Supplier diversity initiatives provide a platform for businesses to source goods and services from suppliers that are owned and operated by organizations or individuals who have been subjected to racial or ethnic prejudice or cultural bias. Many companies set supplier diversity goals for their procurement efforts. Even though these programs are commonplace, there is still confusion among some businesses about the details of supplier diversity initiatives which may leave you wondering if your organization needs a diversity supplier.
The supplier diversity concept has evolved into what we see today — an array of small business owners from all ethnic, racial, gender, and disadvantaged groups providing products and services to government agencies, as well as to major companies and corporations. Becoming part of this group requires skill, dedication, and hard work. Not just any business can become part of an organization’s supplier diversity program. Applicants must meet rigorous requirements, with specific emphases on skills and knowledge, quality control, ability to meet/exceed deadlines, assurance of prompt delivery of products and services, as well as periodic inspections of the supplier’s quality control systems or procedures to ensure that the host company’s quality standards are being met and maintained. A detailed discussion of these requirements is available on respective company websites. Thus, business acumen plays an essential role in consideration and selection of qualified-small business suppliers.1
What is a Diversity Supplier?
A Diversity Supplier in North America refers to a minority-, woman-, disabled- or veteran-owned staffing supplier. Organizations often find that using diversity suppliers as part of their staffing supplier base is a good way to meet their diversity recruitment goals. (See also: Women and Minority Business Enterprise.) 2
Why is Supplier Diversity Important?
There are several reasons why businesses have embraced supplier diversity. One prominent study found that a diverse supplier base can result in significant financial benefits for buyers. Working with vendors from other ethnic or demographic groups can also provide a toehold to sell products to their customers.
For the vendor, securing a new contract may fuel growth, resulting in economic gains for traditionally disadvantaged groups. In a well-run supplier diversity program, businesses profit while contributing to the greater social good.
It’s important to note that corporate supplier diversity goals are set by individual companies; they aren’t mandated by law. Certain government contracts may be earmarked for diverse suppliers or come with requirements to subcontract with them. However, these programs are distinct from efforts run by companies themselves.
Supplier Diversity Certifications
Diverse suppliers generally include vendors owned and operated by women, members of socially and economically disadvantaged groups, and veterans.
Companies with supplier diversity programs often rely on widely accepted certifications to decide whether a vendor meets the requirements to be deemed a diverse business. Among the major diversity certifications are:
- Women-owned Small Business (WOSB) Companies that are owned and operated by a woman or women may qualify as a women-owned small business. The specific requirements to be considered a WOSB are set by the U.S. Small Business Administration. Qualifying businesses can self-certify as WOSBs with the SBA or seek third-party certification.
- Small Disadvantaged Business (SDB) Businesses owned and operated by socially and economically disadvantaged persons may be eligible for SDB self-certification. According to the U.S. government, individuals who have faced prejudice based on their ethnic or racial identities are considered socially disadvantaged. Economically disadvantaged Americans are “socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities.”
- Service-disabled Veteran-owned Small Business Concern (SDVOSBC) U.S. military veterans who acquired a disability as a result of their service may qualify for SDVOSBC status through the Vets First Verification Program. The Department of Veterans Affairs determines eligibility, which enables companies to participate in government contract set-asides. There is also a separate program for veteran-owned small businesses (VOSBs) overseen by the VA, where service-connected disabilities are not a prerequisite for participation.3
In need of a diversity supplier? ClearPath is certified by the Women’s Business Enterprise National Council, (WBENC). ClearPath can help you accomplish your day-to-day tasks pertaining to your contingent workers. We can help relieve this burden by outsourcing your back-office Human Resources and Payroll functions to our Employer of Record service. Contact us to learn more about how our expert personalized service can let you get back to focusing on your business goals. Work with a leader in the industry for outsourced Human Resources and Payroll functions associated with W-2 and 1099 contingent workers. Let ClearPath be the path to your peace of mind. For other questions about assessing your workforce or conducting a review of your current hiring processes, the ClearPath team can assist you.