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supplier diversity programs

Companies to expand their supplier diversity programs

Companies are planning to “dramatically expand” their supplier diversity programs over the next few years, in response to global calls for social reforms and racial equality, according to a study by The Hackett Group.

The study surveyed in early 2021 over 100 large global and US-based companies regarding their supplier diversity programs and strategies and found that they currently dedicate 7.2% of their spending to diverse-owned businesses – which is equal to $72 million per billion of total spend.

By 2025, companies expect more than a 50% increase in their “diversity spend goals,” equating to an average target of 13% of their spending dedicated to companies across a range of underrepresented diversity groups, The Hackett Group says.

Furthermore, by 2025, top-quartile supplier diversity organizations plan to spend 54% more of their total spend with diverse-owned businesses compared to median organizations (20% goal vs. 13%).

Out of the surveyed firms, around 30% said they are “setting formal diversity spend goals for the first time in response to the increased focus on social reform and racial injustice in 2020.”

Women-owned businesses are top diversity category

While women-owned businesses are currently the top diversity category globally, major spending increases are expected across different diversity groups.

The survey found that 77% of respondents are planning an increase in spending with black-owned businesses, 66% with LGBTQ-owned businesses, 65% with women-owned businesses, 62% with Hispanic-owned businesses and 63% with service-disabled veteran-owned businesses.

4 key trends

Four key trends from The Hackett Group’s 2021 Supplier Diversity Study:

  • Supplier diversity programs make a big impact: $72 million spend with diverse-owned business per billion of total US spend – 8% median 2021 spend goal for diversity (as a percentage of total spend).
  • Enterprise support and alignment are critical: Supporting diversity and social responsibility corporate culture is the top objective for supplier diversity programs – 92% of organizations allocate funds toward supplier diversity.
  • Supplier diversity programs are growing: 77% of organisations planning an increase in spend with black-owned businesses – 83% of organisations already have or plan to dedicate funds for supplier development activities.
  • Supplier diversity is a global initiative: 69% of organisations have a global supplier diversity program or are planning to expand globally by 2023 – Woman-owned businesses are the top diverse category in all regions.

Laura Gibbons, Senior Research Director, Procurement Executive Advisory Programs for The Hackett Group and the study’s co-author, said: “As a direct result of the worldwide social reform movement, this has become a board-level issue. Companies are seeing calls to action from consumers and employees to invest in environmental, social, and corporate governance. It’s encouraging to see that an increased focus on supplier diversity is a clear part of this effort for most companies.”


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