Diversifying Your Supply Chain to Strengthen the Economy

Diversifying Your Supply Chain to Strengthen the Economy Main Photo

27 Jul 2021

News, Workforce

By Samuel N. Ndely II, Director of Employer Inclusivity at the Center for Economic Inclusion

As the pandemic released its grip on the economy and businesses began reopening last spring, the slogan, “Buy local or say ‘goodbye’ to local,” began to circulate throughout the region to remind consumers of the importance of spending with locally owned businesses to stimulate our local economy. Businesses also have an important role to play. Studies show that supplier diversity and inclusion and efforts to increase spending with local businesses owned by Black, Indigenous, Latinx, and Asian people and immigrants is a key lever in driving an inclusive economic recovery.

Minority Business Enterprises are increasing in size, scale, and contributions to our regional national economic growth. The U.S. Small Business Administration estimates that there are over 8 million companies owned by Black, Indigenous, Asian, Latinx people and immigrants as of 2018.

Similarly, the National Minority Supplier Development Council, a business-certifying agency that supports corporations and businesses owned, operated, and controlled by Black, Indigenous, Latinx, and Asian people and immigrants, reports that these businesses generated over $400 billion in economic output, created over 2.2 million jobs, and $49 billion in state and local revenue. Employers who diversify their supply chains by purchasing from undercapitalized and historically marginalized businesses grow their revenues, workforce, and economic impact on the economy. The result of this powerful business strategy is good for everyone.

Large corporations have gained national attention for scaling their supplier diversity initiatives to be more intentional about investing in local Black- and Asian-owned businesses.

Recently, Minnesota-based Target announced plans to spend more than $2 billion with Black-owned businesses by 2025 and to invest in several internal and external partnerships to support Black-owned businesses in their efforts to grow and scale. The company is committed to supplier diversity and to incentivizing their non-diverse vendors to spend with minority-owned businesses. In 2019 alone, the company spent $1.4 billion on goods and services with first-tier diverse suppliers and influenced its first-tier suppliers to buy over $800,000 worth of goods and services from second-tier diverse suppliers (source: Harvard Business Review).

For Target, this is just good business. And as the businesses in their supply chain grow and thrive, they can hire workers who also thrive and contribute to building healthy, thriving neighborhoods and communities, in turn creating a great business climate for Target stores.

The same is true for all businesses. Creating an ecosystem that fosters the growth of Minority Business Enterprises is a key step in achieving a more racially inclusive and equitable economy. The challenge today is to overcome generations of racism in business development and the lending ecosystem that has led to disparate gaps in business growth, employment, revenue generation, and wealth creation among businesses owned by Black, Indigenous, Asian, Latinx people and immigrants.

Black and Latinx households now own just 10 cents and 12 cents of wealth, respectively, for every dollar of wealth owned by white households (source: Prosperity Now). According to McKinsey, eliminating disparities for Black business owners alone could generate $1.6 trillion in revenue. Achieving this goal will require better aligned supply and demand, plus inclusive and equitable lending, procurement, and social capital policies and practices.

There has never been a better time to act. Building a new or stronger supplier diversity strategy is good for your business and the region for many reasons:

  • Improved brand awareness: The future is diverse, and it requires inclusion. As you diversify your supply chain, your brand will reach new diverse markets.
  • Improve competition and bottom-line performance: By expanding the pool of suppliers competing for your dollars, you can drive costs down over time and save time and dollars.
  • Meet and exceed goals: Data shows that businesses owned by people of color and women outperform or meet their counterparts’ standards, in most cases.
  • Innovate for the future: Diversity and innovation go hand-in-hand. You need the best thinkers, who represent a wide array of viewpoints, experiences, and perspectives creating the products and tools for your business to drive innovation.
  • Regional growth and resiliency: As small businesses grow, the region’s employment base is secure, increasing economic and social resilience, community vitality, and fiscal health.

Economic growth requires that companies of all sizes build inclusive supply chains and partnerships with Minority Business Enterprises. The economic engine of our region and state is fueled by small- and mid-size businesses. As Minnesota’s demographics grow more diverse, the growth of our economy requires an inclusive business development ecosystem to meet supply chain and consumer needs, grow good jobs, and drive the GDP.  

Ramsey County is committed to partnering with employers, like you, to expand supplier diversity efforts and the growth of businesses owned by Black, Indigenous, Latinx, and Asian people and immigrants. Ramsey County’s Economic Competitiveness and Inclusion Plan - created in partnership with the Center for Economic Inclusion, Fourth Economy, MZ Strategies, NEOO Partners, Inc., and Urban3 - identifies the need for a minimum of 500 more Minority Business Enterprises to match the U.S. ownership rate. Achieving this goal will create 6,690 new jobs and increase fiscal health, inclusive wealth building, and economic resilience for all Ramsey County residents.

Your commitment to supplier diversity as a partner in this effort can help us achieve this goal. The Center for Economic Inclusion partners with businesses to support designing and retooling supplier diversity strategies. Whether you are new to supplier diversity or need to take your program to the next level, commit to building a strategy that is good for your business and good for the Ramsey County economy.

If you are seeking Minority Business Enterprises who offer goods or services you’re purchasing today, one of these entrepreneurial support organizations may be able to help you: The Activate Network, African Economic Development Solutions, Asian Economic Development Association, Fearless Commerce, Latino Economic Development Center, Neighborhood Development Center, MEDA, and Minnesota Black Chamber of Commerce. Each of these organizations provide valuable resources, including training, coaching, lending, and referrals to hundreds of small business owners each year. Truly, the only way we can build an inclusive, equitable economy is together.


About the Center for Economic Inclusion: The Center for Economic Inclusion is the nation’s first organization created exclusively to close racial wealth gaps and accelerate shared accountability for achieving regional inclusive economic growth. The Center is committed to increasing the number of Black, Indigenous, Latinx, and Asian workers earning family sustaining wages in the Twin Cities region by 10 percent over the next five years. Through the Center’s Employer Inclusivity and Inclusive Growth Consulting Services, the Center partners with employers, like Ramsey County, who also seek to increase competitiveness and profitability by centering racial equity, inclusion, and belonging.

Click here to learn more about the Center’s approach to supporting businesses in developing, implementing, and facilitating change management in five distinct arenas: People (Talent), Procurement, Philanthropy, Policy and Products, and Marketing and Services.

About the author, Samuel N. Ndely II: Samuel N. Ndely II, Director of Employer Inclusivity at the Center for Economic Inclusion, works directly with private-sector employers, regional leaders, and community champions to equip them with the knowledge, tools, resources, and networks to disrupt and replace racially and economically exclusive policies and practices with new, racially inclusive talent, procurement, investment, and stakeholder policies, practices, and actions.