Supplier diversification can exceed expectations says Debbie Lentz
When we think of diversity in business we often assume we’re talking about the workforce, says Debbie Lentz, president of global supply chain at RS Components. But diversity lies deeper than ensuring your team fits across a range of age, race, gender and cultural backgrounds.
And much of what has been learned from a diverse workforce can also be carried across to the procurement within a supply chain, she says.
A brand’s moral stance continues to have grave importance on sales, and for those businesses without large marketing budgets to make instant changes, finding a place to start can be a challenge. It pays to be strategic with the suppliers you select; think logically about geographic locations. In today’s volatile economy, a flexible and resilient supply chain will ensure multiple options.
1. Business magnet
While we’re seeing more and more businesses improve their standing to meet the needs and expectations of customers, she says, we also need to acknowledge that this desire also sits with businesses. Many business relationships are being built because of mutual respect for strong and good credentials. Hackett Group’s 2019 Supplier Diversity Study revealed that companies dedicating 20% or more of spend to diverse suppliers can attribute 15% of annual sales to supplier diversity programmes. Social, economic and environmental issues have encouraged businesses to do their part.
2. Innovation boost
Supplier diversification can present innovation and help provide solutions for future generations of customers. Research has found organisations with above-average gender diversity and levels of employee engagement outperform those where it is below-average. People of different backgrounds, races, and nationalities approach work and human interactions in multiple ways, making inclusive companies 1.7 times more likely to be innovative leaders in their market, according to Josh Bersin/Deloitte research.
3. Talent magnet
Inclusion and diversity can drive talent towards your business, she adds. In engineering, for example, where according to the Institute of Engineering and Technology there’s an estimated worsening annual deficit of 59,000 engineering graduates and technicians, diversity best practice has the power to bridge the gap and open up the full potential of the engineering supply chain.
4. Mitigating risk
Supply chain continuity is at risk from natural disaster, cyberattack and political unrest. Diversification throughout the supplier base offers risk mitigation so functions can continue to run smoothly. Sourcing from both small and large organisations has its benefits; while SMEs provide efficiency at local levels and often more innovative services, larger organisations have a wider scope of reach and can often supply a larger range of products. Having a broad supplier base spreads risk.