<img src="https://ws.zoominfo.com/pixel/f25pfNfX8omqHOgIFa5E" width="1" height="1" style="display: none;">

A Pathway to Supplier Diversity in Healthcare


Supplier diversity in the healthcare industry is challenging but Tier 1 and Tier 2 diversity spend is possible through Caracal and Taylor Healthcare.

A healthcare team around a table discussing supplier diversity

The Harvard Business Review published an article about supplier diversity that demystifies the topic and demonstrates how it creates a competitive advantage for corporations across all industries.

As defined by the writers at HBR, a diverse supplier is at least 51% owned and operated by members of a traditionally underrepresented or underserved group. These underrepresented or underserved groups, in turn, can take the form of:

  •   Small-business enterprises (SBEs)
  •   Minority-owned enterprises (MBEs)
  •   Woman-owned enterprises (WBEs)
  •   LGBTQ communities, military veterans, the disabled and more

When procuring products and services from a diverse supplier, the “spend” is then typically categorized into tiers as follows:

Tier 1 Diversity Spend

Tier 1 spend represents the total amount of procurement dollars that an organization spends directly with a certified diverse supplier.

Tier 2 Diversity Spend

Tier 2 spend represents the total amount of procurement dollars that an organization spends with a non-diverse supplier, who then sources the products and services from a certified diverse supplier.

Why Supplier Diversity Matters

Conversations about supplier diversity first gained momentum during the Civil Rights movement in the 1960s. By 1968, influential corporations like General Motors and IBM launched their own supplier diversity programs. The concept came full circle in 1969 when President Nixon established the Office of Minority Business Enterprise, formally recognizing the positive impact of minority businesses on the nation’s economy.

Today, supplier diversity is a core sourcing strategy for many American businesses. HBR notes that logistics giant UPS now spends $2.6 billion annually with thousands of small and diverse suppliers. Likewise, both Target and Coca-Cola report more than $1 billion annually in diversity spend.

Aside from being the right thing to do, supplier diversity is proven to create a competitive advantage for the purchasing organizations. According to research cited by HBR, consumers aware of Coca-Cola’s supplier diversity initiatives are 49% more likely to use Coca-Cola products. Likewise, 52% of survey respondents say they want to work for a company that embraces supplier diversity.

The Healthcare Supplier Diversity Gap

Unfortunately, supplier diversity is challenging in the healthcare industry for a variety of reasons. As noted by the Journal of Healthcare Contracting, the complexity of the healthcare supply chain creates a barrier to entry for many diverse suppliers. The high level of healthcare industry regulation is simply too expensive for most SBEs, MBEs and WBEs to bear.

Likewise, the healthcare industry’s reliance on group purchasing organizations (GPOs) effectively locks up 60% or more of all contracts with the manufacturers of medical products. Another 20% of GPO contract volume goes to everyday consumable supplies with a bias toward low-cost overseas manufacturers.

GPOs are now working to provide their members with more access to diverse suppliers, and with good reason. When a hospital’s supplier network reflects the diversity of the patient population served, great things happen. Innovation flourishes, barriers are eliminated and relationships are formed within the diverse patient communities receiving care.

Clearly, supplier diversity is of long-term strategic importance to the healthcare industry. As a procurement strategy, supplier diversity has the power to enhance patient experiences and improve the quality of patient care.

Caracal: A Tier 1 Healthcare Diversity Spend Solution

Of course, not all diverse suppliers are created equally. To meet your operational goals while driving positive change in the business community, you need the right type of supplier partner. That partner must give you access to high-quality products, provide a robust customer service model, and show a true commitment to creating jobs in American’s underserved local communities.

One diverse supplier organization is doing exactly this. Caracal is a certified minority business enterprise and Tier 1 diversity spend supplier headquartered in Detroit. Since 2004, Caracal has been serving the needs of large companies across a variety of industries – including healthcare.

Through Caracal, healthcare organizations nationwide are able to drive their Tier 1 diversity spending goals by purchasing a wide range of consumable products and services including:

  • Labels and wristbands for the entire continuum of care, from admissions processes and patient charting to specialized pharmacy and lab labels.
  • Print management services that bring new levels of speed and cost-effectiveness to corporate print programs.
  • Branded apparel items and high-quality PPE products including gloves, gowns and masks.
  • Branding and marketing services ranging from corporate identity products and direct mail campaigns to sophisticated data analytics and digital marketing efforts.
  • Warehousing, kitting and distribution through a nationwide network of secure distribution centers.

We are proud to note that Caracal is a strategic business partner of Taylor Healthcare. By sourcing from Caracal, you can procure Taylor Healthcare’s vast assortment of products and services as qualified Tier 1 diversity spend. This is in addition to Caracal’s own fast-growing assortment of private-label healthcare products.

Procurement managers can also achieve Tier 2 spend goals by purchasing from Taylor Healthcare, who then sources products through Caracal. In fact, this relationship is one of the reasons that Taylor Healthcare was nominated by Vizient for their Diversity Supplier of the Year award in 2022.

The procurement teams within hospitals and clinics now have an opportunity to accelerate the adoption of supplier diversity. Taylor Healthcare and Caracal are teaming up to make it happen. Learn more about the partnership between Taylor Healthcare and Caracal.

Subscribe to Taylor’s Blog

Get stories like this in your inbox


Related Content

The latest news, technologies, and resources from our team.