Supplier Diversity Programs 101

Supplier diversity programs are essential because they promote economic inclusion and foster lasting economic growth and impact across communities.  Furthermore, when organizations provide opportunities for small and diverse businesses to compete and succeed, organizations benefit from a broad and growing pool of vendors, innovation, adaptability, unique perspectives, and increased competitive advantage. In this article we outline supplier diversity program basics as well as common supplier diversity program challenges, pathways to a successful supplier diversity program, and  more: 

A supplier diversity program is an initiative that encourages organizations to develop proactive, inclusive procurement practices aimed at engaging and doing business with organizations that are at least 51% owned and operated by historically underrepresented or underserved groups. This often includes minority-owned business enterprises (MBEs), small business enterprises (SBEs), women-owned enterprises (WBEs), veteran-owned small businesses (VOSB), and many more. These programs help to give small and disadvantaged businesses equitable access to more project opportunities. 

Federal, State, and Local governments, as well as healthcare, corporate, and general and civil contractors, establish Supplier Diversity Programs to help level the playing field for underrepresented individuals and businesses. Supplier diversity progams are important because they increase innovation, promote economic equity, and support economic growth and development. 

There are several factors to consider when you are implementing a supplier diversity program. If you’re a public agency, there are federal, state, and local rules you can refer to that outline program requirements and goals, such as the U.S. Department of Transportation’s USDOT DBE/ACDBE program. For corporate organizations, you can follow similar rules or  develop your own. In general, you’ll want to set clear goals and objectives for your program, such as supporting specific community groups or meeting compliance objectives, that align with your organiation’s overall mission and values.  Additionally, supplier diversity initiatives require key executive leadership and stakeholder buy-in – this helps to ensure your program will get adequate resources, support, and alignment of priorities. Next, you’ll need to answer and define key questions such as: how will you identify, engage and source small and diverse businesses? How will you collaborate across your organization’s key teams, including the procurement team? How will you manage, track and report on the progress of your program? How will you highlight your program’s impact, grow your vendor ecosystem, and more?

Not every Supplier Diversity Program is the same. There can be deviations between federal, state, and local programs. Here are some challenges many organizations run into when implementing a supplier diversity program:

Studies show that organizations with supplier diversity programs that use diverse suppliers have an increase in profitability between 25 – 35%. Research also shows that small and diverse vendors can provide flexibility that larger organizations can’t. Having come from different and unique experiences, small and diverse vendors bring new ideas and innovation to the table. Additionally, including small and diverse vendors in public projects provides jobs and economic benefits within the community. To learn more about the positive impact that supplier diversity programs can have on organizations and the surrounding communities, read our blog Transforming Your Disadvantaged, Small or Local Business Inclusion Program: Navigating New Challenges and Boosting Efficiency in 2024

You can qualify as a diverse supplier if you are at least 51% owner of your business and you are a minority, woman, veteran, identify as LGTBQ, disabled, or other disadvantaged business owner. Other factors considered include your personal net worth and your organization’s annual revenue. 

Using B2Gnow’s Business Diversity Management software to manage your Supplier Diversity Program is one of the best ways to find and engage with small and diverse suppliers. B2Gnow has the largest database of certified suppliers in North America, most of which is real-time data. The B2Gnow platform makes it easy to search based on various criteria so that you find suppliers that match your project and reduce the time spent searching. The B2Gnow platform also has outreach capabilities that allow you to match with vendors, and then send them emails to solicit their business for that project, all within the system.

With B2Gnow’s Business Diversity Management software, you can run a successful Supplier Diversity Program and set defensible goals based on the project size, monitor progress, compare goals to actuality, track spend, track subcontractor payments, and run reports to share with overseeing agencies. Other ways to measure success include looking at the amount of revenue the suppliers you hired have generated in their communities and the hiring rate of diverse workers on your projects.

Supplier diversity programs are the fabric of economic growth and pivotal in creating lasting impact across communities. For over 25 years, B2Gnow Supplier Diversity Software brings a wealth of knowledge to help organizations start, pivot, and grow supplier diversity programs and achieve compliance goals. From states to state DOTs, cities, counties, transits, airports, education, general contractors, healthcare, and more – organizations benefit from one solution to manage vendor certifications, track small and diverse vendor utilization, manage prevailing wage labor compliance, and generate reports for program compliance and results. Organizations save up to 60%-80% of time spent on administrative tasks, freeing up time for endeavors that make a bigger difference in the communities they serve. Learn more and request a demo: https://b2gnow.com/request-a-demo/