Diversity in Supply Chain – (DEI) Diversity, Equity, and Inclusion in Supply Chains

By Published On: April 24, 2023

Managing diversity in your company’s supply chain workforce can be challenging. However, the overall benefits of a diverse workforce improve your company’s worth. In business, the bottom line indicates the health and growth of a company. Most return on investment (ROI) numbers can be calculated fairly easily, but there are some intangibles that improve ROI and aren’t so easy to correlateOne such “intangible” is diversity, equity, and inclusion (DEI) in a company’s workforce. In this article, we make a case for actively pursuing DEI (sometimes called just D&I for Diversity and Inclusion), in supply chains and business. Multiple guests on the Supply Chain Careers Podcast have emphasized how diverse backgrounds and viewpoints positively enhance the ability for supply chain teams to achieve far more than teams without a broader perspective. 

The Current Climate and Trend

The news media has shown many situations where diversity and inclusion have not been a focus for many companies and organizations in the past. That is changing. Today, more than ever before, businesses are employing more groups that have historically been inadequately representedThis trend shows that there is a general effort by leading corporations to diversify their workforce and, as a result, reach out to a growing marketplace that is global and heterogeneous. Because supply chains are so diverse, crossing so many organizational and geographic boundaries, supply chain teams for sourcing, manufacturing, and distributing products must reflect the diversity of the customers they serve.    

The Need for DEI in Supply Chain 

Just as there is a need for DEI in business in general, there is a strong need for it in supply chain. Recent Gartner research with the Association for Supply chain Management (ASCM) showed a high level of interest in and commitment to supply chain diversity in organizations. This information aligns with an increased expectation from employees for companies to take a stand on societal and cultural issues.  

Growth in supply chain has already created challenges in finding enough talent to meet the needs of employers. In order to be an attractive employer for new and existing talent, an organization has to evaluate their supply chain commitments to diversity and act appropriately, being as transparent as possible to communicate their commitments and show proof of action. Leaders in supply chain must take action through real investment of budget, resources, and internal changes. However, by hiring in a more diverse way (for example, by sex, race, or geography), supply chain leaders can decrease the skills shortage, expand hiring, and improve retention. Hiring diverse talent can be done by leveraging DEI recruiting. Currently, there is approximately 20 percent gap between men and women employees in supply chain. This alone presents a large opportunity for organizations to attract, develop, keep, and leverage a powerful talent pool. A truly diverse workforce is composed of people who are different in race, ethnicity, gender, ability, age, veteran status, work styles, and experience. 

Benefits of Practicing Diversity, Equity, and Inclusion 

There are quite a few benefits of having a diverse employee base. It has been shown that having a diverse employee base brings more knowledge, a wider variety of perspectives, and greater experience to the company than having a homogenous base of employees. Moreover, today’s highly competitive business environment, with an increasingly global customer base, demands better ideas that can result from employee diversity. In supply chain, there is such a wide-ranging network of product flows and people that enable them, so it should be obvious that teams of people enabling those flows should match the customers they serve. 

Grow New Markets and Drive Innovation 

Quinetta Roberson, a John A. Hannah Distinguished Professor of Management at Michigan State University, has focused her work on the value of DEI for leaders, organizational capabilities, and the bottom line. Her work has shown that diversity not only generates more revenue but also helps companies to reach new markets and drive innovation. Ms. Roberson has included many factors in her research such as the spillover effect of employees feeling valued and then passing that value on to customers, improving customer satisfaction and outcomes. 

Increase Productivity 

As your supply chain employee base becomes more diversified, the better they understand your set of suppliers, services partners, and customers. Through a better understanding, they are able to accomplish more and generate more customers, leading to a more productive business. Additionally, a diverse workforce brings an increased skill set by having more people with a variety of strengths. And, finally, diversity brings an improvement in morale and engagement, which leads to higher productivity and revenue numbers. 

Retain Competent Employees 

Many times, new hires come to an organization because of the company’s commitment to growing its diverse workforce.  With diversity comes new perspectives and enhanced creativity that are critical in meeting the needs of a growing and varied customer base. However, it is imperative for the company to have a culture that underpins and develops an infrastructure of inclusion. If a company has built, or is building, an environment that supports diversity, new employees will see the culture as one in which they can thrive. As a word of caution, however, if the corporate culture is stuck in old ways and ignoring the need for internal changes, these new employees won’t stick around. 

Pursuing DEI has Challenges 

For a company to really see the benefits of diversifying its employee base, it must have leadership that buys into the objective and is willing and able to support the change that is required in the corporate culture and in constructing a new policy infrastructure. The end goal can’t be all about the profit potential of DEI; if it is, the vision is short-sighted and, ultimately, won’t achieve the goals. The overt discussion of DEI needs to be substantive, not just about optics 

This is where it becomes more intangible to measure the ROI because DEI actually needs to be as focused on establishing a better reputation, higher community trust, and increased sustainability and longevity. When these results are a focus, your company will have greater overall success in diversification, develop stronger consumer commitments, and have a more significant return on investment. Why? Because the employees will see the investment the company is making and, in turn, will perform better as a result. This is our case for diversity, equity, and inclusion in supply chains and business. 

DEI Across the Chains 

For a company to really see the greatest benefits of diversifying its supply chain networks employee base, it must also have leadership that buys into the objective and is willing and able to influence suppliers during the sourcing or purchasing process, plus any distribution or logistics partners providing services to the company. Demanding open policy statements and proof of action is critical to truly making a difference in DEI across supply chains.