Over the last few years, you’ve probably heard more and more about diversifying suppliers or supply chains. We recently wrote a blog about the nuts and bolts reasons why this is a good idea, including how it can help your bottom line.
Today, we’re going to talk about the benefits of supplier diversity that are perhaps a little less tangible, but no less important.
New Perspectives, New Solutions
One of the best reasons to have a diverse supply chain that includes small businesses is that it can help keep you from becoming stagnant. It can help you tap into new communities and different ways of thinking or tackling a problem. Lockheed Martin’s Susannah Raheb told Inc. that they “value and leverage the agility, ingenuity and new perspectives we gain when partnering with small businesses to help us solve a wide variety of challenges.”1
This is part of what drives innovation as new companies enter the market with solutions that haven’t been thought of before. It’s how EnvirOx entered the cleaning business, introducing Hydrogen Peroxide cleaning technology that made green cleaning feasible. It disrupted the cleaning industry by being a safer alternative to traditional cleaning products while being just as effective.
Competition & Flexibility
Making sure a diverse group of companies are being used in a supply chain means that a strong, competitive atmosphere can be maintained. No one player can come in and corner a market, leveraging their dominance and driving costs upward. Ultimately, competition is good for everyone. It helps drive suppliers to be the best they can be, and it helps keep costs lower and encourage innovation.2
Also, it allows companies to be flexible. If a company’s needs change and they only have a limited supplier base, it can spell trouble. In the cleaning business, that might take the form of a new client who insists on cleaning products from a minority-owned supplier. If a current supplier isn’t minority-owned, then that would leave the business owner scrambling to find an additional distributor to work with. New opportunities often present themselves when you least expect it, and they can be squandered if a business isn’t flexible enough to jump on them.
A Healthier Economy For All
A diverse supply chain helps bolster the national economy. Minority-owned businesses had an economic output of $400 billion in 2014. They drove the creation or preservation of 2.2 million jobs and $49 billion in tax revenue. In 2014, 7 million of the 10.9 million jobs added back to the workforce in the US were from small start-ups and small businesses, not large corporations.2 Supporting smaller businesses, including minority-owned businesses, shows a commitment to helping drive economic growth for all. It’s a win-win for suppliers, businesses, and ultimately customers.
- Inc. (2016). Why Supplier Diversity is Good for Everyone. Retrieved from https://www.inc.com/branded-content/lockheed-martin.html
- CVM Solutions. (2018). What is Supplier Diversity and Why is it Important? Retrieved from https://blog.cvmsolutions.com/what-is-supplier-diversity