Supplier Diversity Will Help Businesses Large And Small Recover From Pandemic

After ensuring American’s health, economic recovery will be next on the to-do list. Access to financing will play a huge role but so, too, will access to customers and vendors. Having customers who spend billions on goods and services, such as the Fortune 1000 companies, increases your chances for high growth.

It is a mutually beneficial relationship between small and big businesses. Large corporations buy the goods and services from 1.1 million small supplier businesses*, many of which are owned by minorities, women, LGBTQ+ people, individuals with disabilities, and veterans. These diverse businesses are what Hello Alice calls the “New Majority”. Alice is a predictive technology platform that, no matter your stage of business or skill set, helps you find the answers, resources, and support you need

The benefits to the Fortune 1000 are that diverse small businesses:

  • Produce innovative products/services for them to use or sell. 
  • Increase competition, resulting in better prices and service levels. 
  • Enable them to serve emerging and untapped markets.
  • Purchase their products and services.
  • Are acquisition candidates. 
  • Highlight their commitment to diversity and inclusion, and a shared and durable prosperity.
  • Help them be flexible, agile, and resilient. 

Many large corporations have supplier programs but these programs could play an even more important role in the recovery of the US economy. Until recently, to document the impact these programs have, supplier diversity departments relied on counting the awards they received, how much their spend increased. Some even tracked the positive impact these programs had on small and diverse businesses. Others used economic impact studies, which measure changes in business revenue and jobs creation of supplier-diversity programs. 

Last year, Stefanie Francis, founder of Hootology, developed a tracking survey so corporations could measure the impact of their programs on the corporate bottom line. Hootology is a research company that helps its clients develop actionable tactics based on its research. It recently released results to its clients for the second Supplier Diversity Impact Indicator (SDII).

The survey is conducted among 3,000 US consumers. The sample is balanced for income, age, race, and ethnicity. Business-to-consumer and business-to-business companies can segment the data to see results by the personal or business demographics that are important to them. 

“We’re now able to show how awareness of supplier diversity lifts the perception of a brand valuing diversity,” said Francis. “On average, it lifts scores for different metrics by between 25% and 70%.” Right now, awareness of supplier diversity programs is low.” Francis guesstimates that only about 4% of the general public is aware of supplier diversity programs. However, for every one percentage point increase 2.5 million more people will consider a corporation’s brand in a favorable light. 

“It is not something we do just because it sounds good or feels good,” said Kris Oswald, Director of Supplier Diversity at UPS. “It is good for our business. Data can help us confirm whether our approach is working.” This is the first time UPS has participated in the research. They have anecdotal evidence about the impact its program was making. “SDII fills the gap, providing a more complete picture to assess the return on investment our supplier diversity program is making.” 

Diversity and inclusion is a top business priority for UPS.  Suppliers is just one of four stakeholder groups in which UPS embraces diversity and cultivates inclusion. The other three are employees, customers, and communities. UPS spent $2.6 billion with small and diverse suppliers in 2018. It buys goods and services across many categories but its spend is greatest on capital projects, construction, fuel, automotive and aircraft parts and repairs, transportation, and security guards. “It is very gratifying to me that UPS came out on the top of the list [UPS was #1 for being perceived as a brand that values diversity],” Frances said.

UPS will use the SDII to make the business case that supplier diversity is good for the bottom line. The report showed just how strongly UPS customers value diversity and inclusion — a core value of UPS. It is reaffirming to know that UPS’s supplier diversity program — one of four pillars of UPS’s diversity and inclusion will influence customers’ and prospects’ intention to do business with us, commented Oswald. The data will help UPS make informed decisions about how to allocate resources and dollars.  

UPS is accustomed to dealing with market shifts or other economic forces as well as disasters and crises but it has never experienced the scale of COVID-19, commented Oswald. “Local suppliers add to the stability of our supply chain. We have dedicated resources to help diverse suppliers prepare for and find opportunities.”  

Given the reception SDII is receiving from its current clients, Hootology is planning to do another wave using this year’s data. This will enable additional brands to get the data. 



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