In today’s globalized world, sustainable supply chains and overall sustainability are a core concern for businesses in all industries.
Many businesses are focused on reducing their carbon footprint and switching to eco-friendly packaging, one overlooked aspect of sustainability is supplier diversity.
When you develop a supplier base that’s diverse and inclusive, you not only align your business with strong ethical values but also open yourself up to numerous tangible benefits. Below, we explore five powerful advantages of supplier diversity and social procurement.
1. Boost creativity and innovation
Social procurement involves sourcing the goods you need in a way that supports the environment and your local community. When you boost your social procurement initiatives by using a diverse selection of suppliers, you tap into a wealth of different perspectives, experiences, and ideas.
From this foundation of diversity, innovation and creativity can flourish within your supply chain, helping you develop better processes, services, and products. Indeed, research has found companies with diverse supplier bases raked in returns as much as 133% higher than the average performer in their sector. So if you want to stay ahead of the curve, supplier diversity might be the strategy you’ve been seeking.
2. Improve your approach to risk management
Relying on a small, homogenous group of suppliers can expose your supply chain to significant risk from threats like natural disasters, political instability, economic fluctuations, and cyber attacks. By contrast, supplier diversity spreads these risks across different regions and industries, adding much-needed resilience to your supply chain.
By partnering with suppliers that reflect your commitment to social and environmental responsibility, you also reduce the likelihood of bad press and boycotts due to ethical concerns.
3. Earn yourself a powerful competitive advantage
Most modern customers favor businesses that demonstrate social responsibility. A diverse supplier base is something people are learning to look for. Therefore, working on this aspect of your business can increase customer loyalty and boost your market share.
Supplier diversity can also open doors to new business opportunities. For example, many government agencies demand that their suppliers meet diversity criteria to be eligible for contracts. If you’re already operating with a diverse and inclusive supply chain, you’ll be able to access these and other lucrative contracts and markets.
4. Stay on the right side of the law and industry regulations
Many countries and regions have laws mandating diversity and inclusion in procurement. By proactively implementing supplier diversity initiatives, you can ensure you’re automatically compliant with these regulations, avoiding potential penalties and legal dramas.
You’ll also have data and documentation on hand in case of audits or inquiries. By taking a proactive approach like this, you can streamline the procurement process, reduce legal risks, and speed up the audit process if your company is examined.
5. Improve your reputation and standing in the industry
In an era where transparency is highly valued, a commitment to supplier diversity can enhance your corporate reputation. Consumers and investors are increasingly focused on finding businesses that prioritize social and environmental responsibility. When your supply chain reflects these values, you’ll find it far easier to earn the trust of investors and other stakeholders.
Supplier diversity also impacts employee morale, engagement, and retention. Most talented employees take pride in working for organizations that champion diversity and inclusion. So, your commitment to supplier diversity should help you attract and retain top talent.
Incorporating supplier diversity into your supply chain is not just a matter of social responsibility, it’s a strategic move with numerous powerful benefits. Armed with fresh insights and new innovations from your suppliers, you’ll be well-placed to remain competitive and adapt to changing market demands.