Achieving supplier diversity has become a goal of high priority in recent years due to its effectiveness in giving diverse suppliers a seat at the table as well as battling the constraints related to the pandemic era.
The pandemic had a strong and severe impact on commercial real estate (CRE), although its effects are present across all industries. A fully operational and diverse supply chain is critical for industries such as tech, healthcare and transportation, which rely heavily on global supply chains to maintain their operations and create/distribute their products. The same is true for CRE, which carries additional responsibility and weight while functioning as a major component of the country’s economy.
Wide Supplier Range Critical for CRE
It is difficult to overstate the importance of CRE in large cities and New York City in particular. In the 2021 fiscal year alone, the city’s office sector provided roughly $6.9 billion in direct revenue in taxes, with office market property values reaching $172 billion, according to the Office of the New York State Comptroller. Billable values also reached $71 billion, representing an increase of over 200% over the past decade. With these values in mind, achieving and maintaining supplier diversity is critical for the continued success of New York and, by reason of extension, many other parts of the country.
This was made abundantly clear in 2020, when the pandemic-related shutdowns posed a threat to the CRE industry’s ongoing operations. The decline of the office sector comprised over half of the entire $1.7 billion decline in property taxes for Fiscal Year 2022, where the total market value of office buildings declined by 16.6% citywide. In commercial real estate, the lifecycle of spend can span all the way from industries such as strategic advisory and deal structuring services, valuation, data and analytics, to brokerage, operations, facilities and technical services and even workplace/concierge services. The industry as a whole occupies no small footprint throughout the city.
COVID-19’s impact on the CRE landscape was not due solely to companies that did not use a wide enough range of suppliers; the proliferation of work-from-home hybrid models and the inability for retailers to withstand the sudden shift to e-commerce were also factors. As it pertains to pursuing new projects and continuing work on existing ones, the pandemic’s crippling effects on the construction industry had an additional effect that posed challenges unique to the CRE industry. Overall, this pandemic has shown us just how critical supply chain diversity is, which can lead to transformation over time. At the very least, the pandemic has granted us the benefit of hindsight and time for retrospect, which has resulted in an increased emphasis on discovering and determining best practices for operationalizing and achieving greater supplier diversity.
A Necessary Goal
Supplier diversity itself is an outcome that many businesses should have been striving for from inception. Having access to a wider range of suppliers is a logical goal when planning any business that relies on sourcing a variety of materials on a regular basis, particularly as it presents opportunities for forming contingency plans and consistently taking advantage of the most competitive pricing. Further, embracing diverse suppliers makes it vastly easier to drive product-based innovation and ensure that those products and services are as ethically and efficiently sourced as possible.
Operationalizing is the Key
Simply planning to give diverse suppliers a seat at the table is not enough. Steps must be taken to operationalize these goals, although, in contrast to working with other non-diverse suppliers, meticulousness and attention to detail are of particular importance. When updating or creating documentation and templates, as an example, it is beneficial to include notes that are specific to supplier diversity to ensure that awareness is elevated and that diversity requirements are codified going forward. This can be the deciding factor in keeping supplier diversity at the forefront of decision making. This emphasis extends to the classification of these diverse-owned suppliers as well; properly categorizing these suppliers — both retroactively and going forward — can make it much easier for other companies to quickly identify which suppliers meet their diversity criteria and to approach those suppliers accordingly.
Collaboration & Promotion
It is also important to continuously pursue opportunities to work with and highlight diverse suppliers. Many companies today have dedicated programs and personnel tasked with seeking out both new and existing diverse suppliers, and it is through these interactions that professional and personal relationships often arise. Typically, these programs are focused on robust methods for identifying and qualifying suppliers, processes and governance. However, these programs only solve the intake for the corporations and institutions that are looking to increase the numbers without evaluating the root cause of why the uptake of diverse suppliers remains so low.
To make a difference, companies should seek out and capitalize on opportunities to highlight diverse suppliers, which can lend them valuable visibility in a landscape that does not yet provide enough platforms for diverse suppliers to stand out. To take this a step further, some companies that already collaborate with diverse suppliers have begun issuing supplier diversity reports, which can be a key means to signal and highlight the ongoing benefits of pursuing supplier diversity.
Altogether, the list of reasons that supplier diversity is important and beneficial is vast and extends to both the suppliers themselves and the companies they work with. Not only is supplier diversity a valuable tool for reversing the effects of historic marginalization for these organizations, but it can also provide unique opportunities for growth that may not have been available otherwise.
For diverse suppliers, the attention and business activity that occurs from partnering with purchasing companies that hold similar values can lead to significant expansion. This ultimately allows them to be more competitive and attractive.
Previously, advancements have been made in supplier diversity around the operational categories of spend, including typically lower-margin tactical services, such as janitorial or moving services. Companies must take actionable steps to operationalize these ideas and employ effective strategies for goals to be achieved.
It only takes one stepping into the shoes of diverse suppliers, like any small business, to realize the focus is delivering quality services and projects. MWBE Unite helps to lend support in areas that promote further extension of leverage on marketing, bidding, integration and networking with synergistic companies and connecting with corporations, institutions and municipalities to translate the outcomes they are after. For any one diverse MWBE CRE business, as a standalone business, it may not be able to bid for the entire scope of services. Curated partnerships offer an integrated set of credentialed suppliers; once united, they are stronger in their ability to service the client at scale.
Pay Wu is president of MWBE Unite Inc., which offers a full range of integrated real estate services through 100% Minority and Women participation. It delivers real estate services that help achieve Environmental, Social and Governance (ESG) and Diversity, Equity and Inclusion (DE&I) initiatives. The platform focuses on delivering and advancing supplier diversity and workforce diversity with traditional providers.