Embracing diversity in the supply chain: A strategic imperative for growth

As we are in the season of two important months, Black History Month and Women’s History Month, we decided to investigate how WEX is navigating and enhancing its supplier diversity program or, as we call it, Vendor Inclusion & Diversity.

For many years now, inclusivity and diversity have been important themes for businesses across the United States. Today, companies are increasing their focus on diversifying their supplier base. This is also true for WEX because supplier diversity is not just a moral imperative but a strategic one, fostering innovation, competitive advantage, and community empowerment. 

Joining WEX as Vendor Inclusion & Diversity Manager in August 2022 with over 25 years building and developing supplier diversity programs, it quickly became evident to me that at WEX supplier diversity is not about meeting quotas or ticking boxes; it’s about driving meaningful change that benefits WEX, diverse suppliers, and the wider community.  Despite the challenges endemic to supplier diversity, the journey towards a more inclusive supply chain is seen as both a responsibility and an opportunity here at WEX.

The benefits of diversity extend beyond social responsibility. Engaging with a diverse range of suppliers brings fresh perspectives, innovation, and a deeper connection to a broader customer base. For instance, WEX’s work with Chapman Farrell, a Black-owned business, and SHI International Corp, an Asian woman-owned enterprise, not only supports WEX’s operational needs but also contributes to the growth and success of these businesses and the communities at large.

At the heart of WEX’s supplier diversification initiative is inclusion. It is through inclusion that the company actively connects with, learns about, and educates diverse suppliers so that they can be more successful when they compete for WEX’s business.

The current state of supplier diversity at WEX

Launched in March 2023, the supplier diversity program at WEX was focused on setting a foundation where diversity, equality, and inclusion became integral to how the company purchased goods and services. In the program’s inaugural year we celebrated several achievements while also identifying areas that can still change and improve. 

To understand a drive to enhance supplier diversity, it’s first important to define how a vendor can be categorized as a diverse supplier. If a business is at least 51% owned and operated by an individual or group that is part of a traditionally underrepresented or underserved community then that business is considered a diverse supplier. Common classifications include minority-owned, woman-owned, LGBTQ+-owned, veteran-owned, and disability-owned businesses. Additionally, corporations will often require that ownership be certified by a third party non governmental organization. In 2023, WEX more than doubled its spend with diverse suppliers, totaling 8% of the company’s spend. This percentage aligns with companies with a more seasoned supplier diversity program. While this was a notable success in its first year, WEX also found that the majority of its spend was with only two of the community groups WEX is working to engage. This gap presented an opportunity for the company for 2024 to both increase the number of suppliers and at the same time increase the diverse representation of those suppliers.

Additionally, WEX’s 2023 increase in supplier diversity spend was seen largely with suppliers the company already did business with, and in largely the same category: technology. While WEX celebrates the success of growing diverse suppliers and increasing spending, in 2024 the program’s priorities will address the need to grow the number of suppliers and the areas of the business that spend with diverse suppliers. I like to call this “diversifying our diversity.” It will ensure a more balanced representation across all diverse supplier groups from whom WEX purchases.

WEX’s achievements in supplier diversity have laid a strong foundation for future growth. By expanding the scope of its program, enhancing supplier development initiatives, and setting ambitious, measurable goals, WEX is poised to drive even greater impact in the years to come, benefiting not only its own operations but also the diverse suppliers it partners with and the broader community.

Community impact and social responsibility

Beyond the immediate business benefits, supplier diversity has the potential to profoundly impact broader communities and connect with new customer communities. By spending with diverse-owned businesses, WEX contributes to the economic empowerment of underrepresented groups, fostering job creation, promoting sustainable community development, and building multigenerational wealth. This not only aligns with WEX’s ESG program and WEX’s corporate values but also builds a stronger, more resilient economy. WEX’s commitment to a diverse supplier base is a powerful lever for growth, resilience, and social responsibility.

WEX’s achievements are not accomplished in a silo. The company partners with the following community organizations for support and collaboration. They are an unmatched source for certified suppliers, business case statistics, event partnerships, corporate program benchmarking, and networking:

• National Minority Supplier Development Council
• Women’s Business Enterprise National Council
• National LGBT Chamber of Commerce

Measuring impact and maintaining accountability

To ensure current and future goals translate into tangible outcomes, WEX is committed to rigorous measurement and accountability. This includes setting clear, measurable targets for diverse spend and supplier engagement, regularly reviewing progress against these goals, and adjusting strategies as needed to address any gaps or challenges.

WEX’s future goals for supplier diversity are not just about numbers; they’re about making a meaningful impact on the communities with which it engages: 

• Setting spend goals for WEX teams: Driving accountability throughout the organization ensures that those who select suppliers have accountability in their sourcing opportunities.
• Engaging in supplier development: Educating and developing diverse suppliers so that they understand WEX and are prepared to compete for contracts in the sourcing process.
• Creating a second tier reporting program: Inviting large suppliers to prioritize supplier diversity extends the impact WEX can have on diverse communities and its ability to meet its diverse spend goals.
• Expanding the geographic footprint: WEX is a global business with global suppliers. While diversity is different based on where you are across the globe, WEX wants its supply chain to reflect the communities within which it operates.

Through WEX’s commitment to supplier inclusion and diversity the company aims to create a more inclusive, equitable, and sustainable global business ecosystem.

Expanding beyond the company’s supply chain

The original impetus of WEX’s increased focus on supplier diversity came from the company’s sales organization. Over the last several years WEX has seen an increase in supplier diversity questions and requirements as the company responded to requests for proposal (RFPs). Since implementing a formal program, WEX has seen a positive impact that spans much further than simply meeting requirements and winning contracts. The supplier diversity program has opened new pockets of opportunity for the company with benefits expanding beyond WEX’s supply chain. Through the work of identifying and evaluating diverse suppliers, WEX connects with businesses and learns of their professional needs. If these connections lead to business relationships, this supplier connection can develop into a new customer base WEX serves. 20% of employer businesses in the United States are minority owned and this is the fastest growing segment increasing at a rate roughly four times that of all businesses.¹ By selling into diverse markets WEX has an opportunity to grow its revenues and create products that meet the needs of those markets.

A call to action to increase supplier diversity 

WEX’s experiences and achievements in supplier diversity serve as a compelling call to action to its suppliers and to other companies, regardless of their size or industry. Implementing or enhancing a supplier diversity program is not only a step towards greater social responsibility but also a strategic decision that can yield substantial business benefits. Companies looking to embark on or expand their supplier diversity journey can take inspiration from WEX’s approach, focusing on:

• Strategic alignment: Aligning supplier diversity efforts with broader business objectives to ensure that diversity initiatives contribute directly to company goals.
• Comprehensive strategies: Employing a range of tactics, from leveraging data and technology to engaging in partnerships and supplier development, to identify and support diverse suppliers.
• Measurable goals: Setting clear, measurable targets for supplier diversity and regularly reviewing progress to maintain accountability and drive continuous improvement.
• Community engagement: Recognizing the broader impact of supplier diversity on community development and economic empowerment, and positioning these efforts as part of a larger commitment to corporate social responsibility.

As more companies recognize the value and embrace the practice of supplier diversity, the collective impact on innovation, market competitiveness, and community development will be significant. WEX’s journey offers valuable insights and serves as an inspiration for businesses aiming to make supplier diversity a cornerstone of their strategic and social commitments. The path to a more diverse, equitable, and inclusive business ecosystem is a shared journey, and every step taken is a step towards a brighter, more innovative, and more inclusive future.

WEX is a leading, global fintech solutions provider, simplifying payments and back-end business processes in the fleet management, benefits management, and corporate payments areas. WEX values diversity and equity and is an equal opportunity employer. Search jobs on our careers site.

Resources:
¹ 2020 US Census Bureau’s Annual Business Survey
Harvard Business Review