MBN USA

April 02, 2025

UnFollow View Profile Send Message Copy Link

UnFollow View Profile Send Message Copy Link

Future of supplier diversity requires fresh strategies

By Tonya McMurray

Since the 2023 U.S. Supreme Court decision effectively eliminating affirmative action in college admissions, the ruling has had a ripple effect on minority business enterprises (MBEs) and diversity, equity, and inclusion (DEI) programs. Add to that recent policy changes on federal contracting, immigration and tariffs, and the landscape continues to shift for diverse suppliers.

As a result, supplier diversity and DEI leaders say MBEs must hone their focus on capability and value to navigate this new normal. 

Last year, for example, several companies decided to scale back or eliminate DEI initiatives, including John Deere, Harley-Davidson and Ford. Other companies — including Meta, Target, Walmart, Amazon and McDonald’s — have since rolled back their DEI programs.

Some organizations are being more careful about how they discuss DEI. Still others — including Costco, JPMorganChase, Uber and Apple — have reaffirmed their commitment to DEI programs and principles. 

Ron Busby Sr., president and CEO of the U.S. Black Chambers Inc., said corporations have a business imperative to provide opportunity to the communities in which they operate. 

“As the U.S. becomes increasingly multicultural, having a supplier base that reflects the diversity of your customer base is not just a moral obligation — it’s a strategic advantage,” he said. “Diverse suppliers bring unique perspectives, cultural insights and innovative solutions that help companies better connect with and serve their markets. By investing in Black-owned businesses, corporations are fostering economic equity and strengthening their competitiveness and relevance in an evolving marketplace.”

Busby added that companies can maintain the integrity of supplier diversity programs by focusing on economic impact messaging rather than solely emphasizing diversity. 

“Highlighting how Black-owned businesses drive innovation, job creation and competitive advantage resonates broadly and aligns with business goals,” he said. “Programs should also expand partnerships with MBEs by offering mentorship, capacity-building resources and access to capital, ensuring these businesses are equipped to compete and scale. Additionally, data-driven accountability is key. Companies should set clear, measurable goals for supplier diversity spend and track progress transparently. This not only demonstrates commitment but also reinforces the business case for inclusion.”

DEI versus supplier diversity

Supplier diversity leaders note that it is vital to understand that DEI and supplier diversity are separate and that there are ways to highlight the benefits of supplier diversity — even with the current attacks on DEI.

“For years, we’ve advocated for separating supplier diversity from HR [human resources] diversity programs,” said Ingrid Robinson, president and CEO of the Houston Minority Supplier Development Council. “While they both are needed, the work done by supplier diversity focuses on supply chain issues, which are totally different from the objectives of HR diversity programs.”

DEI is a broader issue focused on internal culture and practices. It is aimed at ensuring fair treatment and creating inclusive environments. Supplier diversity, on the other hand, focuses on intentional inclusion of diverse suppliers in the procurement process with the goals of creating economic opportunities for diverse suppliers, enhancing innovation and strengthening the supply chain.  

“Supplier diversity is likely to reflect a mix of challenges and opportunities, influenced by the impact of lawsuits [and] federal, state and local directives related to DEI, and the ability of organizations like ours and supplier diversity professionals to influence the narrative based on economic facts and benefits for supporting small, minority business development,” Robinson said. “Without strong institutional support, organizations may struggle to maintain meaningful commitments to diversifying their supplier base, limiting the economic benefits these programs aim to achieve.”

The distinction between DEI and supplier diversity allows MBEs to highlight the economic benefits of supplier diversity and the competitive benefits diverse businesses bring. According to Supplier.io’s 2024 State of Supplier Diversity Report, 65% of companies cite enhancing supply chain competitiveness as one of the key drivers for supporting supplier diversity programs. 

“In RFP [request for proposal] responses, companies underscore how their diverse suppliers ensure reliable and uninterrupted service delivery while also supporting local communities,” Supplier.io CEO Aylin Bason wrote in a recent blog. “These are all key values for winning contracts — particularly in industries where supply chain reliability is critical.”

MBEs can still compete in the new environment by focusing on their capabilities and value propositions. 

“The future of supplier diversity must adapt to the current environment while maintaining its core mission of equity and inclusion,” Busby said. “Recent challenges, such as the rollback of affirmative action and DEI initiatives, require a shift in how we approach and communicate these programs. The spirit of supplier diversity — creating economic opportunities for minority businesses — remains vital, but the messaging and strategies must evolve to align with today’s landscape. The U.S. Black Chambers Inc. believes that substantive action must accompany any shift in messaging to maintain the spirit and effectiveness of supplier diversity programs.”

Consultant Ralph Moore, founder of Ralph G. Moore & Associates (RGMA), recommends firms use the term “supplier inclusion” rather than “supplier diversity.” RGMA defines supplier inclusion as a business strategy with a compelling value proposition and standards for implementing and benchmarking program performance.

Kenneth L. Harris, Ph.D., president and CEO of The National Business League, supports the advancement of Black Business Enterprises (BBEs) based on capabilities and merit, encouraging diverse suppliers to “focus on raw capability, not diversity optics that have shown no proven, measurable success or accountability in the 61 years since the Civil Rights Act was passed in 1964.”

Immigration and tariffs

Crackdowns on immigration and tariffs also impact minority businesses. 

Large-scale deportation efforts and greater enforcement of policies aimed at reducing immigration place a significant burden on small businesses, according to a recent survey by Clarify Capital LLC, a small business lender. The survey of 1,000 small-business owners indicated that 20% had lost employees due to deportations, visa denials, and U.S. Immigration and Customs Enforcement (ICE) raids. And 51% said immigration enforcement is hurting their industry.

According to the American Immigration Council, the impact is greatest in the agricultural, construction, transportation, warehousing, general services, and waste services industries, where immigrants account for more than 20% of the workforce. 

Michael Verchot, founding director of the University of Washington’s Consulting and Business Development Center and national lead for Ascend, notes that immigration policies may have a broader impact on minority businesses by increasing inflation due to workforce shortages.

Tariffs also threaten to increase business costs and disrupt supply chains.

“Enacting tariffs on our neighboring nations would raise costs, disrupt supply chains and create economic uncertainty for businesses in the U.S. and globally,” said Ramiro A. Cavazos, United States Hispanic Chamber of Commerce president and CEO, in an official statement issued in early February. “Trade policies should strengthen, not undermine, North American economic ties while enhancing border security and curbing illegal drug flows.” 

Supplier diversity professionals note that tariffs could benefit diverse businesses by encouraging corporations to look for more local and regional suppliers. 

“Managing risk has become a cornerstone for any procurement team,” Bason wrote in her Supplier.io blog. “In this environment of uncertainty, the role of supplier diversity has become more crucial than ever — offering a strategic advantage by enhancing supply chain resilience and agility.”

She notes many corporations are strategically planning a shift from reliance on long-distance suppliers to building relationships with local and small suppliers.

“This shift underscores the importance of a robust supplier diversity program that builds relationships with local and regional suppliers that can reduce risk and be more agile as needs change,” Bason wrote. “By minimizing reliance on any single source or geography, businesses enhance stability and showcase a commitment to their local communities ... As organizations saw during COVID [-19], it’s far easier to quickly scale up a local supplier than order materials from across the globe when supply chains are disrupted.”

Navigating the new frontier

The potential benefits of tariffs to diverse suppliers point to a key strategy to help MBEs navigate the new frontier of supplier diversity: Focus on the benefits of agility and value in the supply chain. 

“By adjusting messaging to focus on economic empowerment and innovation, while continuing to support MBEs through actionable programs, we can uphold the spirit of supplier diversity and ensure its future success,” Busby said. 

The National Minority Supplier Development Council Inc. (NMSDC) recently reiterated its commitment to ensuring supplier diversity remains a vital component of business strategy and encouraged MBEs, corporations and regional affiliates to highlight the value diverse businesses bring to corporate success and U.S. competitiveness.

“Ultimately, businesses — both diverse suppliers and corporations should focus on value creation, economic impact and adaptability, ensuring they are prepared to navigate uncertainty while continuing to drive growth and success,” said Ying McGuire, CEO and president of NMSDC. 

Want More?

To learn more about U.S. Black Chambers, visit usblackchambers.org. 

To learn more about Ralph G. Moore & Associates, visit rgma.com. 

To learn more about the National Business League, visit nationalbusinessleague.org. 

To learn more about the United States Hispanic Chamber of Commerce, visit ushcc.com. 

To learn more about Supplier.io, visit supplier.io. 

To learn more about the National Minority Supplier Development Council Inc., visit nmsdc.org.