Supplier diversity boosts innovation and competition

19 October 2012

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19 October 2012 | Adam Leach

Companies can benefit from greater innovation, increased competition and improve their brand reputation by increasing supplier diversity.

Impact Report, published yesterday by Minority Supplier Development UK, argued by implementing a supplier diversity programme and increasing the involvement of women and minority-owned vendors, corporations can gain a variety of benefits. It highlighted greater intelligence on consumer trends by contracting with minority groups, brand benefits and an increase in innovation as a result of having a more diverse supply chain as key advantages.

It also highlighted broader economic motives for corporations to support minority-owned businesses in the UK. The report explained the majority of minority businesses are SMEs, offering companies the associated benefits, such as low administration overheads and greater flexibility. Further, it found when compared with all SMES, minority firms outperformed both in hiring more staff and product and process improvements over the past year.

Baroness Verma, under secretary of state and at the Department of Energy and Climate Change, said in the report: “Programmes that create inclusive, representative supply chains are an increasing necessity to achieve a more balanced economic growth that encourages participation from all members of society. In particular, ethnic minority-owned businesses are more likely to be located in areas of higher-than-national-average unemployment, youth unemployment and lower educational attainment.”

The report also surveyed the 31 corporate members of MSDUK and identified the most common barriers that restrict the ability of businesses to implement a supplier diversity programme. The most common, identified by 86 per cent of businesses, was a push towards regional or global sourcing. Availability of relevant suppliers was chosen by 57 per cent, a focus on cost reduction by 50 per cent, 43 per cent said outsourcing was a prime driver, and 36 per cent blamed a lack of resources.

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