What Are the Benefits of a Supplier Diversity Program?

Supplier diversity is good for business.
Supplier diversity is good for business. (Image: greeting image by Kit Wai Chan from Fotolia.com)

Supplier diversity is when businesses contract with minority-owned businesses that supply goods and services to corporations or organizations. Also called minority business enterprises (MBEs), these businesses usually consist of small businesses run and owned by women, ethnic minorities or disabled or veteran proprietors. Although some supplier diversity may meet legal requirements, it's also viewed as a good business decision. In 2005, America purchased $100 billion in goods and services from MBEs, up from $86 million in 1972, according the the National Minority Supplier Development Council.

Market Access

Creating a relationship with a minority community before your competitors do creates what is called "first mover advantage." By contracting with minority-owned businesses, your corporation or organization will develop relationships and gain access to a new community. This community may be a new market segment and potential consumers of the corporation.

Economic Development

Supporting MBEs stimulates job creation and economic development. Establishing contracts with MBEs helps your enterprise grow, and it provides their communities or the market segments you are employing with additional disposable income, which could be spent on your corporation's goods and services. As minority populations grow, minority-run and -owned businesses will be a substantial part of our economy.

Public Relations

Working with diverse suppliers gives a company a favorable public image and is seen as a form of corporate social responsibility. This increases the satisfaction of the company's stakeholders. Many businesses apply the same process they do when recruiting a diverse workforce to attract and retain suppliers that reflect the demographic of their customer base or of the community in which the corporation or company operates.


By helping MBEs grow creates competition for non-MBE suppliers. This could lead to lower prices, more choices and better quality supplies in the long term as more businesses compete for the same contracts. Eventually, as the diversification extends to emerging countries in addition to communities within America, the prices and quality further improves.

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