Supplier Diversity Strategy

Supplier diversity is a type of a business strategy which ensures that there is a diverse supplier base in terms of the procurement of services and goods. The concept emphasizes on the creation of a particular diverse supply chain which works in order to secure the inclusion of diverse groups in the plans of procurement for the government, private industry, and non-profit motives. Research indicates that the companies which have embraced and implemented diversity are considered to be more profitable than the companies which do not take diversity as a business strategy. On an average basis, diversity programs contribute at least 3.6 million dollars for every 1 million dollars in terms of procurement costs (Abrams, 2013). The rate of return on investment on such companies is very undeniable making it a successful strategy for a business. Every return on investment that backs up the social reputation is supposed to push the supplier diversity to greater levels in the forefront of the business strategy. Advantages of having supplier diversity are the fact that there will be more earnings since it drives the competition to high levels while lowering cost and prices of commodities. Consumption is increased to higher levels when businesses engage in supplier diversity. 

Basically, there are more than 16 categories which can be used in identifying the business diversity. The most common categories include the minority-owned business enterprises, business enterprises for women, and the small enterprises for business. For an organization to have a record and a report on diverse spending, the organization must ensure that the suppliers have been certified through the third party bodies of certification (Ling, 2017). Diversity certification is a very crucial step in the lifetime of any supplier since it depicts that the business is managed, controlled and managed by a diverse group which is qualified. Being satisfied usually, opens the doors the ways for a business to be in contract with the government that has the capability of increasing the number of suppliers in an organized plan. Considering an example of a company that has engaged in diversity such as coca-cola, there are numerous benefits which are derived from such a strategy. Coca-cola is practically the leading company when it comes to beverage and other major brands. Coca-cola does not only deal with beverage soft drinks and sugar-related products but also deals with products such as water, juices, coffee, tea and many other products (Barnes, 2015). This indicates the level of diversity which has earned the company huge profits over the years it has been in operation. Looking at the profit margins of coca-cola company, it is evidently correct to say that it is one of the highest revenue making companies in the world. The gross profit margins as of December 2016 were at 61 percent increase compared to the closest competitor PepsiCo which was at 55 percent.

period	31/12/2016 ($)	31/12/2015  ($)	31/12/2014   ($)
Total revenue	41, 863,200	44, 293,000	45,999,000
Cost of revenue	16, 466,000	17, 483,000	17,888,000
Gross profit	25, 397,200	26, 810,000	28,111,000

 

In many cases, the general public and business people have been made to believe that diversity is nothing but a quota program that is meant to benefit the selected groups of individuals through adding no value to the least level but the idea is a competitive advantage. Competitive advantage exists in almost every level of the business where the organizations have already taken advantage of the opening. Supplier diversity benefits the organization since it gives a chance to new ideas and innovations which in return bring solutions and more profit margins for the business (Madera, 2013). For example, a company such as general motors’ has been on the lead due to its innovations and new ideas to its products and services. The company has taken advantage of the wide consumers and manufactured an automobile that has the speed and capacity to compete at a high speed and maintain stability. Investing in manufacturing automobiles that are environmentally friendly and which are cheap to maintain has won the company more revenue and customer loyalty. The company has opened a chain store in almost every country in the world especially in the African continent and consumer demand continents. 

Period	31/12/2016    ($)	31/12/2015  ($)	31/12/2014 ($)
Total revenue	166,379,000	152,355,000	155,929,100
Cost of revenue	145,126,000	134,055,000	142,122,000
Gross profit	21,253,000	18,300,000	13,807,100

 

Supplier diversity indicates the capability and capacity of a company to be economically stable and very interested in making the steps in economic growth. With this kind of ideology in a business, interested parties and more so potential customers will be very connected to the business. Consumers tend to be related to companies and organizations which show an interest in being in the market to stay and not to make a huge profit and then leave the market (Richard et al., 2015). An example of such a company is McDonald's which has diversified in terms of the products offered by the company. The company deals with a variety of products among them being foodstuff, beef related products, desserts, and coffee including other many brands. With this, consumers all around the world are very interested to spend time at the company restaurants and coffee shops enjoying a wide variety of products according to choice. The company has expanded its supply in more than 30 000 locations in the world creating a sense of belonging to its esteemed customers.                       

Period	31/12/2016 ($)	31/12/2015 ($)	31/12/2014 ($)
Total revenue	24, 621,800	25, 412,000	27, 441,200
Cost of revenue	14, 417,300	15, 622,700	16, 986,700
Gross profit	10, 204,500	9, 789, 300	10, 454, 500

 

 

 

 

 

 

 

 

 

 

 

 

References

Abrams, D. A. (2013). Diversity & inclusion: The big six formula for success.

Barnes, M. (2015). Risk protection and the supply chain. Food Australia, 67(2), 35.

Coca-Cola Co. (KO). Retrieved from: https://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co

General Motors Co. (GM). Retrieved from: https://www.stock-analysis-on.net/NYSE/Company/General-Motors-Co/Long-Term-Trends/Net-Profit-Margin#Calculation

Ling, X. (2017). Customer Relationship Management: Case study Coca-Cola Company.

Madera, J. M. (2013). Best practices in diversity management in customer service organizations: an investigation of top companies cited by Diversity Inc. Cornell Hospitality Quarterly, 54(2), 124-135.

McDonalds’ Corp. (MCD). Retrieved from: https://www.stock-analysis-on.net/NYSE/Company/McDonalds-Corp

Offic, U. A. F. S. B. SUPPLIER DIVERSITY PROGRAM (Doctoral dissertation, Environmental Protection Agency).

Richard, O. C., Su, W., Peng, M. W., & Miller, C. D. (2015). Do external diversity practices boost focal firm performance? The case of supplier diversity. The International Journal of Human Resource Management, 26(17), 2227-2247.