Supplier diversity programs — which build on the economic impact purchases have on historically underutilized and underserved communities — have roots in the 1953 creation of the Small Business Administration (SBA).
The SBA was created as an independent agency of the federal government. Its mission is to help small-business owners and entrepreneurs pursue the “American dream.”
In 1964, the Civil Rights Act expanded the SBA’s mission to include minority-owned small businesses, seeking to end the discrimination that gave greater opportunities to non-diverse companies.
According to Proximo and SourceOne Innovations, Inc., customers are increasingly demanding that the source of their goods comes from diverse suppliers, and that they report the value of these purchases. Qualifying diverse businesses most often include those owned by women, minorities, LGBTQ+, veterans, and people with disabilities.
Many understand that having a supplier diversity program is fast becoming a mission critical activity, but few understand how to start the process of building a program.
For many California hospitals, supplier diversity reporting is required under Assembly Bill 962. To comply with the reporting requirements, hospitals need to know which of their vendors are diverse. But simple reporting — especially if the numbers are “zero” — is only the first step. Hospitals will eventually need to grow those numbers, which means they’ll have to continually identify new diverse suppliers and opportunities for them.
While the purchase value of goods and services does measure success, the real spirit of a supplier diversity program is the economic impact of these purchases on underrepresented and underserved communities. Many suppliers selling to a company are often members of those communities, and purchases from diverse suppliers positively impacts them and their communities.
Research has shown correlations between the impact of spending in diverse communities and positive health outcomes in those areas. Not only does this help a hospital meet its mission, but positive health outcomes, especially lower incidences of chronic conditions, can over time alleviate the system stress experienced by many hospitals.