organization accepts a grant or contract from the government, that organization may be required to subcontract a portion of the award to diverse suppliers.
4. Their organizations want to demonstrate social responsibility. Many organizations voluntarily utilize a diverse supplier base because the leadership feels that it is the right thing to do for society and the community.

Though it is a welcome approach, starting a supplier diversity program has its challenges. In a future edition of PurchTips, you'll hear about these challenges from experts and learn how to overcome them.

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