There’s no question that a diverse supplier base is good for society, but a growing number of executives confirm that it improves business performance too. UPS, Target, Pacific Gas and Electric, and other leaders have been building more diverse supplier pools for decades, a move that benefits their bottom lines and reduces supplier turnover. Companies that make up the top quartile in percentage of spending on diverse suppliers generate more procurement savings than the average company engaging diverse suppliers.
Many companies assume that working with diverse suppliers will make them less efficient, but the data from Coupa shows that doesn’t seem to be the case. The leaders in supplier diversity rely to a greater degree on electronic purchase orders and invoicing, and they benefit from doing a higher volume of work with contracted vendors. They also are faster at invoice approval and order processing.
But building a more diverse supplier base isn’t a quick or easy effort. Despite strong commitment from the board and the C-suite, many companies struggle to achieve their supplier diversity objectives. In our experience, leadership teams that succeed overcome a few key obstacles to change and make sure initiatives have staying power.
Understanding four key hurdles to success can help leadership teams achieve ambitious diversity goals.