Business Case

Supplier Diversity is not something companies do for moral, ethical or social reasons. Like all aspects of procurement and purchasing, supplier diversity is a business decision, helping improve the bottom line and achieve other corporate goals by ensuring that all potential suppliers - regardless of background - are given an equal chance to compete for, and win, opportunities.

Leading companies find that, by strategically expanding their bid competitions to include minority-owned suppliers, they can:

• Drive down costs due to the increased competition
• Receive high quality goods and services
• Increase innovation and flexibility in goods and services
• Enhance brand loyalty
• Add a key strategic partner
• Enhance workforce diversity initiatives
• Improve connection to new markets and customers

Demographic data further demonstrates the need to improve the diversity of a company's supplier base. The US Census Bureau estimates that minorities will account for half of the US population by 2042, with ethnic purchasing power estimated at $3.6 trillion (T) by 2014 - double what it is today. Furthermore, the growth of small and minority owned businesses is outpacing the total US business population, setting the scene for these businesses to provide greater value for any company looking to evolve with the population.

When making the business case for seeking out minority-owned suppliers, companies tie the initiative to their overall strategic goals and objectives, identify desirable results and focus on directly related financial outcomes.

Performance First is named to reflect this reality, emphasizing that companies that maximize the competitiveness of their procurement and purchasing processes are choosing based on who can do the best job, regardless of the background of the supplier; when the company that wins the competition is minority-owned, both parties benefit.

Of course, improving the way that companies interact with minority-owned suppliers is a process, not a one-time investment. Even companies that have won national awards for their Minority-Owned Supplier Strategy see changes with senior executives, the business environment, and the marketplace, as well as streamlining suppliers. Investments in institutionalizing minority-owned supplier best practices - such as Performance First - can be a valuable tool to help companies meet their goals and maximize their competitiveness.

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