Meta’s logo unveiling. The company (formerly known as Facebook) found innovation had increased as it diversified its supplier base © Photo by Justin Sullivan/Getty Images
Meta’s logo unveiling. The company (formerly known as Facebook) found innovation had increased as it diversified its supplier base © Photo by Justin Sullivan/Getty Images

Supplier diversity rising – but more work needed around data

Board-level support for supplier diversity has risen significantly over the past six years, but efforts are being held back by poor data standards, a report has found.  

Buyers have not stopped supporting supplier diversity initiatives – even as economic conditions have worsened, according to’s 2023 State of Supplier Diversity Report.

Nearly two thirds (59%) of respondents said the current economic climate had not slowed their financial support for it down, while 23% actually said it had accelerated their ambitions.

Sourcing managers were the most supportive level of management (70%), followed by senior management (61%) and CEOs (52%). 

However, data was found to be the biggest challenge in strengthening diversity initiatives, with 29% of respondents raising issues around accuracy, and 5% citing audits as their biggest challenge. 

The report found that 67% of respondents used third-party data to monitor supplier diversity status, and this was the main way data was tracked, up from third-place ranking last year.

As a result though, ‘tracking and reporting metrics’ was ranked as the number one supplier diversity problem that needed tackling. 

This came ahead of other issues, including advocating and meeting with businesses, supplier discovery, and onboarding new suppliers.

Commenting on the data, CEO, Aylin Basom, told Supply Management: “One of the primary reasons to invest in supplier diversity a few years ago was just to meet compliance with government regulations. In the past six years, that number has gone down – now, customer requirements has overtaken it.”

She added: “For a lot of companies, supplier diversity is aligned with their values, their corporate culture, but it also has corporate value. It improves supply chain competitiveness, and in the current economic conditions, it can make a big difference.”

According to the data, eight in 10 (81%) of respondents now cite alignment with corporate culture as one of their top reasons for investing in supplier diversity, while two-thirds (66%) said its improvements to supply chain competitiveness was the top reason to do so.

Just over half (53%) pointed to its enhancement of brand image; 40% cited the importance of customer requirements, and 36% said government compliance was their top reason.

Overall, the push for supplier diversity is accelerating, the report found.

Seven in 10 (72%) of respondents have clearly defined supplier diversity goals, up from 68% last year, and 48% now include supplier diversity metrics in their management performance objectives –up from 36% last year.

Two thirds (67%) have now created an annual supplier diversity plan.

According to Basom, buyers who want to get started on their own supplier diversity journey should first develop a full understanding of their supplier base.

“Don’t set goals yet,” she emphasised. “Start with finding out where you’re at, whether you already have diverse suppliers and who they are. Then look at KPIs, the most important things that are drivers for your business. You need to start thinking about how you can tie diversity to that – maybe you really value innovation, so supplier diversity can be one way to develop that core initiative."

Basom described how Meta (formerly Facebook) had innovation as one of their core values, and the firm had told that is it diversified its supply chain, its levels of innovation increased, because smaller, more diverse suppliers were able to be more “nimble” and come up with “more interesting ideas”, as opposed to larger suppliers who were “stuck in their ways”.

She added: “Proactiveness is key. Start looking at your upcoming contract renewals, instead of waiting until the last minute. Go out to the market and find out where the diverse suppliers are, and how they can give you an edge over the competition.”

The survey was conducted across “hundreds” of supplier diversity professionals about business, executive support, program management, data, results, and more.

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