3 Reasons Why Every Company Needs a Supplier Diversity Program

Written by Shon Yates, Chief Procurement Officer, Duquesne Light Company:

Last year was a stark and much-needed reminder about the importance of diversity, equity and inclusion (DE&I) in all aspects of our society. The business world is no exception. As our population becomes more diverse, companies that don’t invest in DE&I in their workforce and supplier base can find themselves getting left behind. Businesses that prioritize DE&I are well positioned to have a greater positive impact on their employees, customers, vendors and the communities where they live and work.

In particular, more companies are creating supplier diversity programs to maintain high moral and ethical standards and give their business a competitive edge. Here are three reasons why every company needs a supplier diversity program.

1. Supplier diversity helps fight structural racism

In the wake of last year’s social injustice and the racial reckoning that followed, many companies — including those in the Pittsburgh region — expressed their long-term commitment to DE&I. One way to show that commitment is through supplier diversity programs, which are more important than ever but still not widely adopted enough. Companies that are serious about DE&I would find value in diversifying their supplier base to reflect the customers and communities they serve.

One company that’s exceling in supplier diversity is UPS. After starting their supplier diversity program in 1992, the company now spends $2.6 billion a year doing business with about 6,000 small and diverse suppliers. Their goal is to increase that spend every year out of a deep desire to be “more inclusive and do what is right.” Not every company has the spending power of UPS, but their ideology is one that every business should adopt and apply. Having a supplier diversity program or strategy is, simply put, the right thing to do.

2. Diverse businesses benefit our economy

The Covid-19 pandemic has had an inconceivable impact on countless businesses, especially those that are Black and minority owned. Through supplier diversity programs, we can stimulate our economy and create more opportunities for disadvantaged communities, in addition to developing suppliers and driving generational growth.

According to the U.S. Small Business Administration, there were an estimated eight million minority business enterprises (MBEs) in the U.S. as of 2018. The National Minority Supplier Diversity Council reports that certified MBEs produce $400 billion in economic output. This helps create and sustain 2.2 million jobs and $49 billion in yearly revenue for local, state and federal tax authorities — and those figures keep rising.

Supplier diversity programs also lead to economic resilience in local communities, helping with job creation and higher wages. When workers make more, they’re more likely to put money back into their community. Companies that partner with suppliers from underprivileged places can further drive economic growth.

3. Companies invested in supplier diversity enhance their overall business

When companies invest in supplier diversity, they help increase the pool of possible suppliers and promote healthy competition, leading to better product quality and potentially lower costs. Bringing unique ideas and experiences to the table inspires innovative ways to meet customer needs.

Inclusiveness also makes supply chains more resilient and able to adapt. That’s especially critical now as businesses and industries have been forced to pivot during the pandemic.

Customers are also becoming more aware of companies' social responsibilities. It’s now widely expected that businesses be on the right side of key issues, including racial and gender equality and environmental sustainability. Many people are becoming just as, or even more, interested in a company’s values as they are in a product or service. As more consumer decisions are based on what a brand stands for, it’s important for businesses to show their commitment to social responsibility.

Aside from keeping companies competitive and our communities vibrant, supplier diversity programs are an excellent way to attract brand advocates that could support a business for years or even decades. And as I said earlier, they’re the right thing to do.

Visit DuquesneLight.com to learn about Duquesne Light Company’s supplier diversity efforts.

This article first appeared in the Pittsburgh Business Times on Feb. 16, 2021.