Supplier Diversity Benefits and Why It’s a Business Imperative
Eighteen percent of all U.S. businesses are minority-owned, and 20% are owned by women. Together, that's more than 2 million businesses. Yet, there is a major delta when it comes to the need enterprise organizations have to source from new and diverse-owned businesses and the actual spend going to these suppliers. Learn how working with them can make your organization not just more ethical, but also…better.
Debunking the supplier diversity myth that's holding you back
A common assumption that holds businesses back is that working with diverse suppliers will make them less efficient. This is false. Diverse suppliers are more likely to bring greater hustle, agility, and creativity to the table because they are running a leaner business. They are more likely to say “sure, we can do that,” to a request that might fall out of their core area of expertise, as well as provide out-of-the-box thinking. What’s more, according to a recent research brief from Bain & Company, based on Coupa data, companies that invest in diverse suppliers do better in additional spend KPIs.
Companies that are leaders in diverse supplier spend are significantly more efficient in every category of electronic purchasing and invoicing. In addition to more electronic transactions, they also experience faster invoice approvals, faster order processing, more preapproved spend, and significantly higher annual retention rate (20% higher, on average).
With higher rates of preapproved spend, you have more employees buying from contracted vendors, getting negotiated savings, and complying with internal controls and policies — which all helps avoid unnecessary spend, reduce risk and fraud, and provide visibility into how a business is spending against its budget. It also contributes to cash savings. In addition, greater rates of electronic transactions speak to how much farther along these companies are in their digital transformation, which, in turn, helps you save paper and reduce your carbon footprint.
Even better, it was also found that top companies with diverse supplier spend saved an additional 0.7 percentage points in total procurement expenditures compared to the average. For a large enterprise with about $1 billion in spend, that 0.7% is a savings of $7 million.
By supporting diverse suppliers, you also support your own business success.
You have good intentions. Let’s talk about execution.
Diversity and Inclusiveness (D&I) does not happen in isolation. It has to become part of your business fabric. Coupa’s here to help.
Coupa works with leading customers to understand their diversity needs across spend, procurement, and supplier health. Building on top of our vast community of buyers and suppliers, we go beyond classifying and reporting on diverse businesses (minority, women, LGBTQ, veteran, disabled, and small). We make them easier to find and transact with.
We have curated one of the largest pools of diverse data in the U.S. (expanding globally). In addition to classic sources, we leverage aggregated transaction data already processed through Coupa. It is "actual," not declarative. Only Coupa can do it thanks to Community Intelligence.
Our D&I product capabilities have been infused in our core spend management workflows — not in separate apps — at opportune Business Spend interactions to
- Track diverse spend for known and potentially diverse suppliers identified through Community data, with out-of-the-box dashboards;
- Receive proactive notifications of opportunities for diverse spend (e.g., for large requisitions of commodities not using diverse suppliers);
- Discover diverse suppliers and opportunities “in context” of real-time spend activity (e.g., sourcing, contracts, open purchase orders, pending invoices);
- Consolidate diversity data across Business Spend Management (BSM) for internal and external compliance, with the unified collection of certificates and management of approvals; and
- Model the right employee behaviors, with diversity filters for item search or supplier selection in sourcing.
Let’s all become smarter together
As organizations strive to be more socially responsible at the urge of their boardroom, but also their customers and employees, engaging with more diverse suppliers is the right way to do good, while saving and improving efficiency.
At Coupa, we strive to expand the reach of supplier diversity, along with facilitating sustainability and reducing carbon footprints for procurement, expenses, payments, supply chain, Treasury, and other business teams. We are already setting higher goals for Environmental, Social and Governance (ESG). Join us on community.coupa.com to share your ideas.
More than ever, it is time to spend smarter together!