Secure Your Business with Vendor Diversity Programs as a Supplier Risk Management

In the current, tricky economic environment, businesses have to focus on supplier risk management. One cannot count on a business to be always successful and in operation, and it is, therefore, best to be cautious and to create a diverse portfolio of suppliers at all times. While focusing on supplier risk management may seem like a way to be too cautious and conservative, it actually can have exactly the opposite effect. A common tactic that is far from conservative is focusing on vendor diversity programs. Even extremely large and successful corporations who are at little risk of financial failure, such as Wal Mart, are utilizing vendor diversity programs as a form of supplier risk management.

Vendor diversity programs encourage businesses to look for suppliers that have been underutilized and brushed aside in the business world. In the past, business was rampant with discrimination. This is falling away as we become a more liberal and global society, and as all groups of people are learning to work with those of other nationalities, genders, races, and classes. This assures you a larger group of suppliers to choose from and makes it more likely that your vendor will weather any coming economic storms.

These programs encourage the use of vendors that are women owned, minority owned, veteran owned, LGBT owned, or SBA defined as a small business. Far from being overly conservative and limiting, this opens up your business to new products, ideas, and customers bases that you may have never considered before. When you work with people who have been underrepresented, you will find yourself exposed to new ideas, products and services that have been underutilized in the marketplace itself. This will encourage customers that you have never attracted before to consider your business or service. It also offers you fantastic social marketing, which is terribly important in this golden age of social media. You can tie your business in with charities and grassroots organizations, which help to foster an image of your business as caring, concerned part of the community.

A choice like this can breed customer loyalty and trust, which is hard to come by in this area of bitter, cynical, and economically hard-pressed consumers. While you help keep your business’s supply chain healthy and safe, you can also give back to the community, expand your product base, and attract more customers than you have ever dreamed of having before. This is a win for society and your business.

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Avoid Finding a Difficult Compliance Management Solution by Focusing on Supplier Diversity

Many issues facing modern businesses require finding a difficult compliance management solution, and creating complicated solutions to regulatory problems. With the current climate of mistrust and lack of faith in big businesses, a compliance management solution seems to be required for nearly everything you do as more and more regulations are put in place, either by the government, by self-regulating boards and committees, by watchdog organizations, or by your corporate office itself. Not all current problems are so difficult and complicated, however. Even some of the biggest, most taxing problems can be easily solved by implementing supplier diversity.

Every business and economic expert agrees that the current financial climate is a terribly dangerous one for small businesses, suppliers, vendors, and even some of the larger, more financially sound chains. A great way to assure that your business is able to withstand the coming trials of the current economy is to practice supplier diversity. This helps assure that you are constantly working with a wider variety of suppliers and vendors than previously possible, increasing the odds that more of your business partners will stay in business for the long term. If you are not risking all of your business on one set demographic or area to get your supplies and products from, you instantly increase your chances of having a reliable source that can weather unforeseen problems in the business market.

This is a remarkably simple practice to implement, and requires very little in the ways of solution searching and planning. All a business does in this case is expanding the sort of vendors they order from. Such programs generally focus on using suppliers that are owned by women, by minorities, by veterans, by disabled veterans, by LGBT members, or by certified small businesses. Many of these business owners come from demographics that have long been marginalized and under used. This is a fantastic market to tap into as it allows you a wealth of new ideas, products, services, opinions, and customers that you previously may not have considered.

This creates several large benefits for your business. In addition to making your business more strong and healthy, you also are doing a social good. This increase the positive image customers will have of your business, and will assure you have a more loyal customer base. This is vital in trying times when customers are more cautious with how they spend their limited dollars.

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Is it Necessary to Manage Risk when it comes to Supply Networks?

Risk management is fundamental to running a successful business regardless of the nature of the business that you operate. It has come into sharp question if it is genuinely necessary to invest in systems to manage the risk that is occasioned by the use of external suppliers or not. While everyone is in agreement about the necessity of these systems within the context of business, the question is whether supplier diversity programs are essential. There are those who are of the opinion that these systems add nothing more to the company than an aspect of diversity and affirmative action. Understanding the basics of these programs is essential in order to understand these programs’ importance and relevance to modern business operations.

 

Supplier diversity programs

These are programs that are used to infuse some diversity in the nature of the suppliers with whom the company operates. It assists the company to increase the overall equality of the different demographics that are used in their supply network. Companies are, therefore, able to create a supply network that closely represents the demographics of the society in which they operate. It is, hence, clear that these programs provide the much needed infusion of equality into the business world. Many people are, therefore, unable to see why what comes across as a project stemming from affirmative action philosophy is able to help a company manage its risk factors. Here is how increasing the diversity of suppliers in a company lowers their exposure to risks caused by external factors.

Homogeneity in suppliers increasing specific risk profiles

Having a highly homogenous group of suppliers increases the company’s exposure to specific risk profiles. This is because the similar the suppliers are the likelier it is that they are exposed to specific risks as a group. This means that even where the company seeks to protect itself from these risks by using the appropriate supplier performance management systems, they will be unable to reduce their overall exposure. The program provides value to the business as a whole and enable them to be operational in adverse socio-economic conditions affecting certain segments of the society too.

Compliance risk factors

Modern business is subject to a number of regulatory and oversight mechanisms that are meant to ensure that the company operates within the law. It is, therefore, necessary for the company to use supplier diversity to ensure that they are able to meet the regulations that have been instituted. This is especially valid as far as economic equality and fair opportunity regulations are concerned.

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