By Jan Norwood

According to a recently released McKinsey and Company white paper, Supplier Diversity is doing well. The Department of Commerce made the Minority Business Development Agency (MBDA) permanent in 2021 and expanded the directives to coordinate and partner with minority business enterprises (MBEs). Leading companies have committed more than $50 billion to partner with diverse suppliers over the next decade (Prilepok, 2022). Diverse suppliers have shown they can compete in the marketplace by offering corporate partners a yearly cost savings of 8.5 percent (Prilepok, 2022). Working with diverse suppliers increases wealth and improves intergenerational outcomes (Prilepok, 2022). Over 60 percent of Millennials demand their companies perform well on social responsibility or they will not work at that company (Prilepok, 2022). It is a win-win situation for corporations and diverse suppliers to seek partnerships.

There is still room for improvement in high paying sectors such as finance, IT, legal, insurance, and engineering. In a white paper released in May 2022, McKinsey and Company urged companies to add value in their supplier diversity programs by including these higher- growth sectors and increasing diversity across the business ecosystem. Partnering with diverse suppliers shows a company’s commitment to diversity, equity, and inclusion and improves employee satisfaction while projecting a positive brand reputation.

Partnerships with diverse suppliers can help provide a remedy to many top concerns for companies. Diverse suppliers tend to have the ability to customize, innovate, and focus on specific customers when compared to major organizations. Some types of partnerships are listed below.

Channel partners- Diverse suppliers can sell or distribute a company’s product to end consumers.

Platform partners- Companies can highlight their relationships with diverse suppliers on their platforms and promote products from the diverse suppliers.

Strategic relationships- Diverse suppliers can provide complementary services.

Joint ventures and investments- New business ventures can be formed which can help grow diverse suppliers by investing in them.

In the end, all businesses- big or small, can benefit by investing in relationships with diverse suppliers.

Resource

Milan Prilepok, S. S. (2022, May 17). Expand diversity among your suppliers-- and add value to your organization. Retrieved from McKinsey & Company: https://www.mckinsey.com/business-functions/operations/our-insights/expand-diversity-among-your-suppliers-and-add-value-to-your-organization