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Alignment with supply management objectives — Rather than conflict with supply management goals such as cost reduction, supplier diversity programs are a key facet supporting those goals. Small and diverse businesses typically have lower cost structures (meaning better value), are more creative and innovative, and can provide a customer focus beyond what larger firms can offer. Larger companies often embrace small companies with large potential, investing in them to help them realize their full potential. The benefit is a close and trusting relationship that can often become a source of competitive advantage.

In conclusion, there is growing evidence for a link between increased supplier diversity and increases in shareholder value. What separates the most successful companies is their ability to effectively communicate the drivers for the business case throughout their organizations. With a strong internal commitment to supplier diversity, successful companies are building a new type of competitive advantage that will enable them to more effectively leverage the value of a diverse supply base.

About the Author: Raj Sharma is founder, president and CEO of Censeo Consulting Group. He has more than 14 years of experience working with and advising senior management of Fortune 500 companies and federal government agencies on how to address complex business issues related to supply chain and procurement. Prior to founding Censeo in 2003, he held several sourcing and supply chain management positions at Booz Allen Hamilton and FreeMarkets (now part of Ariba).