Today, companies must continually reevaluate and reassess their current state to grow and evolve. With the volume of inquiries increasing by 500% over the last year alone, supplier diversity is becoming an area of focus for companies. There are many benefits to incorporating supplier diversity into a company’s objectives, such as moral and ethical enhancements and innovation and efficiency improvements. While the subject may be newer in some businesses, supplier diversity has been gaining momentum in the food industry for the past decade and has been increasingly prioritized.
Major companies, like Coca-Cola and McDonald’s, are setting hundred-million-dollar goals over the next few years to increase the diversity of their suppliers. Along with those notable companies, many others have spent considerable effort to increase their investment and evaluate their own supplier diversity strategies.
As companies incorporate supplier diversity into their business strategy, they are lifting underrepresented businesses and communities while simultaneously improving their innovation and efficiency. Through this companies are bettering their Corporate Social Responsibility, creating a collaborative relationship between suppliers and the business, and pushing originality.
Improving Corporate Social Responsibility (CSR)
Companies working with underrepresented or underserved businesses can positively impact their local communities by creating more jobs and promoting an influx of capital into the community. This creates pride and loyalty with local customers as they see the connection to their community. Also, the connection drives customers to purchase more which creates a positive economic impact for the community, supplier, and business. Shake Shack’s mission, Stand For Something Good, is a great example of improving CSR. By providing updates on how they are meeting their values, taking care of their team, providing a premium product, and supporting the community, they are able to connect and build a faithful following.
Today, supply chains are closely scrutinized to ensure businesses satisfy the needs of their customers and get their products to the right door at the right time. Thus, agility and flexibility are critical to meet customers’ demands. By integrating supplier diversity, success can be achieved due to the wider supply base and the various sourcing location opportunities provided. In addition to the suppliers and businesses satisfying demand, supplier diversity creates a collaborative environment.
A collaborative relationship between the business and supplier is key to building efficiencies because constant communication needs to occur as timelines and decisions regularly shift. Also, as collaboration and knowledge sharing between the business and supplier develops over time improvements in processes and efficiencies grow. For a relationship to be successful, both parties need to make sure they are getting value. Starbucks continues to reevaluate their supplier diversity initiative to ensure they are meeting their partners’ needs and commitments. Recently, they followed through on their commitment to further knowledge sharing by providing toolkits to their suppliers to lay the framework for a more collaborative environment.
While working with a diverse set of suppliers, businesses are introduced to more communities and can increase their understanding of the shifting needs of the people. With trends consistently changing, and innovation being crucial for companies in the food industry, first to shelf is a substantial advantage. By collaborating with diverse suppliers, companies gain insights more quickly and access to untapped markets and customer needs. However, when entering new markets, it is critical the business remains authentic to their brand and values as they build customer loyalty.
Authenticity and values play a key role in customers’ decisions with 72% of consumers seeking out businesses with initiatives that reflect their own values. To match that trend, companies are highlighting their relationships with their unique suppliers and creating a more transparent relationship with their customers. For instance, Campbell’s features innovative and diverse suppliers by providing the suppliers’ backgrounds and values on their website.
Integration of a supplier diversity program will continue to flourish within the food industry and spread to many others. It will be a differentiating factor when customers are making key buying decisions. Therefore, it is critical to begin building a supplier diversity program that will align with your company’s and customers’ values and goals.
When beginning the process, developing a strong plan that highlights major steps and benefits is vital to gain buy in from your business executives. Since this can take a significant amount of time, start the process by setting small goals that expand upon and show the benefits of a supplier diversity program. In the end, the goal is to have supplier diversity seamlessly incorporated into the company’s strategy as well as ongoing and future efforts.
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