Oh sure, supplier diversity is a good thing to do, and it’s the right thing to do. Diverse businesses create jobs (about 20 million of them) and can enhance the community.

But those aren’t the best business reasons. Business is primarily about maximizing profit, and increasing the diversity of your supplier base can certainly help a company do that. Here’s how:

Background, Data and Facts

In a broad sense, supplier diversity is the proactive business process of sourcing products and services from previously underutilized suppliers. This process helps to sustain and progressively transform a corporation’s supply chain, while quantitatively reflecting the demographics of the community in which it operates by purchasing from diverse suppliers.

“Diverse” typically refers to businesses at least 51 percent owned by ethnic minorities (African-American, Hispanic, Native American, Asian-Indian and Asian-Pacific) and women. More broadly defined, it includes businesses at least 51 percent owned by veterans, members of the LGBT community and service-disabled veterans, or SBA-defined small businesses.

Minority-owned business enterprises are among the fastest-growing segments of the U.S. economy. They generate more than $500 billion in annual revenue and employ nearly 4 million employees, according to the U.S. Small Business Administration. Women-owned firms alone employ about 19 million and generate $2.5 trillion in annual revenue, per the latest statistics from the Center for Women’s Business Research. Veteran-Owned (VOB) and Service-Disabled Veteran-Owned Businesses (SDVOB) are some of the most prominent groups on the American entrepreneurial landscape and are being sought after by corporate supplier diversity programs. There are more than 25 million veterans in the United States, according to the National Association of Veteran-owned Businesses.

Cost Down, Quality Up

It’s a basic law of business that competition drives down cost and increases quality. If there are more suppliers competing for your contracts, the price you pay will go down. Likewise, quality of service or products should improve.

New Ideas, New Markets

Working with more diverse suppliers exposes you and your business to people with different opinions, perceptions, ideas and needs. Your company might find new revenue opportunities or markets that you never would have known about without those diverse relationships.


Here’s that competition thing again—in this case, how it leads to a more efficient supply chain. What’s not to like about that?

The beauty of it is that you don’t have to be a multinational company with billions in revenue and a specialized supplier diversity program to diversify your supplier base. All you have to do is integrate it into your normal procurement process by making sure you seek out new and different suppliers to compete for your business. It will certainly encourage your incumbent suppliers to stay competitive. And it’s just good business.