Supplier Diversity brings new opportunities for domestic market

Randall Mauldin
02-13-16 04:57 PM Comment(s)
Supplier diversity is slowly changing the face of the businesses in the United States. The economy is ripe for change and one of the contributing factors is the burgeoning growth of the minority population in the United States and its implication for business success.According to the U.S Census, with the current population growth rate, the minority population will most likely surpass the non-Hispanic, Caucasian population by 2050. It is expected that by 2050, the minority population will account nearly 90 percent of the total growth.Currently, minority businesses are starting to show unprecedented rates and are seen to contribute to the health of the national economy. Minority startup businesses have increased spending power within minority communities, and supplier diversity are creating new opportunities for astute companies to realize first-mover advantages in emerging domestic markets.Supplier diversity brings new opportunities to domestic marketsThe Spending Power of the MinorityAccording to a report of the U.S. Department of Commerce entitled Minority Purchasing Power: 2000 to 2045, the total purchasing power in the United States in 2000 was over $6.5 billion, with white non-Hispanics accounting for nearly 80% of the said purchasing power.The buying power of the African-American, Hispanic and Asian communities between 1990 and 1997 rose by 54 percent, 58 percent and 72 percent respectively. The said trend is expected to continue with the minority purchasing power surpassing $3 trillion by 2030.Business Opportunities in Supplier DiversityOne of the best ways to explore new markets is through supplier diversity. According to Gwendolyn Whitfield, PhD, supplier diversity is the process of  sourcing supplies from minority businesses and presents, the most rousing opportunity for companies facing changing demographics: the chance to gain a competitive advantage in minority communities by partnering with key stakeholders.Moreover, supplier diversity has become an important management practice in most corporations around the United States of America.According to Whitfield, in 2006, the National Minority Supplier Development Council (NMSDC) reported that America’s largest corporations purchased more than $100 billion in goods and services from minority-owned businesses, up from $94.6 billion in 2005. This is significant given that purchases from minority-owned businesses were just $86 million in 1972.The Bottom Line in Supplier DiversityThere are a lot of misconceptions when it comes to supplier diversity. Contrary to the misconception, supplier diversity does not have to cost more and may provide tangible benefits. According to the research conducted by the Hackett Group, there is no evidence that companies that pursued supplier diversity programs had less effective operations.The finding of the Hackett Group depended on an investigation of 50 organizations from both the administration and assembling segments. Driving obtainment associations had marginally higher selection rates of supplier differences than the commonplace organization, yet created 133 percent more prominent returns in the expense of acquirement than the normal performer, driving an extra $3.6 million to their organization's primary concern.For organizations who wish to work with minority suppliers, the initial step is to recognize them. There are various national associations that give arrangements of different suppliers to potential purchasers.