This report is developed in partnership with Procurement Leaders and The University of Tennessee.

Supplier diversity programs are nothing new. In fact, they’ve been around in one form or another for about 70 years, and they do have a role to play. If organizations don’t intentionally set out to have a diverse ecosystem of suppliers, procurement decisions tend to lead to some very nondiverse outcomes, for example, with white-owned businesses tending to buy from other white-owned businesses. Diversity programs set out to overcome these biases.

Companies launch diversity programs for a variety of reasons—from responding to government mandates or contract requirements to aligning with broader corporate social responsibility agendas or simply because it’s seen as the right thing to do. But does supplier diversity even matter? Are there actually any benefits to the business? What exactly are supplier diversity programs hoping to achieve? Again, the approaches differ. Some organizations look to buy more from businesses that are owned by specific social groups, defined by ethnicity or gender. Others cast a wider net, perhaps aiming for small local companies or businesses owned by military veterans. Some focus externally, looking to benefit certain social groups or types of businesses. Others turn inward, seeing benefits in terms of recruiting, innovation, agility, and market position. Some do both, well-aware of the potential impact not only from a societal point of view but also on their own bottom line.

In short, when it comes to supplier diversity, there are few hard and fast rules. So is it even the right objective? New research from the University of Tennessee reveals that the real destination might farther down the road: economic inclusion.

Economic inclusion moves beyond a narrowly defined diversity initiative and uses the company’s spending to work with the broadest possible set of economically and socially marginalized businesses and their workforces. In this whitepaper, created in partnership with Procurement Leaders and the University of Tennessee, we shed light on what an economic inclusion program looks like. We also offer a case study of a company that has taken pragmatic steps to diversify its supply base and support marginalized communities, and we pinpoint where forward-thinking businesses can begin to launch a policy of economic inclusion.

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