While DEI (Diversity, Equity, and Inclusion) is getting a lot of play in the world of hiring and corporate culture, many companies are still working on formalizing their approach to supplier diversity and partnering with Black-owned businesses. Building great relationships and diversifying the supply chain isn’t just a good decision when it comes to marketing or social justice – it’s a great business choice too.
According to one Hackett Group study, companies that have a strong commitment to supplier diversity have a 133% greater return on procurement investments than the typical business. Those companies also spend an average of 20% less on their buying operations and have procurement staffs half the size of competitor companies without diverse suppliers.
Diversifying the supply chain is also about connecting with and committing to the customers you serve. According to Forbes, Black consumers are 25% more likely to change their buying behavior, making them potential future customers for a brand that takes the time to consider their needs, preferences, and communities. A 2019 Nielsen study revealed other key statistics about Black American consumers:
- Black buying power grew from $320 billion in 1990 to $1.3 trillion in 2018.
- African Americans use corporate information apps 14 percentage points more than the average population; these apps are especially prevalent for finding Black-owned businesses to support.
- 42% of African American adults expect brands they purchase to support social causes, which is 16% more than the total population.
- Advertising dollars targeted at Black consumers declined by 5% between 2017 and 2018. In the marketing industry, African-Americans are approximately 5% of the workforce, with less than 100 Black women in leadership, C-suite, or positions of influence. Hispanic/Latino professionals are 10% and Asian Americans are 8.5% of the industry; white professionals are 85%.
What does all this mean?
In short, it means that Black buying power is bigger than ever and still growing, and yet many companies fail to invest in authentic ways to reach those customers. Supplier diversity can make a difference in every aspect of your business, attracting both consumers and workforce talent. It’s also an investment in the community. By contracting with local, small, and minority-owned suppliers, you’re investing in your own communities, helping to create local jobs and support businesses owned by members of historically underrepresented groups.
Supplier diversity might not be the most obvious or the flashiest step to take, but it’s an important one for any business truly committed to improving its DEI practices on every level. Take a chance, branch out, and discover the incredible quality and impact of these suppliers – your business and customers will thank you.