2021 State of Supplier Diversity

By Jan Norwood and Lamont Robinson

If you have been a supplier diversity professional for more than 5 years you should be excited about the future of the profession. For the first time in my 19 years as a supplier diversity professional I have developed hope that corporations are truly understanding the importance of developing and purchasing from diverse businesses. While we are far from where we need to be globally in our support of diverse businesses, we are at least trending in the right direction.  The 2021 State of Supplier Diversity, which was released by supplier.io in June 2021, asked 177 respondents about the state of their diversity supplier programs. In 2019, 42% of those surveyed had supplier diversity programs that were 10 or more years old. In 2021 40% of the respondents said their Supplier Diversity programs had developed in the last two years.

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Formal programs were found in 56% of the corporations while 22% were implementing a new program. Of the businesses surveyed, 22% either had no program, but tracked their supplier diversity spend or had no program at all. The diversity groups tracked for spend included: minority- owned (94%), women-owned (91%), Veteran-owned (87%), LGBTQ (80%), Disabled-owned (75%), small business (68%), and HUB Zone business (52%).

When looking at the maturity of their Supplier Diversity programs, 37% of respondents said their Supplier Diversity program is integrated into their sourcing and procurement practices; and 23% rated themselves as having a strategic approach that is fully integrated into the organization. Other respondents (23%) stated they had a general knowledge of supplier diversity but had not integrated the program into sourcing processes. Twelve percent (12%) of companies were in the starter phase with a formal program that is managed separately from the sourcing and procurement practices. Only 5% did not have a Supplier Diversity program in place.

The level of leadership support for supplier diversity ranged from 48% actively engaged to 6% minimally engaged. The annual revenues of the respondents included 28% with revenue between $1billion- $10 billion, 11% had over $50 billion in revenue, 20% had 10 billion- 50 billion, 27% had less than 250 million, and had 11% $500 million- 1 billion.

Corporations with existing supplier diversity programs have struggled with achieving a successful level of spend with diverse suppliers. Advanced supplier diversity programs spend more than 15% of their overall spend with diverse businesses. The average diverse spend is only 5.9%, which should give supplier diversity professionals less angst about their programs’ success while at the same time inspire them to seek strategic ways to significantly increase their partnership with diverse businesses.

While spend is always a vital metric to measure the success of supplier diversity programs, respondents gave various answers to why they engage in Supplier Diversity. Answers provided in the survey included:

  • Corporate social responsibility - 80%;

  • Alignment with corporate culture and work force inclusiveness - 79%;

  • Improve supply chain competitiveness- 53%;

  • Enhance brand image- 48%;

  • Customer requirements - 43%;

  • Government compliance- 43%;

  • Mirror customer base 43%; and

  • Increase sales 21%

Corporate benefits from supplier diversity was significant in 38% of businesses and 35% had a measurable impact. Some impact of supplier diversity was seen by 24% of respondents and 2% claimed to see no impact.

Building communities was a primary driver for the establishment of supplier diversity and continues to influence corporations to build programs. Diverse suppliers are typically a large employer of individuals from underserved communities. The impact of supplier diversity on the community was reported as significant in 51%, measurable in 30%, and 17% saw some impact.

Challenges to supplier diversity that were seen as “somewhat” to “extremely” challenging included:

  • Finding qualified Diverse suppliers- 75%;

  • Adequate staffing for SD program in 67%;

  • Standard practice of including diverse suppliers in sourcing 65%;

  • Adequate budget to meet the objective of the program 65%; and,

  • Establishing a business case 32%.

 

As we continue to see the recent increase in the importance of supplier diversity, mostly driven by the death of George Floyd and subsequent social unrest movement, we still have not created an equal or even fair playing field for diverse businesses. The 2021 State of Supplier Diversity report inspires those of us that are passionate about creating that utopic level of neutrality that will, in essence, make our roles as supplier diversity professionals obsolete.

Resource

supplier.io. (2022, September 23). Retrieved from 2021 State of Supplier Diversity Report: https://www.supplier.io/resources/download-the-2021-state-of-supplier-diversity-reports