Supplier Diversity: Driving Innovation & Opportunity

Supplier Diversity: Driving Innovation & Opportunity

An increasing number of companies are realizing the value of highlighting their commitment to corporate social responsibility (CSR) by diversifying their supplier base. Sourcing products and services from previously underutilized suppliers helps sustain and progressively transform a company’s supply chain, and shows commitment to supporting diversity in the community in which it operates.

By choosing to work with diverse suppliers, a company demonstrates dedication to supporting diversity in its business community and amplifying its impact through exposure to the marketplace.

Supplier diversity programs and regulations encourage or mandate the selection of suppliers that meet the following criteria:

  • Historically underutilized businesses.
  • Defined small businesses.

They also encourage or mandate the selection of companies owned by:

  • Minorities.
  • Women.
  • Veterans.
  • LGBT-identifying individuals.
  • Service-disabled veterans.

For some companies, supply chain diversity is a requirement, as it is mandated through such regulations as the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the U.S. Federal Acquisition Regulation (FAR). For example, under the FAR, any company that enters into a federal government contract for goods and services must offer equal opportunity to bid on contracts.

By adopting a diversity program, a company may be allowed to bid for more valuable government contracts, that carry more stringent requirements for diversity. They may also qualify for special procurement contracts reserved for companies that have committed resources to encouraging supplier diversity.

Learn how to evaluate vendors and best practices for engaging suppliers by downloading the [Guide] An Introduction to Supplier Qualification.

For companies that are not required to include supplier diversity, supporting diversity may have a number of financial benefits. A study by The Hackett Group discovered that supplier diversity programs increased business revenue by encouraging competition in the market, driving innovation and providing additional channels for procuring goods and services.

Encouraging Diversity During Onboarding

Standardized supplier engagement workflows can help a company more efficiently qualify and onboard suppliers, and ensure they meet any and all requirements for fit and reliability, including supplier diversity.  

Companies must be diligent in requesting documented proof of eligibility when diversity is a contractual requirement. Providing proof of qualification should also be part of an annual or biannual supplier review process, to ensure the ongoing validity of the supplier’s diversity status. Independent third parties, such as the United States Small Business Administration (SBA) evaluate supplier eligibility to claim diversity status.

By streamlining the supplier qualification, companies can preemptively mitigate supplier risk and help ensure business continuity. To learn more about how Assent can help support your supply chain data management needs, contact