Which industries spend the most with small and diverse suppliers?

The high-tech, energy, and insurance industries spend the highest percentage of their budget overall with small and minority-owned businesses (SMBEs), according to a report.

The highest industry spenders with SMBEs, by percentage of total supplier spend, were high tech (20%), energy, (10.2%), and insurance (9.9%), followed by construction (9%), administration and support services (8.6%), and educational services (8%).

The Supplier Diversity Benchmarking Report aims to provide industries with contemporary data on small and diverse spend in their sectors, to help benchmark average diverse supplier spend as well as data on the spend of leading companies in their industries.

The Supplier Diversity Benchmarking Report, by supplier diversity solutions provider Supplier.io, aims to highlight the spending practices of leading companies.

The lowest spenders with SMBEs were transportation and warehousing (2.7%), manufacturing (2.5%), utilities (2.5%), real estate (2.3%), arts, entertainment and recreation (2.3%), and healthcare (2%).

Spend with SMBEs was “highly concentrated”, the report found. The analysis of 466 companies globally in 15 industries found the top 10 diverse suppliers received around 17% of total spend ($1.4tn).

This was despite more than 95,000 diverse suppliers existing throughout these companies’ supply chains. The report warned the high concentration of spend with so few suppliers represented a risk to businesses, and industries would miss the opportunity to develop new suppliers and have a bigger impact.

Companies could use this insight, however, to inform their supplier diversity programmes and decide where to focus their category spend with SMBEs.

It offered three recommendations for companies to improve supplier diversity programmes:

1. Assess programme health. Use reliable, comparative metrics and data from across companies to understand the current progress and achievements of companies’ programmes. Insights should be industry-specific and include similar goals as a company’s own.

2. Seek growth areas. Don’t just look at abstract, high-level figures – commodity specific and detailed data is key to understanding how to get the most out of programs across all possible opportunities.

3. Identify opportunities beyond your industry. To truly build supplier diversity into to procurement departments, firms should challenge themselves to take programmes to the next level and “find new ways to look at results and data from peers in other industries”. 

The report added: “Lower-performing industries had almost half the spend of the overall industry average, and higher performing industries had almost triple the spend of the overall industry average. When setting your benchmark, make sure you’re comparing to your industry peers.”

☛ Want to stay up to date with the news? Sign up to our daily bulletin.

CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates