Investing in women-owned businesses and integrating them into corporate value chains is “smart economics” and good for business. Today, women-owned businesses contribute significantly to the world economy, generating millions of new employment opportunities and spurring local development. But their full economic potential remains largely untapped or underutilized. As of 2013, for example, more than one third of all firms worldwide had women owners, yet they receive a mere one percent of corporate procurement spend.
Corporations that overlook the role of women-owned businesses in their value chains are missing an unparalleled commercial opportunity. The Boston Consulting Group described the women’s market as “the most important commercial opportunity in our lifetime.” Today, women control about $20 trillion in annual consumer spending and, by 2028, will control nearly 75% of consumer discretionary spending worldwide. By all accounts, companies that invest in women-owned businesses and adopt inclusive sourcing practices will be better positioned to access this commercial opportunity than those firms that do not.
A recent study confirms that, for many companies, gender-responsive procurement practices have had a positive impact on profitability and return on investment. Indeed, in 2014, one large telecommunications company, AT&T, attributed $4 billion of increased revenue to the engagement of women suppliers. By all accounts, when the playing field is level, women-owned businesses can compete successfully with businesses owned by men.
Research also shows that consumers are concerned about corporate social responsibility and this translates into a “bottom-line benefit” for brands that practice what they preach. Women, in particular, are more likely to try a company’s products when they know the company supports women-owned businesses. They are also more likely to develop brand loyalty.
Likewise, inclusive procurement policies enhance a company’s reputation among internal and external stakeholders, including employees, business clients, shareholders and the community.
Corporations that diversify their supplier base stand to benefit in other ways as well. Among other things, a diversified supplier base enhances supplier availability and security; promotes innovation through the entrance of new products, services and solutions; drives competition; and increases market penetration and access to new markets. Simply stated, gender-responsive procurement is a win for both the corporations and the women suppliers.