Sourcing and Procurement

Supplier diversity and inclusion is a business imperative

In recent years, diversity, and inclusion(D&I) has become a vital aspect of corporate policies across the globe. While most businesses have made D&I an imperative in their hiring strategies to build a diverse workplace, the practice extends to the choice of suppliers as well.

What is supplier diversity and inclusion?

The supplier is an integral part of a supply chain. Supplier diversity in procurement refers to a category management strategy that nurtures a more diverse and inclusive supplier base. The focus of supplier diversity is on helping the people of underrepresented groups. This includes minority groups such as people from specific races, ethnicity, gender, and more. 

Supplier diversity and inclusion is important because it fosters the growth of a sustainable economy. It provides opportunities to the marginalized and undervalued communities leading to job creation and wealth creation. It also helps a business increase its global reach and extend its business to new markets. Hence, a business needs to select its suppliers with due diligence to ensure that they build a diverse and inclusive supplier base.

Benefits of prioritizing supplier diversity and inclusion in your category management strategy

Meet ESG objectives

Today, there is a global thrust on balancing economic needs with societal needs so that we can address challenges like climate change, increasing inequality, unpredictable changes in the economy, etc. Hence, businesses are required to conform to ESG (environmental, social, and governance) frameworks. As per Supply Chain Online, 55% of respondents in a study say that supplier diversity and inclusion play a vital role in shaping their comprehensive ESG strategy. Supplier diversity contributes to social equity by involving people from diverse groups.

Address supply chain shortages

Businesses that implement supplier diversity programs can develop long-term relationships with suppliers which helps them to get a better understanding of their suppliers. This enables businesses to effectively and efficiently procure goods and services, especially when there is a shortage.

Increase customer base

Suppliers have a better understanding of the needs and preferences of their local markets. Businesses can leverage these insights to cater to new customer groups and increase their customer base which consequently increases profitability.

Cost-effective procurement process

Data shows that businesses that prioritize supplier diversity spend 20% less on purchase functions. Supplier diversity in procurement helps build a more cost-effective and efficient procurement process.

Drive competition through innovations

When a business works with diverse suppliers, it gains access to new mindsets, ideas, and perspectives which pave the way for innovative thinking. Diverse businesses can offer advantageous pricing and new and innovative solutions to common inefficiencies in traditional processes. They are also able to provide a highly personalized customer experience. These factors not only provide them a competitive advantage but also drive the other prominent players in the supply chain to enhance their product quality, reduce costs, and offer better value to customers.

Build brand reputation

Brand image is vital to the success of a business and supplier diversity helps communicate a positive brand image. Customers perceive inclusive brands as the one that cares for them. Hence, it helps the business reach a wider audience that includes members of minority or underrepresented groups. As per Supplier. Io, In 2023, 53% of businesses invested in implementing a supplier diversity program to boost their brand image. It helps build corporate reputation and appeal. 

Boost ROI

Businesses that prioritize supplier diversity in their category management strategies outperform their competitors in their procurement ROI. Data reveals that businesses with diverse suppliers show 133% greater return on procurement investments.

These benefits indicate why supplier diversity has become an imperative for businesses across the globe. According to, 13.2% of respondents have included supplier diversity programs in 2022 compared to 8% in the previous year.

Supplier diversity has become a core element of the success of an enterprise with far-reaching societal impacts. Digital transformation helps businesses meet their diversity and inclusion goals. Businesses can use Artificial Intelligence (AI)-based platforms for supplier discovery. Technologies like Blockchain make the process of implementing a supplier diversity program transparent. Businesses can leverage these tools alongside enhanced data collection and standardized metrics to streamline their diversity and inclusivity initiatives.

How can Infosys BPM help?

Infosys BPM offers Category Control Tower (CCT) which is a genome-based category management solution. This tool streamlines your category management strategy by providing real-time actionable insights and proactive alerts. These insights help category managers make data-based decisions for better outco

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