In 2020 we saw anti-racism move to being high on the public agenda. For businesses, this meant it was high on the agenda of their workforce, clients and partners. Companies were urgently looking for ways to act on diversity and inclusion. Many organisations saw a huge opportunity in their supply chains to invest in more diverse communities and align their values with a more inclusive market.
They also began to realise the economic benefit of diversifying their supply chains. The 2017 McGregor-Smith review, Race in the Workplace, for example, found that we could boost the UK economy by £24bn by “full representation of BME [Black and Minority Ethnic] individuals across the labour market.” Earlier in 2015, the McKinsey report, Why Diversity Matters, examined data of 366 companies across a range of industries in Canada, Latin America, the UK and the US. It found that companies with higher levels of racial and ethnic diversity were 35% more likely to have better financial returns than their competitors.
So how can a business embed diversity in its supply chain? Here are my tips for success.
What do we mean by ‘diverse suppliers’?A diverse supplier is defined as one that is majority owned (51% or more) by those typically discriminated against on the basis of certain protected characteristics such as gender, race, disability or sexual orientation. |
1. Assess your starting point
An audit of your supply chain is a good starting point. First, gather data by sending questionnaires to your current suppliers to understand the diversity of their ownership and staff. This might require upfront resource, but understanding where you are starting from can make goal-setting and targets more effective and realistic. Consider building diversity questions into your supplier assessment and onboarding processes. Make it clear to your suppliers and your procurement team that supplier diversity is important to you. Requiring suppliers to have a diversity and inclusion policy is one way of doing this. As part of the contract specifications, consider including requirements that any jobs created from the contract should be distributed equally.
Communication is key as you’re on the journey to diversifying your supply chain. Sharing lessons learned and outcomes from your efforts can be mutually beneficial: support and encourage companies in your supply chain to be more diverse, and learn together in doing so.
2. Set a vision and agree on targets
It’s important that organisations are fully committed to an agreed target and process. Specify what a diverse supply chain looks like for your organisation and make that part of its broader responsible business strategy.
You will need to decide which groups you want to engage and the impact you want to have for them. You might agree that your ideal supply chain employs more people from minoritised ethnic groups, but also that you want to increase opportunities for these people to take on leadership positions. To maintain consistency and authenticity, get input from all your stakeholders on this.
Specify what a diverse supply chain looks like for your organisation and make that part of its broader responsible business strategy
A great example of setting and achieving targets is the Small Business Development Programme created by the Metropolitan Transportation Authority (MTA) in the USA. They specified wanting to increase the number of minority and women-owned businesses in their supply chain and so created a programme that included technical assistance and learning that would make potential suppliers more competitive and familiar with the MTA environment. Since the project’s inception in 2010, 443 contracts, totalling over $467m, have been awarded to small businesses in this programme.
Above: an event run by Generation Success, a social enterprise that ‘advances social mobility by empowering young people of diversity to reach their career aspirations’, as well as providing diversity and inclusion consultancy for businesses through its commercial arm. It was listed on the NatWest SE100 list of top 100 social enterprises in 2019
3. Engage your employees and network
Employers lose the true power of the supply chain if they just make it transactional. Create a project that engages decision makers and empowers them to be part of the change that’s needed. Accenture’s Diverse Supplier Development Programme, for example, matches Accenture executives with diverse suppliers to help them grow their business. This helps suppliers become more competitive and gives executives the understanding to lower barriers to diverse businesses across their supply chains.
Diversity really matters to your own workforce and that of your clients. In a survey commissioned by UPS and cited in Harvard Business Review, 52% of respondents said they want to work for a company that has a supplier diversity and inclusion programme. It’s important that people understand what you are doing so they can buy into it. Work with your marketing team to communicate this both internally and externally; showcase opportunities to be involved in recruitment open days and employee inductions.
4. Use intermediaries and support organisations
Not every organisation has the resources to do the hard work, so it’s all about leveraging knowledge and expertise. Draw on the experience of others who understand the barriers and best practices.
The first barrier that many companies face is finding and engaging the suppliers. Partnering with membership and support organisations can give direct access to the specific groups you want to engage. For example, UPS has partnered with organisations like the National LGBT Chamber of Commerce, Disability: IN (a disability inclusion resource) and National Minority Supplier Development Council to reach a broader pool of suppliers and understand better how to work with them.
Other organisations exist specifically to lower barriers in procurement. Social procurement company Supply Change identified that resource-poor smaller businesses often can’t go through admin-heavy processes to win contracts, such as bidding for contracts or onboarding onto procurement systems. Their solutions include digital platforms where buyers can see pre-verified suppliers. This means suppliers only have to submit verification information once to access multiple buyers.
Taking the first step is daunting and may seem slow to start, but doing nothing is no longer an option
5. Learn and iterate
Starting somewhere is better than not starting at all. Taking the first step is daunting and may seem slow to start, but doing nothing is no longer an option and sticking with the status quo does nothing for our economy.
Review the data, identify where your efforts are working and what might need improving. Create feedback loops with all your stakeholders to understand where things can be improved and what might be creating an obstacle in your current processes (such as resource-intensive paperwork, hard-to-use software or unrealistic pre-contract requirements).
Orbit, a housing association based in the Midlands, England, commissioned Supply Change in 2017 to understand why it had so few social enterprises in its supply chain. As a result of the research, Orbit created a dynamic purchasing system for voluntary, charity and social enterprise organisations only, to prevent suppliers having to reapply for every individual contract opportunity. This made it easier for impactful organisations to engage with Orbit and for its procurement teams to procure ethical goods and services in a compliant way.
- James Adeleke will be speaking about how diverse supply chains can create more impact at the Social Procurement Festival on 23-24 March; Pioneers Post readers can use the code PP22 to claim a 20% discount on tickets.
Header image: James Adeleke. Photos courtesy Generation Success
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