Supplier diversity refers to the use of minority-owned businesses as suppliers, and a supplier diversity program is a proactive business program which encourages such use within an organisation's supply chain. Minority-owned includes black and minority ethnic business ownership, women owned,

veteran A veteran () is a person who has significant experience (and is usually adept and esteemed) and expertise in an job, occupation or Craft, field. A military veteran is a person who is no longer serving in the military, armed forces. A topic o ...

owned, LGBT-owned, service disabled veteran owned, historically underutilized business, and

Small Business Administration The United States Small Business Administration (SBA) is an independent agency of the United States government that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and str ...

(SBA)-defined small business concerns. The Hackett Group refers to "approximately 16 categories" covering various aspects of supplier diversity. It is not directly correlated with supply chain diversification, although utilizing more vendors may enhance supply chain diversification. Supplier diversity programs recognize that sourcing products and services from previously under-used suppliers helps to sustain and progressively transform a company's

supply chain A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distri ...

, thus quantitatively reflecting the demographics of the community in which it operates by recording transactions with diverse suppliers.

United States

Paul D. Larson links the establishment of supplier diversity concerns to the American civil rights movement in the 1960s.Larson, P. ''et al''
The State of Supplier Diversity Programs in Canada: the Buyer's Perspective
published September 2021, accessed 8 June 2022 Diverse- and women-owned business enterprises are among the fastest-growing segments of the U.S. economy. Diverse-owned businesses generated an estimated $495 billion in annual revenue in 1997 and employed nearly 4 million workers, while women-owned firms employed about 19 million people and generated $2.5 trillion in annual sales. Alongside the Women-Owned Small Business Program, the US Small Business Administration also operates an Economically Disadvantaged Women Owned Small Business (EDWOSBs) program for preferential award of federal contracts in certain industries. A wider categorization including women, minority, disabled veteran, and/or

LGBT LGBTQ people are individuals who are lesbian, gay, bisexual, transgender, queer, or questioning. Many variants of the initialism are used; LGBTQIA+ people incorporates intersex, asexual, aromantic, agender, and other individuals. The gro ...

business enterprises (WMDVLGBTBE) is referenced in

California California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...

n supplier diversity requirements. The Hackett Group, in their 2019 study of supplier diversity, found that US companies increasingly adopt supplier diversity programmes to achieve objectives associated with

reputation management Reputation management, refers to the Social influence, influencing, controlling, enhancing, or concealing of an individual's or group's reputation. It is a marketing technique used to modify a person's or a company's reputation in a positive way. ...

, their own corporate diversity culture and investment in their local communities, rather than reasons connected with legal compliance, and there are a growing number of companies who aim to extend supplier diversity within their tier 1

but also set expectations for tier 2 supply chain engagement activities to include supplier diversity language.Hackett Group
Supplier Diversity: Moving Beyond Compliance Drive Meaningful Value
presentation by Fong, A. and Peters, G., published April 2019, accessed 4 March 2021

Practices at state level

Certain states within the United States, as a part of their bidding process, incentivize

Minority Business Enterprise Minority business enterprise (MBE) is an American designation for businesses which are at least 51% owned, operated and controlled on a daily basis by one or more (in combination) American citizens of the following ethnic minority and/or gender (e ...

s (MBEs) and women-owned business enterprises (WBEs) to bid for publicly awarded

construction Construction are processes involved in delivering buildings, infrastructure, industrial facilities, and associated activities through to the end of their life. It typically starts with planning, financing, and design that continues until the a ...

or service contracts. They may also declare that a percentage of the work performed on a contract be awarded to an MBE or WBE. In

New York State New York, also called New York State, is a state in the northeastern United States. Bordered by New England to the east, Canada to the north, and Pennsylvania and New Jersey to the south, its territory extends into both the Atlantic Ocean and ...

, a goal was set in 2014 for the award of public contracts to women and minority businesses to increase from 20% in 2014 to 30% by 2019.Gavin, R., When the target was increased, the Association of General Contractors (AGC) sued the state for failing to release documents via New York's Freedom of Information Law (FOIL). The AGC was concerned that the state had not conducted a proper contract analysis before declaring the increase of the MWBE goal to 30%. The AGC stated that the 30% goal did not reflect the availability of MWBEs statewide. The AGC also questioned a later study - performed by Mason Tillman Associates Ltd. of Oakland, California - which was paid for by the state in consideration of its employment goals for state contracts. In 2018, the state was also considering establishing goals for the workforce of contractors awarded public contracts, but insisted these goals were not quotas. If contractors could not make a "good faith" effort to reach the goals, contractors might not be eligible for future public contracts for a length determined by the state. There have been cases where contractors have been charged with crimes for impersonating MBEs. In New York in 2018, Eastern Building & Restoration was charged for fraudulently receiving over $1 million from public construction contracts by representing itself as an MBE during the years 2012 - 2014. California's

Public Utilities Commission A public utilities commission is a quasi-governmental body that provides oversight and/or regulation of public utility, public utilities in a particular area (locality, municipality, or Administrative division, subnational division), especially in ...

requires public utility companies and prime contractors to monitor and report on supplier diversity in accordance with its General Order 156 (GO 156), first adopted in 1988. The supplier information underlying this reporting requirement is maintained by the Supplier Clearinghouse, a Commission-supervised body created under GO 156.

Canada

In Canada, supplier diversity is supported and facilitated by five councils: *Canadian Aboriginal and Minority Supplier Council *Canadian Council for Aboriginal Business *Canadian Gay and Lesbian Chamber of Commerce *Inclusive Workplace and Supply Council of Canada *Women Business Enterprises Canada Council The Supplier Diversity Alliance Canada, formed in 2016, draws together the work of these councils (although the Canadian Council for Aboriginal Business is not directly involved in the alliance).

New Zealand

Supplier diversity initiatives in

New Zealand New Zealand () is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and List of islands of New Zealand, over 600 smaller islands. It is the List of isla ...

are aimed in particular at engaging with Pasifika businesses.

Europe

A "Handbook on Supplier Diversity" published by the

European Commission The European Commission (EC) is the primary Executive (government), executive arm of the European Union (EU). It operates as a cabinet government, with a number of European Commissioner, members of the Commission (directorial system, informall ...

in 2009 made "a strong case for supplier diversity" in the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

, acknowledging that "Europe is still at the beginning of its journey towards supplier diversity". The handbook was supported by Supplier Diversity Europe, a business-led initiative which at that time operated in the UK, France and Germany, along with the Migration Policy Group and the

Economic and Social Research Council The Economic and Social Research Council (ESRC), formerly the Social Science Research Council (SSRC), is part of UK Research and Innovation (UKRI). UKRI is a non-departmental public body (NDPB) funded by the UK government. ESRC provides fundi ...

. The slower pace in adopting supplier diversity programmes in Europe, compared to the United States, was also acknowledged at the World Economic Forum in 2020.Mallinckrodt, V.
How to move towards more inclusive procurement in Europe
''World Economic Forum'', published 6 October 2022, accessed 16 December 2023

References

{{reflist Business terms Procurement