State of Supplier Diversity Report for 2022
By Jan Norwood
Supplier.io recently released the 2022 State of Supplier Diversity Report. The report outlines the latest trends in corporate supplier diversity programs. The fifth report contains the largest data collected by supplier.io.
The respondents included consulting/professional services – 60%, staffing- 44%, information technology- 41%, advertising and marketing- 37%, and construction – 33%. Of the companies with a supplier diversity program, 45% have a formal program while 12% of companies are implementing a new program. The number of companies without a supplier diversity program, but track the diverse spend is at 19%. Respondents without a supplier diverse program is 24%. In 2022 21% of companies report having a supplier diverse program that is less than one year old. Programs with ten plus years have increased from 4% in 2017 to 34% in 2022.
The spend of respondents with diverse businesses was above the overall industry average of 3%. The average spend with diverse suppliers was 5.9%. The company’s industry and the maturity of the supplier diversity program had a direct effect on the amount of spend.
Global supplier diversity increased to 20% in 2022 up from 17% in 2021. There was a slight decrease in the programs that have a presence in the United States and Canada. In 2021 that percentage was at 9 while in 2022 it was 7%. Global suppler diversity programs represent 13.2% in 2022.
Why participate in supplier diversity? Respondents (81%) stated their reason for participating in supplier diversity is alignment with corporate culture and workplace inclusiveness. Slightly less than 80% cited corporate social responsibility as the reason to support supplier diversity. Other respondents stated their reason was to improve supply chain competitiveness- 63%, enhance brand image- 45%, customer requirement- 40%, and less than 50% due to government requirements.
The benefit of supplier diversity for corporations included appositive impact on the company internally and externally in 93% of respondents. This shows an increase of 15% from 2021.The success of supplier diversity is tracked through the opinion of the companies’ employees in 40% of the companies. Success is tracked in looking at brand reputation in 54% of the respondents.
Level of management engaged with their company’s supplier diversity initiatives include 31% of Board of directors, 61% of CEOs, 49% of CPOs, 53% of chief Diversity and Inclusion Officers, 62% of Sourcing Directors, 53% Senior Business owners, and 68% Sourcing managers.
The impact of Supplier diversity in 2022 was measured in three ways. Spending with diverse businesses- 85%, economic impact of your program 39%, and job creation at diverse businesses 28%.
Policies and Processes for supplier diversity programs are a must to ensure the longevity of the program. Respondents reported that 32% of organizations do not have clearly defined goals. Supplier diversity metrics was not included in management’s performance objectives in 62% of organizations.
Integration of supplier diversity into the procurement processes was highly encouraged but not mandatory in 54% of companies. Inclusion of diverse suppliers was mandatory for all sourcing projects in 19%. Supplier diversity was included if required by customers or regulations in 11% of companies. Diverse supplier inclusion was mandatory for sourcing projects above a certain dollar amount in 10% of companies, and supplier diversity was included on an ad hoc basis for 6% of respondents.
Only 61% of companies are currently training buyers on what they want to achieve with their supplier diversity program. Forty-eight percent of respondent buyers received training for including diverse suppliers in sourcing opportunities as well as learning about utilizing tools for supplier diversity. Forty-three percent of the companies focused on educating owners on why diverse suppliers should be included in sourcing activities.
Respondents had several challenges listed in their efforts to grow and establish their supplier diversity program. Companies found the following to be somewhat to extremely challenging in the 2022 survey: finding qualified diverse suppliers- 33%, adequate staffing for the supplier diversity program- 28%, standard practice of including diverse suppliers in sourcing- 34%, adequate budge to meet the objectives of the program- 27% and establishing a business case- 28%.
In looking at program infrastructure, 78% of respondents have at least one full-time person dedicated to supplier diversity. Respondents that had an annual plan for Supplier Diversity with goals and planned activities was at 67%. Companies that did not include supplier diversity metrics in their management performance objectives was at 62%.
Overall, supplier.io’s 2022 State of Supplier Diversity Report validated that supplier diversity continues to increase in awareness and importance on a global scale. Supplier diversity professionals often connect the social unrest events from 2020 to the elevation of the practice and look forward to seeing the continued strategic growth of the initiative.
Resources
supplier.io. (2022, October 22). Retrieved from 2022 State of Supplier Diversity Report: https://www.supplier.io/resources/download-the-2022-state-of-supplier-diversity-reports
