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What Is Supplier Diversity?

Article Details
  • Written By: Felicia Dye
  • Edited By: Melissa Wiley
  • Last Modified Date: 04 December 2017
  • Copyright Protected:
    2003-2017
    Conjecture Corporation
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Supplier diversity refers to a deliberate effort to engage in business relations with companies owned by certain classes of individuals. These may include businesses owned by ethnic minorities, veterans, and women. Many of these businesses have historically been underutilized, which can have widespread social and economic effects. Supplier diversity is a means to initiate change. Though many businesses make commitments to such efforts, they often face challenges when trying to fulfill them.

There are a wide range of suppliers of goods and services available. Yet it has been common to find that large corporations had a few suppliers, which were also commonly large companies. It was found that there was a need for change. Consumers commonly take note of the business practices of large corporations. Among the things that they may observe are the choices that those corporations make with regard to their partners and affiliates.

There are a growing number of instances where small businesses and members of the public protest against or condemn corporations that fail to utilize community-based suppliers. The reasoning for supplier diversity is not merely to pacify small business owners and sensitive consumers, however. If large corporations do not deal with these smaller businesses, they are essentially locked out of very lucrative markets. This can result in widespread adverse economic consequences, which can generally be avoided if better decisions are made.

For example, it is often found that women earn less than men. When looking at business ownership, however, it may be found that more women are entrepreneurs. If a deliberate effort is not made to engage female-owned businesses on a broader scale, this earning disparity may not be rectified.

Another of the benefits that results from this practice is that having a diverse network of suppliers can promote or increase supply chain diversification. Supplies of goods or services can be interrupted or negatively impacted by a wide range of issues. Businesses are generally encouraged to try to prevent this risk by having multiple sources.

Corporations that attempt to implement supplier diversity may face challenges in doing so. One problem that they may have is identifying the small businesses that can fulfill their needs. Smaller businesses often have limited budgets for marketing and promotion and as a result are unknown. Another issue that may arise is that the highest levels of officials in a corporation may express a commitment to supplier diversity, but those who are in a position to act on those commitments may not do so.

There are hopes, however, that a time will come when the need for these deliberate efforts will be eliminated. It has been found that younger generations entering the business world are more naturally inclined toward diversity. The number of successful entrepreneurs who are increasingly being given the spotlight tend to influence more positive attitudes about the potential of small and start-up businesses.

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