Companies Increasingly Turning to Smaller and Local Suppliers in Procurement
Companies Increasingly Turning to Smaller and Local Suppliers in Procurement
Mounting uncertainty in global supply chains is driving a pronounced shift in corporate sourcing strategy approaches. The 2025 State of Supplier Diversity Report published by Supplier.io reveals that companies are no longer viewing supplier diversity programs merely as matters of corporate reputation or social responsibility, but rather linking them directly to operational resilience and business performance. At the heart of this transformation lies a focus on small and local suppliers.
According to the report, 46% of organizations plan to increase procurement volumes from small suppliers, while 38% aim to deepen their overall focus on small suppliers. This trend reflects corporate efforts to establish supply networks that are closer, more controllable, and more flexible during a period marked by volatile tariffs, increased political pressure, and persistent global supply chain risks.
Supplier.io CEO Neeraj Shah summarizes this transformation as follows:
"Supplier diversity programs are directly tied to business performance and resilience."
According to Shah, the changing cultural and political climate is forcing companies to redefine the concept of "responsible sourcing" and become better prepared in the face of volatility.
From Program to Strategy: Small Suppliers Now a Priority
One of the most striking findings in the report is that small suppliers are no longer viewed as a "program objective" but rather as a direct sourcing priority. Companies are moving beyond traditional spend tracking approaches when measuring success. New measurement criteria include:
46%: Impact of supplier diversity on RFP wins,
43%: Economic impact (regional and sectoral contribution),
40%: Cost savings
This demonstrates that small suppliers are being evaluated on business results rather than solely on ethical or political grounds.
Certification Model Under Scrutiny
Another notable trend highlighted in the report concerns shifts in supplier verification and certification processes. Dependence on traditional certification bodies is declining:
A 74% increase was recorded in companies not belonging to certification agency councils.
However, companies employing manual onboarding and internal data reported experiencing 40% more data issues.
This pattern shows that as companies move away from traditional certification models, they face data integrity risks. Consequently, 33% of organizations report refocusing on data integrity, while 28.7% have increased technology investments to support these programs.
Political Pressure Becomes the Greatest Risk
For companies participating in the report, the greatest risk facing supplier diversity programs is no longer economic but rather political and cultural pressure. While 39.6% of respondents identify this pressure as the primary risk:
20.7% cite economic uncertainties,
18.9% point to potential budget cuts
as important risk factors. As a result, many companies are transforming their programs into structures that are integrated into business performance, more understated yet more strategic, rather than relying on public discourse.
Executive Support Remains Strong
Despite all these pressures, executive support remains notably robust. According to the report, 87% of companies reported stable or increasing executive support for supplier diversity initiatives. This support results in program restructuring rather than complete withdrawal.
Looking ahead to 2026, corporate expectations are becoming clearer:
30% increase in internal tracking,
34% increase in economic impact reporting,
56% plan to conduct public reporting.
These figures demonstrate that supplier diversity has become not a fleeting trend but rather a permanent component of corporate sourcing architecture.
Strategic Conclusion
Rising tariffs, geopolitical uncertainties, and supply chain disruptions are directing companies toward suppliers that offer shorter distances, faster adaptability, and lower risk profiles. In this environment, small and local suppliers are evolving from merely a social responsibility consideration to strategic actors capable of generating competitive advantage.
Key Takeaways:
46% of companies plan to increase procurement from small suppliers.
Supplier diversity is now linked to business performance and resilience rather than reputation.
Success metrics: RFP wins, economic impact, and cost savings.
Certification dependence is declining, but data integrity risk is rising.
Greatest risk: political and cultural pressure (39.6%).
87% continue to receive executive support.
----------
News Link: https://www.supplychain247.com/article/small-suppliers-supply-chain-strategy-2025
--------------------
Author: SedatOnat.com
--------------------
!!! ANNOUNCEMENT !!!
How to Procure ERP? Our book has been published on Google Play Books.
#What is ERP?
https://www.sedatonat.com/erpnasilalinir You can download and read it for free via this link.
We would be delighted to receive your feedback.
Wishing you good reading.