2020 will go down in history under many names, not least of which is “the year of supply chain disruption. In early February, before COVID-19 became a worldwide pandemic, 70% of US businesses were already assessing their suppliers and trying to figure out who was in lockdown. Soon after, 97% of businesses worldwide were impacted by pandemic-related supply chain disruptions.
The depth of the impact was not equal across businesses, however; small businesses were far more likely to suffer than large companies due to lower bargaining power and tighter margins. Another determining factor was minority status. From February to April, minority business ownership declined nearly twice as much as white business ownership. One year later, 60% of business closures during the pandemic are permanent.
These figures spell more than a tragedy for individual business owners. They are, according to economics professor Robert Fairlie, a setback for racial equality. Perhaps one of the worst things about the minority business closures is their timing. As spring turned to summer in 2020, public outcry for diversity and racial equality exploded. 70% of millennials chose to shop with brands they felt demonstrate diversity and inclusion, and 60% of people said the way a brand reacted to the protests would influence their buying decisions in the future. At the time, companies reacted by promising more diversity. It’s time they follow through on their promise.
Companies shouldn’t just view diversity as a mandate to be reached. Diversity is good for business; diversity leads to more product innovations, more new patent filings, and more citations on patents. When companies use local suppliers, not only are they immune from distant lockdowns, but local communities flourish. Mark Cuban predicts that “when we get to the other side, companies are going to be operating differently.”
Embrace change. Embrace diversity today.