Add Diversity to Your Supply Chain to Boost Innovation
Companies of all sizes are increasingly recognizing that building more diverse organizations not only helps create a more just, equitable world but also yields a variety of business benefits.
For example, companies with above-average diversity among their management teams report a higher amount of so-called innovation revenue, i.e., products and services launched within the preceding three years, according to a Boston Consulting Group study. Specifically, 45% of revenue at companies with above-average management diversity comes from innovation revenue, while companies with below-average management diversity only have 25% innovation revenue.
By having more diversity — including gender, race, sexual orientation, veteran status and more — companies can gain new perspectives and reduce group-think, which can stall innovation. Diversity can also play a key role in other areas such as recruitment, attracting investment and meeting compliance requirements.
In addition to increasing diversity among management, boards, and general employees, companies can also benefit from building a more diverse supply chain, which can also play a key role in the aforementioned areas, while also helping companies find new products and services and enhance overall procurement activities.
Innovation in the supply chain
Similar to how management teams with more diversity can find new ways to solve problems and create new products and services, having a more diverse supply chain can also help companies procure products and services they otherwise might not have had access to, while also finding innovative ways to work with vendors.
These areas of innovation can range from customizing orders, payments and deliveries that better fit your procurement needs to improving your marketing based on your partnerships with women-owned, minority-owned, veteran-owned and other diverse businesses in your supply chain. For example, Marriott publicizes its efforts to work with diverse suppliers such as for cleaning services and products, which can help draw in customers, employees and other suppliers who want to work with a company that supports diversity.
As Hackett Group finds in a study, companies that excel in having supplier diversity see improved quality, increased market share and can access new revenue opportunities. These top performers go beyond checking the box in adding diverse suppliers such as by also collaborating with vendors on product innovation and increasing brand reputation and awareness by publicizing supplier diversity on social media. Moreover, focusing on increasing supplier diversity does not take away from procurement efficiency and overall satisfaction. On the contrary, only 1% of diverse suppliers fall short of buyers’ expectations, finds Hackett Group, while 23% exceed expectations and 76% meet expectations.
Room for improvement on diversity efforts
While the benefits of diversity among employees and suppliers are clear, companies still have a long way to go in terms of implementing and getting the most out of their diversity efforts. Only 5% of organizations in North America have reached the highest levels of maturity of their diversity and inclusion programs, according to a PwC model.
Working with e-procurement partners like GoProcure, a diverse business itself, can also help improve diversity efforts, such as by increasing your access to a supplier network of women-owned, minority-owned and veteran-owned businesses.
You can also learn more about how procurement is leading corporate disruption by joining our webinar tomorrow, October 9th at 1pm E.S.T. This 45-minute interactive event will help procurement leaders, supplier diversity leaders and anyone else looking to find ways to innovate, generate revenue and increase cost savings by adding more diverse vendors for their procurement activities.