As more companies grow savvy to the benefits of cultivating a diverse supplier base, supplier diversity programs have grown in popularity and in number. For a supplier diversity program to succeed long term, however, it needs to have a sustainable growth strategy—that’s where supplier development programs come into play.
Supplier development is a business strategy that involves working with your diverse suppliers to boost their performance and drive continued business growth. Through education and mentoring, you’ll help drive more sustainable and robust economic opportunities for your own business. Below, we’ve outlined 10 reasons to invest in a formal supplier development program.
1. Gain a Competitive Edge
By educating the diverse suppliers in your network on sourcing and procurement best practices, you’ll help them access more vendors and foster competition between their suppliers. In addition to driving their growth, this optimization will empower them to offer more competitive pricing, service levels and options to your business.
2. Promote Innovation
Development programs present opportunities for suppliers to work together for the benefit of your company. That may mean competing for a contract or partnering together with other diverse suppliers to accomplish a project. Creating these partnership opportunities encourages out-of-the-box thinking and empowers your suppliers to offer more specialized solutions.
3. Access More Supplier Channels and Sources
By investing in the success of your diverse suppliers and giving them opportunities to collaborate, you’ll help grow your channels and sources. More supplier channels ultimately mean more companies competing for your business—and more options to choose from. With more options available, you can be more selective in your procurement decisions, receiving the best possible product and value.
4. Encourage Collaboration Between Suppliers
Small, diverse suppliers often lack the resources or expertise to compete for large contracts on their own. A development program can help encourage suppliers with complimentary solutions to team up on business opportunities that they would otherwise be unable to handle. These mutually beneficial partnerships allow each supplier to focus on its specific area of expertise, thereby ensuring that you receive a top-quality solution.
5. Improve Brand Perception
Just like supplier diversity programs, supplier development initiatives encourage the economic development of surrounding communities. This local community impact can help humanize large corporations and enforce brand values. To amplify the impact that your supplier development program has on local and national brand perception, you can showcase your initiatives in your marketing efforts.
6. Drive Job Creation
By investing in the development of your diverse suppliers, you’ll also drive job creation and economic growth opportunities for local businesses and families. Along with boosting brand perception, more jobs will also lead to more sourcing options for your organization down the line.
7. Create Stronger and More Sustainable Business Partnerships
Partnering with a diverse supplier for a single project or contract may not be enough to help it become established in its industry. By nurturing longer-term relationships with small suppliers, you help them gain the economic and business resources they need to continue to grow. At the end of the day, their growth will nurture a more reliable, sustainable, and beneficial partnership for both businesses.
8. Improve Customer Satisfaction
Nurturing a more personal relationship with your suppliers can also benefit your customers. Businesses that cultivate strong supplier relationships are able to communicate with greater ease, troubleshoot issues with greater efficiency, and ultimately provide a better-quality end product to their customers. Greater alignment and transparency in your supply chain can also positively impact brand perception.
9. Achieve Corporate Supplier Diversity Goals
Many large-scale corporations have quarterly and annual goals for supplier diversity initiatives. A supplier development program will help ensure that you continue to grow in the right direction and see a sustainable return on your efforts.
10. Improve Alignment and Engagement on Supplier Diversity Initiatives
Even more than supplier diversity programs, supplier development requires the support and involvement of your entire organization (beyond just your procurement department). Working one-on-one with suppliers encourages C-suite executives to become more intimately involved with these programs and aware of their benefits. This direct engagement will help improve buy-in for both supplier diversity and supplier development initiatives.
To learn more ways to improve and grow your supplier diversity program, download our latest Supplier Diversity Best Practices whitepaper below.