Apr 14, 2022
Supply Chain Diversity: What It Means and Why It’s Important

It’s no secret that COVID-19 has had major repercussions on the business world. According to Accenture, 94% of Fortune 1,000 companies have seen supply chain disruptions as a result of the pandemic, with 75% reporting negative or strongly negative impacts on their business.

The need for companies to grow and maintain a resilient supply chain has never been stronger. Organizations need a supply chain that is diverse and sustainable. According to EY, diverse suppliers – companies owned by people from historically underrepresented groups – can help cut costs, drive innovation, and broaden the traditional footprint of a supply chain. That helps to mitigate disruption, minimize risk, and create agility.

At Cigna, partnering with and supporting diverse suppliers is a key part of our strategy to deliver on our mission to improve the health, well-being, and peace of mind of those we serve. We’ve committed to spending $1 billion with diverse suppliers by 2025 as part of our Building Equity and Equality Program. We are on track to reach this commitment, with approximately $764 million spent with diverse suppliers in 2021. And this spending goes beyond the companies and partners we work with, providing a direct economic benefit to local communities. Based on external benchmarks (Supplier IO), we estimate that our diverse spending will have a 2.6 multiplier impact in the communities where diverse suppliers live and work.

Cigna has a number of mechanisms built into our procurement process to ensure we are identifying and engaging diverse suppliers for relevant business opportunities. Diversity is top of mind from the beginning of the vendor sourcing process, said Carlos Guzman, managing director, supplier diversity and sustainability at Cigna. The goal is to include diverse suppliers wherever there is an opportunity. Our global procurement and third-party management team, which manages strategic sourcing, purchasing, and supplier-relationship management, proactively seeks to assess and include diverse candidates and engage them in the competitive bid process. If diverse suppliers are not selected due to size or scale, the team can work to pair a diverse supplier with a larger company to take on part of the business as a sub-contractor. Supplier diversity is tracked and monitored across the enterprise, with the goal of including diverse suppliers in at least 50% of all sourcing opportunities in the next few years.

Supplier Diversity Improves Resilience and Agility

Supporting and growing our relationships with diverse, historically underrepresented suppliers and communities is a top priority for Cigna because it is a best in class business practice.

“When we invest in supplier diversity, it helps us to increase the pool of possible suppliers and promote healthy competition, leading to better product quality, more innovation, and cost savings.” Carlos Guzman, managing director, supplier diversity and sustainability at Cigna

Guzman noted that diverse suppliers can provide the best combination of total cost, quality, and service, and this leads to healthy competition and a level playing field for all potential and existing suppliers – which proves vital when the supply chain is strained or disrupted.

Importantly, diverse suppliers are often more innovative, differentiating themselves from their competitors with disruptive technologies and solutions, Guzman said. Studies have found that long-term supplier diversity can generate 133% greater return on investment while spending 20% less on average on their buying operations. Another advantage is that diverse suppliers tend to be smaller and therefore more agile and nimble.

In addition, emphasizing supplier diversity helps attract and retain employees, which is a key priority across all areas of Cigna’s business, particularly amid the Great Resignation. Guzman noted that today’s workforce, particularly millennials and Generation Z employees, places great value on diversity, and these younger workers seek out companies that commit to reducing inequity across society. Supplier diversity is just one way Cigna is committed to driving diversity, equity, and inclusion.

Supporting and Developing Diverse Suppliers

At Cigna, we believe that equity and equality for all can drive economic vitality. Our focus on supplier diversity is important because it is one of the biggest direct contributors to sustained economic progress and prosperity for underrepresented local communities, Guzman said, noting that sustained employment is one of the primary ways to drive prosperity in a community, and many diverse suppliers are focused on hiring from within their localities. By helping to support and develop this talent, Cigna is in turn able to benefit by working alongside them and harnessing their talent and drive.

Cigna’s long history with supplier diversity has deep roots that date back to the 1970s. We are a longstanding corporate member of various development organizations, including the National Minority Supplier Development Council, the Women's Business Enterprise National Council, the National Gay & Lesbian Chamber of Commerce, and the National Veteran Business Development Council. These organizations help develop emerging entrepreneurs and business owners, and we work with them to connect us to diverse suppliers and cultivate alliances to ensure an equal opportunity for all companies that want to do business with us.

We are also proud to run the Cigna Supplier Mentor Protégé Program. Now in its second cohort, the program was established in 2016 to assist minority suppliers by pairing them with Cigna executives for 18 months to help develop and grow their businesses – positioning them to compete for contracting opportunities with Cigna. The program’s sole focus is to help diverse suppliers develop, grow, and become more competitive in the market.

Partnering With Responsible, Sustainable Suppliers

We expect our business partners – including suppliers, distributors, and vendors – to share our commitment to integrity in human rights and labor, business conduct, and the environment. Staying true to our values, in order to be considered a potential supplier, a company must read and attest that it complies with Cigna's Supplier Code of Ethics. No supplier is exempt.

Our Code of Ethics outlines our expectations in the areas of community, child labor, human trafficking, forced labor, wages and working hours, health and safety, freedom of association, nondiscrimination, and preventing harassment. It also outlines our commitment to environmental sustainability, requiring our suppliers to attempt to minimize and reduce waste, reduce carbon footprints, and conserve water.

We also recently launched our Responsible Supplier Program, which helps us better understand our suppliers’ sustainability efforts through a universal scorecard, benchmarks, and performance improvement tools.

“In times of uncertainty, it is crucial that we bring diversity, flexibility, and innovation to our business solutions,” Guzman said. “While we cannot predict the future, we are acting with purpose and precision when it comes to how we spend with suppliers to ensure we are delivering on our promise to our clients, customers, and communities we serve.”

Diversity, Equity, and Inclusion

At Cigna, we are committed to respecting differences, treating each other fairly, and standing together. We take an expansive view of diversity, including race, ethnicity, nationality, gender, veteran status, ability, sexual orientation, and gender identity.

Learn more