MIT Sloan Management Review Article on How Procurement Can Strengthen Diversity and Inclusion

As we emerge from the pandemic, broad interest in socially responsible companies is accelerating. Investors are pouring their money into funds designed to promote social good, and one company after another is announcing initiatives to encourage diversity and inclusion. Until now, driving economic growth and confronting social equity haven’t necessarily gone hand in hand. Today, companies can not only meet both requirements but also combine them into a competitive advantage by procuring more from diverse suppliers — defined as small businesses or companies owned by minorities, women, veterans, members of the LGBT community, or people with disabilities.

Supplier diversity and inclusion initiatives can make a significant difference to companies’ revenues and to communities. First, customers are three times more likely to purchase a product or service from a brand they perceive to be committed to diversity and inclusion. Second, directing $1 million in procurement spending toward diverse suppliers can create as many as 10 new jobs, according to research conducted by diversity analytics provider Proximo. These jobs drive at least $124,000 in economic impact through tax revenues, helping to build local communities where the suppliers operate.

About the Author

Karina Swette is a partner and Timi Boyo is a principal in Oliver Wyman’s operations practice.

David Ricciardi, president and CEO of Proximo, also contributed to this article.

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