In this recent published article on Fortune.com, according to a McKinsey’s study the supply chain reset could help build a more equal economy.
Data shows that the return on investment of partnering with diverse owned businessess is significant. The study found that companies sourcing from diverse owned businesses reported benefitting from increased innovation, competitiveness, and resilience, while realizing a year-over-year cost savings of 8.5%, compared to the three-to-seven-percent industry average.
Although this study originated in the U.S., the impact that working with diverse owned companies can have on the business and the economy is no different elsewhere in the world.
The research also found that diverse owned businesses hire more minorities and pay them higher wages on average. That trend opens additional opportunity: If spending with diverse owned businesses in the US was to double from the current $1 trillion dollars to $2 trillion, it could generate $280 billion in additional income and 4 million jobs for minority populations.
Full article; https://fortune.com/2022/07/18/supply-chain-reset-equal-economy-mckinseys-suppliers-inflation-shelley-stewart/
One of the key advices from the study for creating an ecosystem for Supplier Diversity & Inclusion is to:
– Invite more stakeholders to the table. While procurement and DEI teams are most often the locus of supplier diversity programs, spending decisions are made across the organization. Invite functional leaders outside DEI to be the company’s face of supplier diversity in internal and external forums.
McKinsey Study; https://www.mckinsey.com/business-functions/operations/our-insights/expand-diversity-among-your-suppliers-and-add-value-to-your-organization
Find an interview with Cheryl Harris of The Allstate Corp. on how to get more diverse suppliers and what small businesses can do to to get more contracts with companies here: https://www.benefitspro.com/2022/07/18/why-companies-should-contract-with-diverse-suppliers/?slreturn=20220620084228
Also check out this replay of the Supply Management Insider webinar about 3 Essential KPI’s for a best-in-class procurement function – ”How companies fare in their supplier diversity & ESG efforts” being one of them; https://www.supplymanagementinsider.com/essential-kpis-for-best-in-class-procurement-function
One thought on “Increase Cost Savings With Inclusive Sourcing”