Companies Should Take Note of Best Buy's Commitment to Supplier Diversity

Many companies are now addressing issues of diversity, equity, and inclusion internally. They are putting forth HR programs that focus on equitable hiring practices, and they are seeking out ways to develop diverse talent within the organization to open doors for more diversity in their leadership.

Now, supplier diversity is becoming an increasing priority at procurement departments across the world. In this context, a diverse supplier is a business that is at least 51% owned and operated by an individual or group of people that are members of a traditionally underrepresented group, such as women or Black, Indigenous, or other people of color (BIPOC).

Supplier diversity programs aren't just the right thing to do. Companies that don't do business with diverse suppliers also risk missing opportunities to procure innovative products and services from a growing industry segment. According to Michigan State University, studies over the years have placed the ROI of a supplier diversity program as high as 133%.

In the past, many of these initiatives have been little more than symbolic. Most company programs don't effectively drive change until they are adopted at scale and only when they are properly funded. That's why companies should pay attention to Best Buy's recent announcement: Best Buy will commit to spending $1.2 billion with BIPOC and diverse businesses by 2025.

Best Buy's Supplier Diversity Program

The substantial dollar amount of Best Buy's investment is impressive, but so is the company's strategy for supporting BIPIC businesses and communities.

The technology retailer's pledge includes plans to increase every form of spending with Black, Indigenous, and people of color-owned businesses from almost every part of the company. For example, Best Buy won't just commit to supplier diversity as part of its direct procurement program. It will also commit to working with diverse suppliers in how it brings services to its stores and how it advertises.

The company laid out its commitments. By 2025, it will do the following:

• Dedicate nearly 10% of its annual media spend to BIPIC media.
• Host a media summit for BIPOC and diverse media businesses in 2022.
• Commit a minimum of 30% of its paid advertising to feature diverse cast members.
• Commit that at least 25% of its production crew members will be from an underrepresented group.

(Source: Best Buy)

Best Buy established a web page specifically for the purpose. It contains information about the company's supplier diversity program as well as eligibility requirements and a call-to-action encouraging visitors to create a "Supplier Diversity Company Profile."

Best Buy's stated goal is "to create a stronger community of diverse suppliers and to help increase BIPIC representation in the tech industry, who for too long have faced systemic disadvantages such as a lack of access to funding and other resources."

In addition to its financial commitments, the company will provide BIPOC businesses with access to its supply chain, sourcing, and product development capabilities. This will eliminate systemic barriers and allow diverse businesses to do business more easily with Best Buy. Best Buy will also form more partnerships with historically Black colleges and universities (HBCUs).

All these commitments come after the company launched previous programs to promote diversity and inclusion. Best Buy had already made a $44 million commitment to expand college prep and career opportunities for BIPIC students. Last year, the company created a racial equity task force to drive enterprise-wide change as well.

Why Best Buy's Supplier Diversity Strategy Matters

The weight of Best Buy's financial commitment to its supplier diversity program is significant, but so is its scope. Not only is the company focusing on expanding its network of suppliers to include more diverse businesses, but it's also committing to feature more people of color in its advertisements.

While this gesture may seem symbolic, driver representation in media can have a measurable effect on people's attitudes toward underrepresented groups. According to one study cited by Forbes, a lack of contact between racial groups in media can lead to a greater reliance on media stereotypes when people formulate ideas about others.

Best Buy's promise to connect diverse suppliers with its supply chain, sourcing, and product development capabilities is also significant, as this represents a long-term commitment that could lead to continuous change for underrepresented businesses.

Hear More from Best Buy at the ProcureCon Indirect Virtual Summit & Expo

In 2020, Best Buy's CEO Corie Barry said working to address racial injustice "starts with seeing the situation for what it is, acknowledging these experiences for what they are, and, quite simply, apologizing for not doing enough. As important, it includes committing the company I lead down a path of systemic, permanent change in as many ways as we can find."

Like most companies, Best Buy may not have a perfect track record when it comes to diversity and inclusion. But its most recent steps to promote diversity internally and in its supply network should be noteworthy to other companies looking to do the same.

To learn more about strategic sourcing plans, don't miss the ProcureCon Indirect Virtual Summit & Expo Exclusively for Procurement Innovators happening online from September 14th to September 14th, 2021.

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