Supplier diversity promotes economic inclusion by incorporating diverse (minority, women, veteran –owned) and other underrepresented businesses into a company’s supply chain. This creates a more diverse and competitive group of suppliers, leading to job opportunities in marginalized communities, small business growth and development and stimulation of local economies. Additionally, diverse suppliers bring fresh perspectives and innovative solutions, enhancing a company’s overall performance and market competitiveness. The inclusion of diverse suppliers also aligns with customer preferences for socially responsible businesses, positively impacting a company’s reputation, brand image and most important, bottom line.
Senior Living Executive (SLE) had a conversation with Edmund Wilson, President and CEO of OMNI Procurement Solutions, who has over 34 years in contract, procurement and supply chain management at various levels. His company specializes in Lifecycle contracting which include: contracts, acquisition and procurement services, focusing on the development of solicitations, proposals, pricing, and small business utilization. They also cover contract management, compliance and providing a comprehensive view of the entire contract lifecycle. OMNI works with government agencies including Federal, state, municipal as well as commercial organizations both large and small. OMNI incorporates diversity, equity, inclusion into their services.
SLE: How does supplier diversity promote economic inclusion?
EW: Supplier diversity can be complex as it holds different meanings for different people. It’s not just about the number of diverse businesses a company uses, but also about the entire supply chain and every organization the company spends money with. Leaders should ask themselves deeper questions like, what are our goals and objectives. Is there management buy-in? Without support from the top, success is harder to come by. Additionally, and organization should ask ‘what are we spending money on?’ and ‘who are we spending money with?’. As part of the process it’s important to segment and categorize the supply chain by type of supplier (specialized, strategic, preferred, and general suppliers) and amounts of spend.
When discussing diversity, it’s necessary to closely examine the entire supply chain, identifying opportunities to diversify based on minority status, winning status, veteran status, service-disabled veteran status, and historically underused business zones. The goal of supplier diversity is to diversify the supply chain without compromising value or increasing costs. For example, if a company has $100 million worth of spend, they can explore opportunities to diversify their supply chain with new businesses without significantly raising costs. This approach helps develop other businesses, enhances their capabilities, and allows them to leverage relationships with other clients.
When working with large businesses or those with whom there is significant amount of spend, we expect them to incorporate some of our goals and objectives which include prioritizing the use of a diverse supply chain and working with different vendors. Make it clear that being a preferred supplier comes with benefits and expectations to promote opportunities for diverse suppliers, especially in the public sector.
SLE: Why is supplier diversity crucial for your bottom line?
EW: The idea of supplier diversity goes beyond mere altruism or good feelings—it also has a financial component. When considering diversifying the supply chain, we must factor in the economic impacts and return on investment. We strive for cost savings, cost avoidance and value added performance.
When assessing an organization that spends billions of dollars annually on goods and services, the first step is evaluating how we categorize our supply chain and thoroughly examining where we spend money and where we could better leverage our potential throughout the entire contract. Transactional utilization or the one time use is important, however developing an on-going relationship is preferred. Build a strategic relationship.
And many of you may be asking, ‘how do you know if the relationship working? And, what else can we do?’. Organizations should establish goals/objectives, milestones and metrics to monitor efforts and relationships. This includes meeting periodically to assess areas for improvement. Finally, report your progress to your team, celebrate your wins.
We can continue building the relationship by working with the smaller business on upcoming contracts and letting them know about set aside portions of that contract that will only be given to diverse businesses to give them an opportunity to compete. This is one method to build capacity and capabilities in order to leverage their pricing, increase efficiency, expand learning, and enhance their ability to be responsive. And now you’ve completely changed the equation because you have diversified the supply chain and increased your supplier base. You’ve also transitioned the supply chain from being transactional to strategic with increased visibility into how your organization spends and whom it is spending with.
SLE: How does everyone benefit from supplier diversity?
EW: Supplier diversity is essential for a thriving supply chain. When you prioritize working with diverse suppliers, everyone benefits. By including small, women, minority and veteran-owned businesses, you not only encourage healthy competition but also contribute to community growth. These diverse suppliers bring job creation, increased wages, and tax revenue to communities that may not typically experience such advantages.
The benefits of supplier diversity go beyond social impact. Businesses that work with diverse suppliers often enjoy better-quality products and services, lower costs, and increased innovation. By diversifying your supply chain, you reduce the risk of being reliant on a single supplier and create a network of stakeholders that contribute to the success of your company.
SLE: If there were just a few things that you would want our readers to take away after reading this article, what would they be?
EW: To make supplier diversity a reality, there are a few key actions you can take. First, understand your supply chain by identifying where your money is being spent and who you are spending it with. Categorize your suppliers based on their strategic importance, specialization, generality, and preference. This segmentation will help you identify areas where you are spending a significant amount of money.
Next, actively seek opportunities to expand your supplier base. Continuously review your suppliers and assess new ones that meet your expectations and fit within your business footprint. By doing so, you can uncover possibilities to break down contracts and allow smaller businesses to participate in areas they wouldn’t normally have access to. This not only strengthens your business and also supports the community.
At the end of the day, supplier diversity is a win-win situation. By working with diverse suppliers, you create a level playing field, promote competition, and bring valuable benefits to your company and the community. Embrace supplier diversity, know your supply chain, and look at the big picture to drive success in your business and foster positive change.
CEOs Are Encouraged to Show Their Company’s Commitment to Advancing DEIB – Take the CEO Action Pledge Today
Companies that prioritize Diversity, Equity, Inclusion, and Belonging (DEIB) initiatives foster a workplace where every individual is respected and valued, regardless of race, gender, sexual orientation, age, or any other characteristic. Demonstrating a commitment to DEIB reflects a dedication to creating an equitable and inclusive environment for all employees, customers, and suppliers. This commitment enhances employee engagement, productivity, and satisfaction, driving greater overall success for the company.
Investing in DEIB initiatives is particularly impactful in the senior living industry. A company that actively promotes DEIB creates a safe and welcoming space for seniors and caregivers from diverse backgrounds. This commitment not only benefits the residents but also cultivates a more positive and inclusive business culture.
Several industry leaders have taken the CEO Action Pledge, underscoring the importance of DEIB in their organizations. Discover why so many have committed to this pledge and how it is transforming workplaces across the industry. Watch these videos to learn why others have committed to taking the pledge.
- Leigh Ann Barney, President & CEO, Trilogy Health Services
- Judd Harper, President, The Arbor Companies
- Joel Nelson, CEO, LCS
Now is the time to pledge to take action to cultivate a workplace where diverse perspectives and experiences are welcomed and respected and where employees feel encouraged to discuss diversity and inclusion. Sign the pledge today!
