Supplier diversity is the use of certified vendors owned by people from traditionally underrepresented groups. Historically, this has meant minority-owned business enterprises (MBEs) and women-owned business enterprises (WBEs), but increasingly, it includes vendors owned by veterans, gay and lesbian people and people with disabilities. It is a cornerstone of progressive regional economic-development efforts.

Supplier diversity is aimed at increasing the number of these underrepresented groups that supply goods and services to companies by allowing them to compete on a more even footing with larger vendors to access market opportunities.

Like affirmative action, supplier diversity started out as a government mandate.

The struggle of Blacks in the civil-rights movement resulted in the establishment of laws and corporate imperatives to ensure equal business opportunities.

The first companies to make significant inroads into supplier diversity were the telecoms, followed by the auto industry. This was largely caused by government requirements since the federal government was among these industries' largest customers. In recent years, other industries, including those that do not have government contracts, have realized the benefits of supplier diversity in innovation, cost-cutting and inroads into multicultural communities.

Businesses owned by women, Blacks, Latinos, Asians, American Indians, people with disabilities, veterans and LGBTs provide unique insights into emerging markets, build a loyal customer base and create wealth in communities.

The number of diverse suppliers has been increasing. Between 1997 and 2002, the number of Latino-owned firms grew 31 percent, while the number of African-American female-owned firms and African-American male-owned firms increased by 75 percent and 29 percent, respectively, outpacing the national rate of 10 percent. (U.S. Department of Commerce)

Veteran-owned and service-disabled veteran-owned businesses are increasingly important as well. There are more than 25 million veterans in this country, and 1 in 7 small businesses are owned by a veteran, including DiversityInc.

Supplier-diversity programs typically involve two layers of suppliers. Tier I programs are defined as those suppliers and vendors who do business directly with the buyer/buying firm. Tier II programs are those suppliers and vendors doing business directly with the Tier I (subcontractors).

Managed correctly, supplier-diversity efforts have three goals: Lower cost of procurement, greater innovation and speedier time to market.

In this section, find out what companies are doing to strengthen ties with these suppliers and how to build new relationships and business partnerships. Click here for The DiversityInc Top 10 Companies for Supplier Diversity.