Today’s business environment and rapid globalization has created an environment where supplier diversity impacts modern procurement.
This refers to having a diverse variety of suppliers to procure from. It may include but is not limited to, minority-owned, small and micro sized, women-owned, and more.
Also Read: Procurement Outsourcing: Pros, Cons, and Considerations for Success
Discover how supplier diversity impacts modern procurement.
Embracing supplier diversity has a major impact on modern procurement. It influences every aspect from risk management to corporate social responsibility (CSR) to innovation.
Fostering Innovation and Competitive Advantage
One of the major reasons supporting the importance of supplier diversity is the ability to foster innovation and creativity. A diverse set of suppliers can bring fresh perspectives, unique ideas, and solutions that drive product/service differentiation.
A firm sourcing from a wide range of suppliers can gain access to technologies and processes that may not be available with conventional supply chains.
This fosters the possibility of having a competitive advantage and helps better fulfil customer demands.
Improving Corporate Social Responsibility (CSR) and Brand Image
Modern procurement is viewed as a way to support a firm’s large-picture CSR goals. It delivers this by prioritizing diverse suppliers, specifically firms that show commitment towards promoting DEI.
Working towards community support and inclusion improves the firm’s overall image and brand reputation.
For example, a firm that actively supports women-owned businesses helps close the gender gap while also contributing to economic growth.
Enhancing Risk Management
Supplier diversity can enhance the business’s risk management strategy. By diversifying the supplier base, firms can decrease their dependency on a small group of suppliers. This reduces supply chain risk.
Over-reliance on one or two large suppliers can create dependency risks during time of uncertainty.
Additionally, engaging with a diverse group of suppliers can help firms identify and avoid potential environmental or ethical issues.
Creating Access to New Markets
Diverse suppliers often have unique connections to different geographical, cultural, and demographic markets.
By engaging with a wide range of suppliers, firms can gain access to new markets to market their products or services.
These suppliers can act as the bridge to fresh and underserved markets. For example, partnering with a minority-owned business can open door to untapped regions that can contribute significantly to driving revenue.
Closing Thoughts
In conclusion, incorporating supplier diversity into modern procurement strategies is more than just a moral or social imperative. It is a strategy that garners tangible benefits to a businesses.
