A colossal $280 billion in additional revenue and four million jobs could be generated for minorities and women if spending with these groups is increased.
Revenue could be collected if suppliers increase the purchase of goods and services with Minority/Woman Owned Business Enterprises (MWBEs) to $2 trillion from $1 billion currently. This analysis comes from “Eexpand your supplier diversity and add value to your organization“, a new report from McKinsey and Co.
Additionally, the study stated that approximately 210,000 of the new jobs would be created in leadership and management roles if expenses for minority businesses were twice as high. Research suggests it would boost wealth creation and improve intergenerational outcomes for families from diverse populations.
He deduces several other findings that could potentially benefit the black community. A finding showsVarious companies are 67% more likely to hire minority talent than the average US company and offer more minorities senior positions in their organizations. Yes 40% of the $50 billion that companies have committed to MWBEs went into these sectors, which would equate to $20 billion in revenue for MWBEs. This would bring some 190,000 jobs and $15 billion in revenue to minority communities.
The study also surmised that businesses have greater potential “to generate value as America transitions to a professional services-based economy. He said professional and business services such as real estate, finance, insurance and IT accounted for nearly 40% of GDP in 2020, up from 35% in 2000. growth” remain low priority even for the most mature supplier diversity programs: less than 10% of companies rank finance and insurance among their top areas of supplier diversity spending. »
Another interesting finding showed that finance, IT, law and engineering are high-paying sectors where minorities are underrepresented. On the contrary, he reported that black Americans are overrepresented in jobs with the highest rates of displacement by automation and underrepresented in categories with the lowest rates.
“Broadening the scope of supplier diversity would create more jobs for minorities in higher-wage industries and in roles less likely to fall prey to machine learning and AI,” wrote the researchers.
Shelley StewartIIISenior Partner at McKinsey and leader of the company’s Institute for Black Economic Mobility, discussed why now is the time for large US corporations to create a broader supplier ecosystem with MWBEs and the means to do so.
He says stakeholders are increasingly holding companies accountable for their efforts toward inclusivity and fairness in business, including customers, employees, investors, and federal and state governments.
“The Supply Chain Reset is a great opportunity for companies to redevelop their supply base for increased minority business participation, especially as relocation and regional sourcing becomes an essential part of delivering to customers.
Steward also reflected on why this makes good business sense for large US corporations.
He says working with MWBEs has a tangible impact on business bottom lines.
“Research has found that MWBEs have helped companies identify and achieve cost savings of up to 8%, compared to industry average procurement savings of 3% to 7%. Additionally, the study found that the key benefits of working with MWBEs include increased speed, agility, localization, and innovation of business products and services. »