Why are firms struggling to identify diverse suppliers?

1 October 2021

Difficulties identifying women and minority-owned business enterprises (MWBEs) and a lack of data are preventing organisations achieving greater supplier diversity.

A global survey, involving around 90 attendees at supply chain webinars hosted by Jaggaer and Tealbook, found 70% of organisations worldwide claim to have prioritised supplier diversity.

But while more than half (53%) of North American respondents said supplier diversity was a “high priority”, this fell to just 17% among European organisations.

The survey suggests the Black Lives Matter movement and calls for diversity have had a strong influence in North America, where 68% agreed or strongly agreed it had heightened internal pressure to boost supplier diversity initiatives.

However, only 23% of respondents globally considered they had a highly diverse supplier portfolio and were implementing “progressive and impactful supplier diversity initiatives”.

The two biggest obstacles to progress were “difficulty identifying diverse suppliers that also meet procurement criteria”, cited by a third of respondents, and a “lack of supplier diversity data and insights” (27%).

One in six (17%) said they felt unable to verify supplier diversity claims and 11%  said they simply “don’t know where to start”.

While no North American respondents said they had not started or invested in supplier diversity initiatives, this applied to 49% of European respondents.

European companies that expressed a desire to increase supplier diversity said they were challenged to identify MWBE suppliers in tier two and beyond.

Worldwide, 38% of respondents said they had no visibility into supplier diversity – rising to 47% in Europe.

“It was a little disheartening that only one fifth (20%) have considered reaching out to suppliers with tools and coaching to help them scale the diverse supplier base (which fell to 7% among European respondents),” said the report.

“Positive reputational impacts”, mentioned by 52% of respondents worldwide, was most commonly cited as the prime benefit of increasing supplier diversity.

This rose to 66% in North America, while 56% of Europeans said supplier innovation was the most important benefit.

“It is possible that despite the importance of the issue, actual implementation projects have taken a back seat for the past 12 months as organisations focused on firefighting through the pandemic,” said the report.

“Nonetheless, we were surprised to learn that it is a board room issue in less than a half of organisations.”

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