The importance of diversity, equity, and inclusion initiatives in your procurement process

TL;DR: With concerns for social equality rising, diversity, equity, and inclusion (DEI) initiatives have become topics of increased discussion in the business world. More European businesses have been trying to implement DEI measures for hiring and retaining diverse talent, creating unbiased talent management processes, fostering inclusive cultures, and developing inclusive leaders. As a core business process, procurement must also take DEI initiatives into account as developing an effective supplier diversity programme has the potential to improve performance and profitability for your business. In addition, your commitment to diversity will also nurture a positive brand perception and enhance compliance.

Diversity, equity, and inclusion (DEI) have become important topics for the business world in the recent past. An increasing number of businesses have engaged in diversity measures such as hiring initiatives, community engagement, and philanthropy.

However, only a select few companies globally have implemented these measures in their supply chain.

The Supplier Diversity Poll conducted by The Hackett Group in 2020 revealed that even though 93% of procurement organisations expressed interest in supplier diversity, their leadership does not hold the same views. Only 18% of CEOs and Boards of Directors and 10% of COOs have expressed the same interest in DEI initiatives.

Regardless, best-in-class organisations for diversity in Europe invest in these initiatives for business reasons, such as stronger financial performance, a deeper understanding of customers, higher innovation, and the enhanced ability to compete globally.

Here’s why your company should consider implementing DEI initiatives into your procurement process.

Benefits of DEI for procurement

Apart from the favourable brand perception that comes with the focus on diversity, there are many other tangible benefits to DEI initiatives.

Collaborative partnerships with diverse suppliers give you access to creative new ideas that enable innovation.

An expansive supply chain helps you establish new channels for procuring goods and services.

A wide variety of diverse suppliers allows you to gain unique market insights that may not be accessible to contemporaries.

DEI initiatives showcase your commitment to the economic growth of diverse communities, further improving brand perception.

With a diverse range of suppliers, you can also increase exposure to new demographic segments.

As a result of all these, you will also improve corporate culture, support social responsibility, and retain and attract top talent for your business.

The value of DEI initiatives in procurement is apparent by the focus that companies are increasingly placing on them. In fact, 63% of companies in Europe have an established diversity & inclusion strategy, even though only 15% of those are at an advanced stage where it is treated as an organisational priority that engages all employees.

There is always much room for improvement in DEI initiatives. Here is how you can develop a successful supplier diversity programme in your organisation to enhance your commitment to diversity and inclusion.

Guide to developing a supplier diversity programme

Developing a successful supplier diversity programme requires effectively identifying diverse suppliers, investing in them, measuring programme performance, and leveraging best practices to improve it.

Identify diverse suppliers

Supporting local and national small businesses, and businesses owned by people of colour, women, and LGBTQIA+ individuals should be the focus at this stage. To do so, you can join supplier diversity organisations, participate in workshops, and attend supplier diversity trade fairs.

Invest in identified suppliers

Investing in diverse suppliers should ideally go beyond simply leveraging their services. You can offer mentoring programmes, provide education and training resources, hold networking events, provide technical assistance, and help them increase their capacity to raise them up.

Measure programme performance

Measuring the programme’s performance allows you to gauge its impact on the communities you support. Data such as the percentage increase in diversity spend, increase in the number of diverse suppliers, and internal and external economic impact can be measured in this context.

Leverage best practices

Following best practices such as appointing a dedicated owner for the programme, confirming supplier certifications, ensuring data integrity, performing audits on performance, and setting specific performance objectives enable you to maintain an effective supplier diversity programme.

Commit to a better future by implementing diversity, equity, and inclusion initiatives into your procurement process

Effective DEI initiatives not only improve your company’s brand perception but also improves performance and profitability as evidenced by key statistics like organisations that are at the top quartile for gender diversity and ethnic diversity having a 25% and 36% more chance, respectively, of financially outperforming their peers.

As for procurement, companies that maintain a higher focus on supplier diversity saw 30% higher procurement ROI. It is clear that implementing DEI initiatives in procurement is not only a socially conscious decision but also a sound business strategy as well.

Consider implementing or improving your existing DEI initiatives in procurement to enhance your performance, profitability, social responsibility, and compliance.