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Supplier Diversity: An Important Step for Water Utilities

Supplier Diversity: An Important Step for Water Utilities

By Water Street – June 24, 2020 – 2 Comments

Over our 134-year history, American Water has seen the importance of working with diverse suppliers, from small businesses to companies owned by minorities, women, veterans and more — it’s a choice we make consciously and consistently. By paying attention to the wants and needs of the communities we serve and addressing those needs in our business practices, American Water has put diversity at the forefront of its operations. We encourage companies who have the choice to do the same.

At American Water, we believe three things about supplier diversity: (1) It’s about access and opportunity; (2) It brings value to American Water and our communities; and (3) It’s everybody’s job.

American Water is committed to increasing our investment in diverse business year over year. Our process is built on aggressive goals at the state level through the year 2023. With the commitment and support of senior leadership and our state operations actively developing plans and strategy to engage diverse business in all aspects of our procurement needs. Supplier Diversity and the inclusion of diverse suppliers in our procurement strategy is a business imperative, it is important that our supply base reflects our customer base.

For businesses looking to diversify their suppliers, consider the following information about why supplier diversity needs to be made a business imperative.

Businesses should represent their customers.

In 2017, 22% of procurement spending in the water utility industry went to diverse business enterprises. Minority business enterprises came in at 13% of water utilities spending.

By representing minorities in business practices, companies are actively acknowledging the diversity in the communities they serve and the industries they operate in. Beyond acknowledgement, working with diverse suppliers is a direct way of supporting economic growth and stability in the communities of customers.

 Diverse suppliers are competitive in today’s market.

Diverse businesses have an ever-growing presence in today’s market. There are 8 million minority-owned firms in the U.S., a 38% increase from 2007, and these businesses generate $1.4 trillion annual gross receipts. This presence is also met with positive results from investment. According to a study from the Hackett Group, firms that allocate at least 20%of their spending to diverse suppliers can attribute anywhere from 10 to 15% of their annual sales to supplier diversity programs.

 Diversity drives innovation.

According to a Forbes study of senior executives, when asked about the relationship between diversity and innovation, a majority agreed that diversity is “crucial to encouraging different perspectives and ideas that foster innovation.”

By working with a wide range of diverse suppliers, companies accept the limitations of their points of view and are open to the thoughts, ideas and beliefs of others. With more and more voices at the table, companies can operate in a way that better reflects the needs and wants of their customers.

The right thing to do.

Setting standards for supplier diversity is the right thing to do. It is investing in the people and companies that define the communities we serve while embracing the diverse identity of the business world.

No matter how seemingly small, everything we do affects more people and businesses than we could ever imagine. With that in mind, we recognize that supporting diverse suppliers makes a profound impact.

American Water will continue to listen, learn and self-reflect, be transparent and encourage others to do the same. Ask yourself, how can your business operations better support the people and communities you serve?

For more information on American Water’s supplier diversity, click here.

2 Comments

  • Brin says:

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