Walmart's sourcing from women-owned suppliers drives business

The number of U.S. women-owned businesses (WOB) is increasing dramatically, yet they continue to contribute the same percentage to domestic business revenues as they did 20 years ago — about 4% of all revenue — in spite of the number of WOB growing 114% compared to 44% for all businesses in the same period. The country had an estimated 11.6 million WOB in 2017, according to American Express OPEN, with $1.7 trillion in revenue.

Even with the growth in WOB, these suppliers are having difficulty competing for corporate and government contracts and earning less than 1% of the money spent by the organizations, according to Elizabeth Vazquez, CEO and co-founder of WEConnect International, who helped create the corporate-led global nonprofit to educate and connect WOB with qualified buyers dedicated to diversifying their supply chains. Companies are realizing that adding more WOB suppliers is not just a feel-good program. Increasing their supplier diversity efforts makes business sense. When suppliers mirror a company’s customer base, it helps anticipate market needs and innovations for a competitive advantage.

On International Women’s Day, Supply Chain Dive explores the efforts and impacts of promoting diverse sourcing, looking specifically at how one company is doing that. It’s good for women; it’s good for business

Walmart launched its global Women’s Economic Empowerment (WEE) initiative in 2011, aiming to source $20 billion from U.S. WOB in five years, and to double the spend on WOB in specific international markets. By the end of 2016, it exceeded the U.S. goal, sourcing $21.2 billion domestically in that period, and sourced almost $250 million internationally from WOB in 2016.

Through the company's diversity sourcing initiative, in fiscal year 2017 it spent about $14.7 billion in tier 1 and 2 diverse business purchasing efforts. Walmart doesn't set quotas or goals for percentage of business from these diverse sources, but instead tracks money spent.

Walmart uses a shared value concept for its sustainability and sourcing initiatives.

“In the long run, they benefit the world, but they also benefit our business,” said Jenny Grieser, senior director of Women's Economic Empowerment at Walmart. “Women are our primary customers. Women are the primary decision makers of purchases in our stores. When you invest in women, they put their earnings back into the community,” she said. Making a difference in the community also helps Walmart. “It’s the right thing to do, but it’s also the smart thing to do.”

Diversity in sourcing also helps stock the store with local products, including produce, which domestic and international customers want.

“That’s where the smaller suppliers can play,” Grieser said. Suppliers don’t need to serve 5,000 Walmart stores; they can stock 10-15 stores. Two-thirds of Walmart’s WOB suppliers do less than $1 million in annual sales with the retailer, though the number of companies who do more than $1 million has been steadily rising.
Source: Supply Chain Drive