Supplier Diversity Could Add $280 Billion To The U.S. Economy
The U.S. economy is being called to task regarding the very top of mind subject of diversity, specifically when it comes to suppliers and vendors that could add $280 billion in extra income and four million jobs. A new McKinsey report “Expand diversity among your suppliers—and add value to your organization” found that the U.S. could reach these figures if spending with minorities and women increased.
The Breakdown You Need To Know:
CultureBanx reported that diverse supplier representation will contribute to the long-term success of the U.S. economy. Specifically, the report found that if 40% of the $50 billion that companies have pledged to Minority/Woman Owned Business Enterprises (MWBEs) went into these sectors, that would equal $20 billion in revenues for MWBEs. This would bring some 190,000 jobs and $15 billion in income for minority communities.
“Expanding the scope of supplier diversity would create more jobs for minorities in higher-wage sectors and in roles less likely to fall prey to machine learning and AI,” the researchers wrote. Some key benefits for working with MWBEs include increasing corporations’ speed, agility, localization, and innovation of products and services.
Supplying Corporate America With Diversity:
Corporate America is trying to do its part. For example, Citi has an Action for Racial Equity plan that includes $50 million in impact investing capital for Black entrepreneurs, $350 million in procurement opportunities for Black-owned business suppliers, and $50 million in growth capital to Minority Depository Institutions (MDIs). Even Facebook has committed a broader $1.1 billion investment in Black and diverse suppliers and communities in the U.S.
Large organizations spend 58 cents of every dollar in revenue on payments to suppliers and can therefore benefit by increasing their diversity. Leading companies know this, and perhaps this is why they have committed more than $50 billion to partner with MWBEs over the next decade.
Shelley Stewart III, a senior partner at McKinsey, said that “The supply chain reset is a great opportunity for companies to redevelop their supply base with an eye toward increased participation from minority businesses.”
It’s not just corporate America getting onboard with supplier diversity so is the U.S. government. They are doubling down on supplier diversity, and in 2021, the Department of Commerce made the Minority Business Development Agency permanent and expanded its mandate to coordinate and partner with MWBEs.