Forecasting Change: Supplier Diversity Trends Shaping 2024

Supplier diversity is gaining traction thanks to its positive impact on procurement investments, cost reduction, and client attraction. A report by Supplier.io found that companies, on average, spend 3.6% with certified diverse suppliers—with a best-in-class average of 9.1%—and 7.5% with small and diverse suppliers. Yet, a lens zoomed in further into the data reveals a concentration risk: 80% of companies spend less than 5% with diverse suppliers, and the top 10 diverse suppliers receive 17% of all diverse spending. 

This blog post explores the key factors influencing the supplier diversity sector in 2023. We’ll evaluate spending commitments from major corporations, economic impacts generated by these initiatives, and more to comprehend how the supplier diversity sector is setting the stage for 2024.

The rising spending commitments to diverse suppliers vividly outline the trajectory towards more inclusive procurement practices. Around 75% of organizations had already projected increased spending with diverse suppliers by the end of 2022. Which was a substantial leap from 49% in 2020. This upward curve was more than a subtle nod to inclusivity. It was a strategic business move. Companies nurturing relationships with diverse suppliers are witnessing a 133% higher procurement investment return than their counterparts.

This data clearly indicates the tangible benefits of supplier diversity, highlighting the financial returns extending beyond moral imperatives.

For further reading: Supplier Diversity the Key to Maximizing Business & Societal Impact?

We’ve seen that companies prioritizing supplier diversity this year are enjoying a significant reduction in their spending on buying operations. Large organizations report a 20% savings, ushering in a more efficient, cost-effective procurement process. This is an important statistic to consider when you’re evaluating supplier diversity initiatives for the next year.

In the United States alone, 8.1% of procurement spending goes to diverse suppliers. This growth shows that more and more people are realizing how important it is to work with suppliers from different backgrounds. Furthermore, 94% of organizations with supplier diversity programs are experiencing increased client attraction or retention. This highlights a mutual benefit for diverse suppliers and businesses aiming to boost their revenue. This is moving the economy towards more equity and inclusivity. 

With over 40% of U.S. firms adopting supplier diversity programs, big corporations are leading the charge to foster a more equitable business environment. Taking a cue from Johnson & Johnson, which invested $2.3 billion in supplier diversity, companies like Intel, Microsoft, and Google have set significant spending goals with diverse suppliers. Additionally, Walmart has committed to sourcing $10 billion annually from diverse suppliers by 2025.

Intel actually exceeded its goal of spending $300 million annually with diverse suppliers. This speaks volumes about their proactive approach to fostering an inclusive business setting. It also fuels job creation and economic growth for minority-owned businesses. Intel’s success hints at a bright future for supplier diversity.

These stats are a powerful indicator of their dedication to creating a more equitable and inclusive business environment. This will help ensure that minority-owned businesses have equal access and opportunities as larger companies and that their products and services are given the same consideration. Above all, this serves as a reminder that businesses of all sizes can make a difference in the lives of minority-owned businesses and their communities.

Entering 2024, the trajectory is clear: supplier diversity is not a fleeting trend but a fundamental pillar of success with far-reaching societal impacts. Looking ahead, technological advancements such as digital platforms for supplier discovery, blockchain for transparency, and artificial intelligence for supplier qualification will shape the coming decade. These tools, along with improved data collection and standardized metrics, are setting a new standard in tracking and benchmarking supplier diversity progress.

As businesses, policymakers, and stakeholders, it is our responsibility to embrace supplier diversity and inclusion. This commitment will spur tangible economic benefits. These advantages of supplier diversity are majorly reflected in job creation and fostering increased competition. By including diverse suppliers, companies not only create more employment opportunities but also encourage a competitive market environment, which, in turn, drives innovation and delivers better value to consumers. Additionally, it contributes to social equity by opening doors for underrepresented groups, thereby building stronger, more resilient communities.

The coming year will see an emphasis on exploring emerging trends, technologies, and best practices. Collaboration among organizations, researchers, and policymakers will take precedence in developing innovative strategies for more inclusive supply chains. This joint effort will be the key to fostering a business ecosystem that celebrates diversity, empowers the underrepresented, and fuels innovation and collaboration.

Connect with Crave InfoTech to embark on your journey towards a more inclusive supplier diversity ecosystem. Discover more about our expertise at Crave, and together, let’s step into 2024, rich in business diversity and innovation.