7 Reasons Why Your Company Needs a Supplier Diversity Program

7 Reasons Why Your Company Needs a Supplier Diversity Program
Posted by PS Energy Group on

Common business strategies you can explore if you’re looking to gain a competitive advantage include:

  • Improving customer service
  • Building brand awareness
  • Investing in innovation
  • Differentiating your company from the competition

While these strategies are effective, there’s another strategy worth considering that is just as effective. That strategy is supplier diversity, and its impact on the bottom line for companies with long-term supplier diversity programs is impressive:

  • 133% greater ROI than companies that use the suppliers they have traditionally relied upon
  • An additional $3.6 million to the bottom line for every $1 million spent on procurement operating costs

Supplier Diversity: Why You Need to Get With the Program

Supplier diversity is a business strategy incorporating diverse-owned companies, suppliers, and vendors into a company’s supply chain and business practices. The goal is to create a more inclusive supply chain and equitable business environment.

Diverse-owned companies are at least 51% owned and operated by members of racial or ethnic minorities, women, veterans, LGBTQ+ individuals, or people with disabilities.

The concept of supplier diversity is nothing new. It has been around since 1953 with the establishment of the Small Business Administration. Due to the multiple advantages companies gain by partnering with diverse suppliers, supplier diversity programs are increasingly gaining traction. They’re now considered business critical.

Advantages of a long-term program include:

  1. Enhanced Innovation and Creativity
    One of the primary benefits of supplier diversity is the infusion of new perspectives and ideas in business operations. Diverse suppliers bring unique insights and innovative approaches to problem-solving. The result of this approach can lead to the development of innovative products and services that help companies stay competitive.

  2. Expanded Customer Base
    By partnering with diverse suppliers, companies can better connect with diverse customer bases. Diverse suppliers often understand specific cultural nuances and consumer behaviors within their communities. With this first-hand knowledge, companies can tailor products and marketing strategies to reach and engage diverse markets, expanding their customer base and driving revenue.

  3. Strengthened Brand Image
    There’s no doubt that commitment to supplier diversity can significantly enhance a company’s reputation as consumers, investors, and stakeholders increasingly value social responsibility and ethical practices. Demonstrating a commitment to diversity and inclusion can strengthen brand image. In turn, it helps foster customer loyalty and helps attract top talent since prospective employees often seek companies committed to diversity and inclusion.

  4. Enhanced Economic Growth and Community Development
    Small, diverse companies are crucial to job creation and growth within their communities. By providing these companies opportunities to participate in the supply chain, larger businesses help grow local economies, foster community development, and demonstrate a commitment to social responsibility.

  5. Increased Supplier Competition and Quality
    A diverse supplier base fosters healthy competition, which improves quality and cost-efficiency. Diverse suppliers often bring a high level of dedication and customer service, striving to exceed expectations to secure and maintain business partnerships. This competitive environment encourages all suppliers to continuously improve their offerings, benefiting the company and its customers.

  6. Improved Risk Mitigation and Supply Chain Resilience
    Supplier diversity can also enhance supply chain resilience. Relying on a varied pool of suppliers reduces the risk of disruptions caused by over-dependence on a single source. Diverse suppliers can provide alternative sourcing options, ensuring continuity when unforeseen challenges occur. This flexibility is crucial in maintaining a stable and reliable supply chain.

  7. Increased Tax Incentives
    Companies that use diverse suppliers are eligible for tax breaks from the federal government. Additionally, tax liabilities are reduced for companies that use diverse suppliers to supply labor or services to a project funded with federal or state grants or loans. Depending on the state, tax incentives on the state level may also be available.

PS Energy has been committed to supplier diversity and creating long-term value for customers, the community, and diverse suppliers since its incorporation in the State of Georgia in 1986. As one of the top Hispanic-owned and women-owned companies in the United States, PS Energy has created a Supplier Diversity Program to help facilitate the development of mutually beneficial business relationships.

Learn more about PS Energy’s Supplier Diversity Program and how you can participate here.