The landscape of business transforms quickly. It is pulled and shaped by the tides of society, and must mold itself to be successful with each turn. In recent years, the progression that has directed success in the most exceptional businesses is an awareness of the importance of diversification. Supplier diversity in particular is emerging as a powerful tool for launching a business to its next level.
Supplier diversity is a way to classify the benefit of choosing products and services provided by organizations which were established by a wide variety of people, cultures, and lifestyles. The array of backgrounds and perspectives offered by these organizations is vital for maintaining a successful business, able to relate to an extensive customer base. At CQ fluency, we feel as though this description fits us perfectly.
There are metrics established to quantify what it means to be a diverse business. To earn the title, a supplier must meet the standards of their certifying entity. Some examples of these include the National Minority Supplier Development Council, the Women’s Business Enterprise National Council, the National Gay and Lesbian Chamber of Commerce, and the Veteran’s Affairs Office of Small and Disadvantaged Business Utilization. Certification awarded by one of these programs proves a supplier is managed, owned, and operated by a qualifying group.
The benefit of supplier diversity extends beyond merely adding a new, interesting platform to an organization. It is an effective and important business strategy. Procuring services from a diverse supply chain is key to increasing efficiency and overall success. Companies cease to be relevant when they lose sight of the value earned by expanding their reach to include diversified organizations. The only way to fully understand the community your company serves is to create partnerships that reflect the spirit of that community. The most successful organizations integrate their business with the unique cultures represented by their customers and employees.
The national economy is also intrinsically tied to the success of small businesses run by largely diverse groups. According to the U.S. Census Bureau’s 2012 Survey of Business Owners, receipts from minority-owned businesses climbed to $1.4 trillion within five years. The bulk of this money went straight into bolstering the United States economy. The same survey revealed that minority-owned firms accounted for almost 29% of all U.S. firms in 2012. Comparatively, women-owned firms accounted for the same number of economic output and represented 36% of all U.S. firms. These numbers prove how our nation’s markets are changing. Investments made into certified diverse organizations will not return void.
The success of these smaller businesses increases job growth for minorities who might otherwise struggle to find an opportunity due to a struggling economy or a disadvantaged community. The positive cycle continues as those individuals are now able to financially contribute to their communities and further support the stability of the economy on a national level. They will now have a major voice in how markets continue to adjust and grow based on the needs of their consumers.
With all this in mind, it’s easy to acknowledge the benefits of establishing supplier diversity as an industry standard; however, moving forward with this ideal requires careful thought. Here are some best practices for building supplier diversity:
Establish clear metrics and share them transparently
Set targets and determine how they will be measured. A tangible standard will ensure accountability at all levels of your organization. Go one step further by publicly sharing these standards, i.e. a supplier diversity policy shared on your website, and include all data related to program performance. Announcing your intentions will not only keep your organization’s focus in the right direction, it will show your clients and providers where you place the most value.
Bring your leadership on board
The only way to effectively steer a ship is if the captain can clearly see the route ahead. To excel in business, it is vital to ensure that your steering committee understands the initiative’s direction and is completely committed to its success. Invite your leadership to engage with minority owned and women owned business enterprises. Allow them to make connections and verify the benefits of building a diverse supplier base.
In 2012, DiversityInc named thirteen companies as the most successful in establishing supplier diversity best practices. All of these companies have top level management determine and enact supplier diversity goals and metrics. Their leadership set the stage for success in their industries.
Integrate the Idea
After your executives are on board, bring in the rest of your team. Expand your network by training your team to seek out and connect with diverse companies. Organizations such as the Minority Business Development Agency and U.S. Small Business Administration host numerous conferences throughout the year which are designed to foster connections.
Take this one step further by being mindful of the people you add to your team. Diversity starts at the ground level. By considering how every department can be enhanced with a mix of culture, gender, or background, you can build to broader initiatives easily.
Organize Your Data
Create a database of all of your suppliers which includes their price quotes, contracts, business information, size, and any other factor you find relevant. This database should include both diverse and non-diverse businesses so that you can easily compare rates and competencies. If you see a particular area in your business where suppliers could be more diversified, focus your efforts there first. Over time, you should be able to see the long term effects that diversifying your supplier chain has had on your customers and your own organization’s culture.
The Importance of Small Business Enterprises and How We Relate
Small businesses are of vital importance to the strength to the economy. They serve as the backbone of the countries largest corporations. Since 1995, small businesses have generated 64 percent of new jobs, and paid 44 percent of the total United States private payroll, according to the Small Business Administration.
At CQ fluency, we realize this large impact that small businesses have on the economy. Our feelings toward this way of doing business is ingrained in our mission as we are both a diverse supplier as well as a certified minority business enterprise as well as women-owned small business. Our leadership places a high regard on the privilege of maintaining this certification and we convey this proudly.
The concept of supplier diversity and its best practices is a high value at CQ fluency. Diversity is a crucial part of our success. We actively seek out certified diverse suppliers and acknowledge that their input is integral to our daily operations. It is only possible for us to tailor our services to resonate in multiple markets if we understand the needs of those markets. We are proud to serve, employ, connect, and procure services from diverse organizations and individuals who drive our passion for culture, diversity, and people.