It’s no secret that many businesses are enacting change to deliver value. For many, that means focusing on diversity and inclusion initiatives that bring meaningful change. With the global adoption of the United Nations 2030 Agenda and Sustainable Development Goals, as well as the impact of consumers looking to brands to lead social and environmental change, being committed to diversity and inclusion is more than just a box to check for businesses.
In supply chain, diversity expands beyond a range of age, race, gender, orientation, and cultural backgrounds in the workforce – it should be carried across to procurement.[i] Having a resilient and flexible supply chain includes being strategic about the suppliers you choose to work with, their ethics, and how together you can have a real impact on the economy.
Seeking diversity across an organization is a great first step, and it needs to be tied in with inclusion to have real impact. Ensuring that diverse voices across the entire organization are heard and leveraged is essential to achieving a high-performing supply chain.
“Inclusion is not a matter of political correctness. It is the key to growth.”— Jesse Jackson
Diversity and Inclusion – what’s the ROI?
Having a diverse and inclusive workforce comes with a myriad of benefits that lead to a competitive advantage.[ii] A McKinsey study found that inclusion of highly diverse individuals – and the multitude of ways in which diversity exists beyond gender (e.g., LGBTQ+, age/generation, international experience) – can be a key differentiator and essential growth.
Attract and Retain Talent
Deloitte’s research directly links workplace diversity and inclusion to higher employee engagement and retention. When employees feel included, accepted and valued at work, they are more engaged and more likely to stay with an organization for a longer period. A recent ZipRecruiter survey showed that workplace diversity is an important factor for an astounding 86% of job seekers and that Millennials, who make up two-thirds of today’s U.S. labor force, are likely to stay nearly twice as long at a company that fosters diversity, equity, and inclusion.[iii]
The State of Sustainable Supply Chains report produced by Ernst & Young and the UN Global Compact shows that having diverse procurement practices also plays a role in attracting top talent. When an effective supply chain diversity program is in place, employees are also more likely to be engaged and promote the program to others.
Having access to a variety of different perspectives also unlocks creativity and higher innovation. Companies with higher cognitive diversity make better decisions and solve problems more quickly.[iv]
More inclusive companies are 1.7 times more likely to be innovation leaders in their market.[v] A Boston Consulting Group study found that companies with more diverse management teams have 19% higher revenues due to innovation. This is especially significant for tech companies, start-ups and industries like supply chain where innovation is the key to growth.
Having diverse partners and suppliers can also help drive innovation. Google understands the value of diverse perspectives and created its supplier diversity plan with innovation in mind. They connect their employees with diverse-owned small suppliers, connect those diverse businesses to opportunities within Google, help those suppliers grow with Google tools, and encourage information sharing and feedback on those tools to foster innovation.
Diversity and inclusion, especially at leadership levels, can have a direct impact on profits. A recent study by McKinsey showed that companies in the top-quartile for ethnic and cultural diversity on executive teams were 33% more likely to have industry-leading profitability. At the board of directors level, more ethnically and culturally diverse companies were 43% more likely to see above-average profits. Considering that 83% of chief supply chain officers are men, there is plenty of room for improvement in the supply chain industry.
A CVM solutions report measuring the success of supplier diversity programs found that minority business enterprise sales are growing twice as fast as the national average. Organizations that incorporate diverse suppliers into their supply chain procurement strategy can leverage that growth as well. The Hackett Group found that companies that allocate 20% or more of their spend to diverse suppliers can attribute as much as 15% of their annual sales to supplier diversity programs. Previous studies showed that companies with a strong focus on supplier diversity generated up to 133% greater procurement ROI than other businesses, resulting in an additional $3.6 million to the company’s bottom line.[vi]
Inclusion is more than a metric to strive for, it’s an integral part of a successful revenue-generating business that extends across the entire supply chain.
Improving Diversity and Inclusion
Talking about diversity and inclusion can be challenging and implementing changes for improvement across an entire organization can feel insurmountable. Here are four simple things to consider when seeking to create a more inclusive workplace, workforce, and supplier network.
An Inclusive Workplace
- Do you have an environment where all voices can be heard? Creating an atmosphere where employees feel comfortable speaking up knowing their opinions are valued is a critical first step to improving inclusion.
Policies & Benefits
- Are existing workplace policies diversity-friendly and fair to everyone? Ensuring benefits ‘benefit’ everyone equally and offering flexible schedules, leave options, holidays and meal choices can help retain a more diverse workforce.
- What kind of learning and development resources are provided to employees? Providing employees with personal assessments to better understand themselves is key to being able to identify differences and a better understanding of others. Encouraging employees to engage in training around topics, like unconscious bias, will also help create more awareness when collaborating with diverse co-workers
- Is there ample opportunity to work on diverse teams? Management can help leverage diversity across the workforce by strategically partnering employees from different generations, geographies, hierarchical levels, and cognitive processes on specific projects.
An Inclusive Workforce
- Are you able to leverage your existing diverse workforce for recruiting? Talented candidates often come from employee networks. If an inclusive atmosphere is established, the existing diverse workforce will feel more comfortable referring similar candidates.
- Is diversity highlighted on your career site? Do you have a diversity and inclusion strategy posted on your website? If diversity and inclusion commitments aren’t visible and well communicated, potential candidates could assume that they don’t exist and pass on applying.
- How diverse is your recruiting interview panel? Including diverse people in your recruiting process will help improve the fairness and equality principles of the recruitment process and uncover unconscious bias.
- Are adequate diversity and inclusion resources provided for recruiters? Training recruiters to be more aware and sensitive of bias is critical to helping them learn how to avoid bias in recruitment.
An Inclusive Supplier Program
- Are diversity and inclusion important to your executive team? Having buy-in from the top down for a supplier diversity program is critical to its success. When diversity and inclusion are built into the company’s core values of leadership it becomes more than just a best practice, it becomes a commitment.
- How much diversity is there in your current supply chain? Knowing your supply chain is the first step in assessing its diversity. Identify and classify the existing supplier base and take note of any specific diversity classifications that are missing.
- Is diversity part of your onboarding process? Monitoring data, like third party diversity certifications, can be more complicated and time consuming if not captured on the front end.
Tools and Systems
- Do you have the right tools to pull proper data and reporting to meet your goals? Tracking metrics can become complicated, so having adequate vendor management software can make your supplier diversity goals more attainable.
At Blue Yonder diversity, inclusion, value and equality are core tenets of our culture. To underscore these initiatives, Girish Rishi, CEO, has taken the personal pledge to advance diversity and inclusion through the CEO Action for Diversity & Inclusion coalition.
To learn more about DIVE at Blue Yonder, visit our new DIVE IN blog series.