Supply Chain Diversity Brings Tremendous Opportunities
The proverbial face of the American marketplace continues to change and evolve, reflecting “The Great Melting Pot,” at an ever-growing rate. As the U.S. continues to grow in its diverse
composition, more and more large manufacturers and other types of corporations are embracing the importance of diversity among its supply chain partners.
Diversity in the Marketplace
As of 2014, the U.S. Census Bureau reports that approximately 38% of the U.S. population is part of a minority race. This number is expected to continue to rise significantly, with the U.S. population as a whole projected to become majority-minority in 2044. This means no one group will have a majority share of the total population. Moreover, the Census Bureau predicts the minority population will rise to 56% in 2060, compared to 2014’s 38%.
While the population continues to change in its diversity, industry has also seen a metamorphosis of the business landscape. According to the U.S. Small Business Administration (SBA), minority-owned businesses contribute much to the nation’s economy. The SBA reports that in 2012, eight million minority-owned organizations contributed $1.38 trillion in revenue to the U.S. economy, creating 7.2 million jobs in the process. Moreover, the U.S. Census Bureau reports a rapid increase in minority-owned businesses, increasing 5.8 million in number to 8 million, or 39%, from 2007 to 2012 alone.
Both the U.S. population as a whole and the business climate are experiencing a momentum in diversity that shows no signs of slowing. As such, companies are understanding the benefits of true supplier diversity programs.
Companies Embrace Change
Diversity businesses include Minority-owned, Woman-owned, and Veteran-owned organizations.
Businesses of all kinds, including large manufacturers and other corporations are recognizing the benefits of supporting a diverse U.S. population by employing these types of diversity businesses for a variety of products and services. Among some of the most notable organizations with significant supplier diversity programs are Johnson Controls, Lockheed Martin, Walmart, Google, General Motors, Ford, IBM, and many more.
Gwendolyn Whitfield, PhD, states in the Graziadio Business Review, “The most promising opportunity to explore new markets is through supplier diversity. Supplier diversity is the process of sourcing supplies from minority businesses and presents, perhaps, the most rousing opportunity for companies facing changing demographics: the chance to gain a competitive advantage in minority communities by partnering with key stakeholders.”
Whitfield further points out that many large enterprises are embracing the change of supplier diversity, with most of the Fortune 500 including supplier diversity initiatives in their corporate strategy. The National Minority Supplier Development Council (NMSDC) clearly agrees. The NMSDC reports that more than $100 billion in goods and services were purchased from minority-owned businesses by enterprise-size organizations in the U.S. in 2005; a steady increase over the course of a few decades.
In addition, approximately 68% of the Fortune 100 companies are national corporate members of the NMSDC, showing the importance of diversity among the most successful businesses in the U.S.
Some argue that many companies originally began supplier diversity programs as simply “lip service” or a check box to mark completed in the name of good public relations. But as studies have proven, organizations that truly embrace the importance of supplier diversity programs reap several benefits, including increased revenue, market share, productivity, talent, competitive advantage, and goodwill.
Stay tuned for Part 2 of our Learning Series in which we further explore the benefits of supply chain diversity and the use of veteran-owned businesses. Visit Universal’s Linkedin page again soon…