Supplier Diversity: A Critical Asset for Contingent Staffing Programs
In today's globalized business environment, embracing diversity is a necessity rather than a choice. This principle applies not only to workforce demographics but extends into the realm of supplier relationships as well.
Supplier diversity, the strategic business process of procuring goods and services from underrepresented suppliers, is particularly crucial within contingent staffing programs. The reasons for this are manifold, ranging from strengthening corporate reputation and ensuring regulatory compliance to driving innovation and competitiveness. Currently, about 85% of companies in the United States have dedicated supplier diversity programs.
But supplier diversity isn't just critical within standard procurement operations; it's also a crucial component of a company's contingent staffing program. In this area, supplier diversity cultivates a culture of inclusivity and equality, reflecting the diversity of the customer base and fostering economic growth.
This article explores the importance of supplier diversity within contingent staffing programs and its far-reaching impact on business success.
The Importance of Supplier Diversity in Contingent Staffing Programs
Supplier diversity is critically important within a company's contingent staffing program for several reasons.
- It fosters innovation. Contingent staff from diverse supplier backgrounds bring a breadth of new perspectives, ideas, and problem-solving approaches. This diversity of thought stimulates creativity and innovation, which are pivotal for a company's growth and competitiveness in the evolving business landscape. We'll touch more on this subject in the next section.
- It supports social responsibility and strengthens corporate reputation. A commitment to supplier diversity demonstrates a company's dedication to social responsibility. It signals an endorsement of economic equality and inclusion, which enhances the company's reputation among stakeholders, including employees, customers, and investors.
- It improves regulatory compliance. Many governmental and non-governmental bodies require or encourage organizations to engage with diverse suppliers. By incorporating supplier diversity within its contingent staffing program, a company aligns its operations with these regulatory compliance needs.
- It enables a company to mirror its diverse customer base, thereby offering a competitive edge. The more a company's workforce reflects its customer base, the better it can understand and cater to those customers' needs, thereby gaining a competitive advantage.
- It drives competition, leading to better quality and pricing. By engaging with a diverse array of suppliers, a company encourages competition, which can result in improved quality of services and more promising pricing structures.
- It strengthens the supply chain resilience. With a diverse supply base, a company reduces its over-reliance on any single supplier, thereby enhancing its ability to withstand disruptions and maintain business continuity.
In summary, incorporating supplier diversity within a company's contingent staffing program is not merely a box-ticking exercise but a strategic decision that drives innovation, strengthens corporate reputation, improves regulatory compliance, offers a competitive edge, stimulates competition, and enhances supply chain resilience.
How Supplier Diversity in Contingent Staffing Drives Innovation
Supplier diversity in contingent staffing introduces a rich tapestry of cultural, experiential, and cognitive diversity, which in turn fuels innovation. This diversity incites a melting pot of ideas, challenging traditional ways of thinking and encouraging the exploration of novel, out-of-the-box solutions.
When staffing is sourced from an array of diverse suppliers, the contingent workforce naturally embodies a wider variety of experiences, viewpoints, and insights. This diversity leads to more comprehensive discussion, better decision-making, and ultimately, a higher level of creativity and innovation.
Diverse teams are known to bring unique perspectives to the table, fostering an environment where innovative ideas can flourish and thrive.
According to Forbes, when a workforce is diverse, "Individuals are empowered to share their opinions and unique insights in inclusive environments. Organizations can benefit from well-rounded discussions and comprehensive evaluations by valuing and incorporating diverse perspectives. As a result of considering a wider range of possibilities and challenging groupthink, diverse teams are more effective at solving complex problems."
Achieving a Competitive Edge with a Diverse Supplier Base
By most metrics, diverse workforces also enable businesses to become more competitive. They're also much more financially viable.
Forbes also reported that financial returns are "strongly correlated" with diverse leadership. While many contingent staffing programs focus on obtaining temporary workforces for lower-level positions, many companies are now relying on fractional and virtual executives as well.
According to the report, "Increasing market share and customer loyalty is easier for companies that focus on diversity since they are better equipped to understand and connect with a broader customer base. Diversity can also foster a competitive advantage for companies attracting and retaining rockstar employees."
Stimulating Economic Equality by Supporting Underrepresented Suppliers
More importantly, supplier diversity in a contingent staffing program can lead to a significant impact on economic equality. By supporting underrepresented suppliers, businesses contribute to the growth and success of these often-overlooked communities.
This support is especially vital for small, minority-owned companies that may not have access to larger business opportunities. The influx of contracts and revenue from working with a larger company can help these small businesses grow and thrive, creating jobs and promoting economic equality in their communities.
Additionally, working with diverse suppliers also helps to combat discrimination and promote a more equitable business landscape. Companies that prioritize supplier diversity are actively promoting fair and inclusive practices within their industry, ultimately leading to a more diverse and representative economy.
According to Harvard Business Review, "Inclusive procurement also delivers broader societal benefits by generating economic opportunity for disadvantaged communities. The U.S. Small Business Administration estimates there were 8 million minority-owned companies in the United States as of 2018. The National Minority Supplier Diversity Council reports that certified MBEs generate $400 billion in economic output that leads to the creation or preservation of 2.2 million jobs and $49 billion in annual revenue for local, state, and federal tax authorities. And those numbers are steadily increasing."
Strengthening Supply Chain Resilience with Supplier Diversity
Finally, a diversity-based contingent staffing program is often critical to maintaining supply chain resilience and flexibility. This is because it ensures that a company is not overly reliant on any single supplier, which can create significant vulnerabilities and disruptions in the event of unforeseen circumstances.
According to EY, "Sourcing from diverse suppliers (defined as at least 51% owned, operated and controlled by a minority, woman, LGBTQ+, veteran, service-disabled veteran, person with a disability, indigenous person, or as defined by the local country) is a social imperative that’s also good for the top and bottom line."
Furthermore, "Use of diverse suppliers, given their vast and unique footprint, can contribute to building resiliency, better environmental, social and governance (ESG) outcomes — and more cost-effective and innovative approaches."
By diversifying their supply base, companies are better positioned to withstand crises and adapt to disruptions. In essence, this diversity acts as risk management, bolstering the overall stability and resilience of the entire supply chain.
Incorporate Supplier Diversity into Your Contingent Staffing Program
Supplier diversity is not simply a social responsibility, but a strategic necessity in today's global business landscape. It brings multiple benefits, including driving innovation, enhancing competitiveness, fostering economic equality, and ameliorating supply chain resilience.
Adopting a diverse supplier strategy in your contingent staffing program is, therefore, a decision of both ethical and economic merit. Businesses that recognize and harness this power stand to gain a significant edge in their respective markets.
To learn more, don’t miss ProcureCon Contingent Staffing 2024. It’s happening from April 3rd to April 5th at the JW Marriott LA LIVE in Los Angeles, California.