How supplier diversity programs can help small businesses grow

May 30, 2024 | 4 minute read

Corporate supplier diversity programs can unlock new business, networking and training opportunities. In the U.S., companies have committed to spending more than $50 billion with minority and women-owned businesses by 20301. Often the key to participating in these programs is certification, which by some estimates, fewer than 50% of qualifying businesses have pursued2. Though certification can be a resource-intensive process, it is often a worthwhile investment. To get you started, let’s look at how these programs can help small businesses grow.

 

What is supplier diversity?

Supplier diversity is an organizational commitment to do more business with minority, women, disabled, LGBT+ and veteran-owned businesses, which have traditionally been overlooked in funding and purchasing decisions. Many governments and corporations have established supplier diversity programs, and a survey of North American companies found that 53% say supplier diversity is a high priority3.

 

By striving to increase supplier diversity, governments and corporations are helping diverse-owned businesses gain an equal share in the market. Supporting diverse businesses also helps create jobs and can benefit local communities. But supplier diversity is not just seen as the right thing to do. It is also good business. Supplier diversity programs expand the pool of potential vendors and promote competition in a supply base, which can improve product quality and drive down costs. 

 

Supplier diversity benefits both corporations and diverse suppliers, building economic vitality within communities. An inclusive, diverse supply chain:

 

  • Promotes competition in the supply base
  • Widens the pool of potential suppliers
  • Drives down costs by providing more sourcing options
  • Improves product quality
  • Makes supply chains more resilient and agile
  • Spurs innovation and creativity
  • Strengthens brand recognition
  • Stimulates the economy by creating jobs

 

What does it mean to become a diverse supplier?

A diverse supplier is a company that is at least 51% owned and operated by individuals from a traditionally underrepresented or underserved group. Businesses that meet this definition can get certified through organizations like Women's Business Enterprise National Council, National Minority Supplier Development Council, National LGBT Chamber of Commerce  and Disability:IN. Certification is key because many corporate supplier diversity programs are only available to certified diverse-owned businesses.

 

In addition to providing availability to corporate supplier diversity programs, certification programs often provide education sessions, training and networking events to support business growth. They can also create opportunities to join business networks and councils.

 

Creating a diverse supplier ecosystem

Companies that are committed to expanding their partnerships with diverse suppliers can create a supplier diversity program to formalize their intent and create the right processes and metrics to sustain the effort over time. In fact, more companies than ever are seeking out competitive, top-quality diverse suppliers, and they are investing time, resources and finances to create supplier diversity programs that find, engage and support them. Supplier diversity programs often include creating or using a database of diverse businesses that a company can proactively engage in RFP (request for proposal) opportunities. Robust programs also provide diverse suppliers access to mentoring, education and capacity development, events and networking.

 

In general, supplier diversity programs exist to help diverse businesses get better contracts and grow their businesses. The support and advantages these programs provide are vital to the select diverse and small business owners who may face additional challenges in getting started and expanding their operations.

 

A banking partner

Bank of America spends $2 billion a year in hiring and contracting diverse businesses.

 

Small businesses with diverse ownership have a well-equipped ally in Bank of America. Bank of America’s Supplier Diversity Program works with suppliers to understand their capabilities, ensure they have opportunities to participate in competitive bids and support growing their existing business with the bank. “At Bank of America, we are committed to ensuring we maximize diverse business inclusion within our supply chain — and we have stood behind that commitment for more than 30 years, sourcing approximately $2 billion in goods and services from diverse suppliers alone in 2023,” said Vonshe Jenkins, Bank of America’s Supplier Diversity & Responsible Sourcing Executive. 

 

Bank of America’s Supplier Diversity Team also partners with national non-governmental organizations (NGOs) and regional NGOs to support its commitment to including certified diverse-owned companies in our supply chain and improving the communities where we do business. To participate in Bank of America’s program, businesses must become certified as a diverse supplier, which can be done through engagement with a number of national organizations:

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Supplier management and Bank of America

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1Expand supplier diversity for more resilient business operations | McKinsey

2Are Business Diversity Certifications Worth The Effort For Suppliers? (forbes.com)

3Supplier diversity importance grows, but hurdles remain | Supply Chain Dive

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