Understanding tiered supplier diversity is important for any business who hopes to expand their partnerships to new talent and network with different companies – all while benefiting their communities and their business’ bottom line.
Supplier diversity is a simple business strategy where some government entities, not-for-profits, and businesses in the private sector require contracts with Certified Diverse Suppliers.
What Defines a Certified Diverse Supplier?
A Certified Diverse Supplier is acknowledged as being owned, managed, operated, and controlled by a qualifying diverse group. There are approximately 16 categories of diverse businesses, some of the most common being Small Business Enterprises (SBE), Women’s Business Enterprise (WBE), and Minority-Owned Business Enterprise (MBE).
Groups like the Women’s Business Enterprise National Council (WBENC), the National Minority Supplier Diversity Council (NMSDC), the U.S. Department of Veterans Affairs Vets First Program, and the National Gay and Lesbian Chamber of Commerce are responsible for ensuring that each diverse business is categorized correctly by providing nationally recognized third-party certification services.
Tier I VS. Tier II
Tier I describes any relationship between a business and its direct supplier. Tier II takes that one step further, and represents when the business’s direct supplier contracts with other diverse suppliers. In supplier diversity programs, there is no limit to how many Tier I & Tier II suppliers may be contracted, creating a large opportunity for growth. As businesses realize the many benefits of supplier diversity programs, more and more are incorporating Tier I and Tier II spends into their strategy.
Benefits of Boosting Supplier Diversity
Adding Certified Diverse Suppliers into a business’s strategy offers a range of benefits for the business, the suppliers, and their communities.
Tier I and Tier II Supplier Diversity:
– Provides multiple channels from which a variety of goods and services may be accessed.
– Drives competition on price, quality, and service between current and future suppliers.
– Encourages innovation with the introduction of new products and services.
– Displays an organization’s commitment to working in diverse markets and support of economic growth.
– Creates opportunities for business expansion and growth.
– Provides goods and services to emerging consumer markets.
– Drives job creation in minority communities.
– Allows businesses to gain a competitive advantage in minority communities.
– Opens the doors to contracting opportunities with the Federal Government.
Contrary to popular belief, supplier diversity doesn’t necessarily cost a business. In fact, research shows that the opposite is true – supplier diversity programs may actually contribute to profitability; and according to research, businesses that embrace diversity are more profitable than those who do not.
Here at Alpine, we are proud to be certified by the Women’s Business Enterprise National Council (WBENC) as a Women’s Business Enterprise (WBE). If you’re looking for a packaging or labeling supplier that meets the demands of a Supplier Diversity program, we’d love to talk with you about how we may be a good fit!