Supplier diversity has its roots in the civil rights movement of the 1960s, which gave rise to new legislation and economic opportunities for minorities. The real catalyst for supporting minority businesses was Executive Order No. 115, which was signed by President Richard Nixon in 1969. This created the Office of Minority Business Enterprise, now known as the Minority Business Development Agency (MBDA), an entity dedicated to promoting the growth and competitiveness of minority-owned businesses. 

The expansion of the MBDA in 1971 gave rise to the founding of what is now known as the National Minority Supplier Development Council (NMSDC), which has a vast network that supports and facilitates the integration of minority-owned businesses, such as minorities, women, veterans, LGBTQ+ individuals and people with disabilities into corporate and public sector supply chains. 

Implementing a supplier diversity program not only contributes to social responsibility but also brings economic benefits, fosters innovation and enhances a company’s overall competitiveness. It reflects a commitment to creating a more inclusive and equitable business environment. 

Zions Bank and its parent company, Zions Bancorporation, have always been known as a bank for small businesses and have strongly supported diverse small businesses. During the U.S. Small Business Administration’s 2021 fiscal year, Zions Bancorporation ranked 22nd in the nation in SBA 7(a) loan approvals, and 31.8 percent of SBA 7(a) loans approved by Zions during the period were made to women-owned businesses and entrepreneurs of color.

“Our supplier diversity initiative has been designed so that diverse businesses have open access to contracting opportunities available within the company. Just as the diversity of our employees enhances our business culture, supplier diversity provides us a competitive advantage in the marketplace, is an integral part of our long-term business strategy, and helps us contribute to the communities in which we work and live,” says Harris Simmons, chairman and CEO of Zions Bancorporation.  

According to Procurement Tactics, 85 percent of U.S. companies have a supplier diversity program. In its 2023 benchmarking survey of nearly 500 companies, Supplier.io—which provides sourcing solutions for supplier diversity programs—reported companies spend on average 3.6 percent on diverse suppliers, and some industries spend as much as 9.1 percent.

The NMSDC reports that certified minority business enterprises generate $400 billion in economic output that creates or preserves 2.2 million jobs and $49 billion in annual revenue for local, state and federal tax authorities. And those numbers are steadily increasing.

To encourage such growth, Coca-Cola aims to grow spending up to $1 billion with diverse suppliers. Together with Georgia State University, Coca-Cola formed a supplier-development institute in 2016 to provide education on how to start businesses for small and disadvantaged groups, and it also has the STEP initiative to support women entrepreneurs through training, education and mentorship.

Utah, as a state, can benefit from more companies having a supplier diversity strategy or program in a few ways:

1. Economic growth

Supplier diversity programs can stimulate economic growth by providing opportunities for a broader range of businesses to participate in procurement processes. This can lead to job creation, increased tax revenue and overall economic development. 

When researching how to get his craft cerveza into retailers, Javier Chavez learned about supplier diversity. After discovering Walmart had a supplier diversity program, he certified Cerveza Zolupez Beer as a minority business enterprise. Since then, more doors have opened into various national retailers, accelerating its business sales. Chavez also certified his law firm and his family’s restaurant business as these types of enterprises, each experiencing similar success. 

2. Innovation and competition. 

Diverse suppliers often bring unique perspectives, ideas and innovations to the market. By including a variety of suppliers, corporations can foster competition and encourage the development of creative solutions, which can lead to improved services and cost efficiencies.

Inlingua provides various language products, such as translation and interpretation services and corporate language training. In a world economy, bilingual employees have become a must. Its extensive knowledge of world cultures has helped clients find a one-stop solution for their language needs. Certification with the NMSDC has strengthened client relations and connected them with large multinational corporations.

3. Enhanced reputation.

As diverse businesses grow and their successes become more visible, it enhances Utah’s inclusive and socially responsible reputation. This positive image can attract more corporations, talent and investments contributing to the overall attractiveness of the state as a place to live and do business. When I led the Utah Black Chamber, new community professionals would always ask about barbershops, salons, restaurants, churches and other companies they could go to they could identify with and meet their cultural needs.

By creating a diverse and inclusive supply chain, companies contribute to social equity and unlock new avenues for growth and resilience. I would like to see more companies subscribe to establishing a supplier diversity program. As organizations continue to recognize the value of supplier diversity, they play a pivotal role in driving positive change and shaping a business landscape that thrives on collaboration, equality and sustainable success.