Why Supplier Diversity is Important for Procurement Transformation?

Gaurav Baheti
Aug 10, 2022·3 min

Organisations worldwide are now encouraged to incorporate racial, gender, and LGBTQ diversity into their ecosystem. Diversity helps drive more value, pushing the organisation towards growth. In the context of procurement, a report by Mckinsey shows cost benefits for organisations due to supplier diversity. According to the report, large enterprises spend $50 billion on partnering with minority and women-based businesses (MWBE) in the USA. These MWBEs provide an annual cost savings of 8.5%. Another study by The Hackett Group shows the emerging trends in supplier diversity. The findings, which highlight the importance of supplier diversity, can be seen in the image below.


Source: The Hackett Group

5 Advantages of Having Supplier Diversity in Your Organisation

1. Enhanced Supplier Competitiveness

Adopting a sourcing strategy to promote supplier diversity increases competition. Suppliers from diverse backgrounds compete to win bids and contracts, automatically improving quality. Organisations have better scope for cost-saving negotiations amid heavy competition.

Diversity in supplier management also makes the sourcing process more agile and resilient. While implementing supplier diversity, your sourcing team should ensure that biases are avoided.

2. Room for Innovation

Minority-owned and women-owned companies are far more resilient than large corporations and come with new perspectives, ideas and mindsets. They can quickly adapt to changing environments and bring new capabilities rapidly while trying to seize every opportunity to make their business better.

3. Improved Brand Perception

Consumer behaviour changes according to business practices. In a study by Mckinsey, 64% of millennials said they would work only with companies that show social responsibility. Incorporating supplier diversity in procurement is one of the best ways to show that your organisation cares for the betterment of people. Consumers are willing to pay more to businesses that stand up and support issues they truly care about. About 50% of consumers have moved away from companies that disappointed them by not supporting social issues. You can set up strategic sourcing parameters to support diversity while sourcing large-scale suppliers.

4. Value Added Partnerships

Diverse suppliers unlock additional value for businesses by offering different types of partnerships. Businesses can generate more value by building strategic relationships and recognising minority businesses as channel and platform partners. Your organisation can successfully build joint ventures that can diversify your business path, gaining more access to isolated demographics and customers.

5. Service to Community

Every successful large enterprise must help small businesses grow together as a community. Ensuring supplier diversity is one way to do it.
According to the National Minority Supplier Diversity Council, minority-owned businesses contribute $400 billion to the economy. By supporting minority-owned suppliers, your enterprise can build local economies and improve community health.

3 Ways How Procurement Software Helps Implement Supplier Diversity Easily

Ensuring supplier diversity can be a challenge. However, a procurement solution can help to quickly analyse and qualify suppliers based on your business goals. Here are the ways in which a procurement software for supplier management can help you ensure diversity:

1. Expanding Your Scope

A procurement solution is easily scalable, which enables your sourcing team to expand its scope quickly. You can include categories that are traditionally excluded while looking for suppliers. You can dig deeper into the supply chain with a transparent procurement workflow and open it up for more diverse suppliers.

2. Tracking Diversity

An e-procurement platform will help you track your supplier’s diversity and forge valuable partnerships.

3. Involving More Stakeholders

A procurement platform opens up new communication channels between suppliers and buyers, giving an excellent opportunity for procurement professionals to listen to the unique challenges and demands of minority suppliers. Using the same platform, you can nurture and grow strong supplier relationships with better understanding and tolerance.


Supplier diversity can unlock numerous benefits for your business. It can help you save costs, improve brand perception and more. However, ensuring supplier diversity through the traditional sourcing process can be a challenge. In which case, a procurement solution can help you streamline the process.

Procol is a highly customisable procurement system that can be customised for specific business goals. Schedule a demo to learn how to implement supplier diversity in procurement quickly with the help of the solution.

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