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Why Procurement Managers should engage on Equity, Diversity & Inclusion

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SUMMARY

The process of selecting and managing suppliers is an important opportunity for companies to enable equity diversity and inclusion for their supply chain, as well as for their own company.

This paper provides a summary of the reasons why procurement executives, supply chain managers, HR & EDI professionals, and internal customers of the supply chain should work engage on equity, diversity and inclusion.

TARGET AUDIENCE

This guide for:

  • Senior executives
  • Procurement executives
  • Supply chain managers
  • HR & EDI professionals
  • Internal customers of the supply chain

INTRODUCTION

All functions in a company have a role to play in improving equity, diversity, and inclusion (EDI) within their companies, their supply chain, and in the communities in which they operate. Supplier management is an important “lever”.

Benefits include:

  • Corporate learning for overseas expansion using supplier knowledge
  • Improving corporate reputation using positive alignment with societal impacts
  • Aligning with government expectations (e.g.: engaging SMEs).
  • Complying with legal obligations (e.g.: pay gap reporting).
  • Adhering to customer requirements (e.g.: using minority-owned businesses).

Below, I summarise key findings from industry-relevant sources to further evidence the benefits of managing equity, diversity, and inclusion in the supply chain.

CHARTERED INSTITUTE OF PROCUREMENT AND SUPPLY (CIPS)

In their paper Supplier Diversity: Unlocking Innovation, Driving Competitiveness and Enhancing Reputation the Chartered Institute of Procurement and Supply (CIPS) state:

  • “As businesses become more global … there is increasing pressure on procurement to remain relevant, look beyond traditional ways of sourcing…most organizations are trying to create a more strategic understanding around supplier diversity and inclusion. The corporate sector is gradually recognizing the fact that its suppliers must accurately mirror the structure of its customer base. However, it is important that procurement redesign its traditional approach to sourcing; access must be made easy, process simple and decision making transparent in order to attract small, nimble and innovative suppliers.”

Diagrammatically they summarize the value brought to the business:

THE HACKETT GROUP

The Hackett Group, a strategic consultancy and leading benchmarking and best practices firm, have for several years issued reports on their findings on Supplier Diversity.

In those reports they conclude:

  • “Virtually all diversity suppliers meet or exceed expectations, and top corporate performers in supplier diversity experience no loss in efficiency.” … “they see improved quality and often extract other benefits, including increased market share and access to new revenue opportunities.”
  • “The research challenges the attitude of many business leaders, who worry that dedicating resources to supplier diversity will divert attention from other strategic activities.”
  • “Top performers in supplier diversity recognize the value of objectives such asthe ability to gain access to new markets and improve supplier partnerships.”
  • “Supplier diversity is evolving from a check-the-box corporate social responsibility requirement to a strategic enabler providing access to innovative products and increased market share in new and developing communities.”

In their 2016 report they summarized key findings as follows:

UNITED NATIONS (UN)

The UN has for some time highlighted that businesses have the ability and responsibility to influence for good through their supply chain activities.

  • “Supply chain sustainability and responsible procurement are critical to making global goals local business by ensuring that the extension of a company’s operations, products and services can support the realities of our planet and better serve markets both today and in the future.”

This extends to the Sustainable Development Goals as well as global compacts e.g.:

  • The Women’s Empowerment Principles (WEPs) includes “Principle 5: Implement enterprise development, supply chain and marketing practices that empower women”
  • The Standards of Conduct for LGBTI people was announced with “The decisions that companies take – whether in respect of human resources, investment, supply chains, even marketing – can have a real and, in some cases, profound impact on human rights.”

CONFEDERATION OF BRITISH INDUSTRY (CBI)

In addressing their diversity and inclusion conference the CBI president stated:

  • “If you’re part of a supply chain – challenge conventional thinking, to look at how you could work with a more diverse set of suppliers and partners, including minority-owned businesses.”

BUSINESS IN THE COMMUNITY (BITC)

BITC state that there are many benefits for businesses to diversify their supply chain including:

  • Wider base of potential suppliers and larger range of solutions
  • More innovation and greater flexibility
  • Access to local knowledge and alignment with a culturally diverse marketplace
  • Opportunity to support and build relationships with local communities

BENCHMARKING

Renowned EDI benchmarks include the impact of supply chain management.

CONCLUSION

The business case for and impact of managing EDI in the supply chain is clear. Many resources are available including:

  • WEConnect provides a comprehensive set of global Supplier Diversity & Inclusion Resources.
  • MSDUK offers resources and a marketplace.
  • Stonewall’s WEI advisory team.
  • Chambers of Commerce are available (e.g.: Women’s Chamber of Commerce and the Gay and Lesbian Chambers of Commerce) provide access to suppliers.
  • National Minority Supplier Development Council (NMSDC) provides certification of minority businesses.

It is recognized that it will take time for companies to develop policies and procedures, and furthermore to implement them. As such a maturity level perspective can be taken with iterations through time to develop from a starting approach to a market-leading and market impacting one. Procurement and supply chain managers undoubtedly have a significant role to play – for their own companies, their suppliers, and the societies within which they operate.


About Steven

Steven has extensive experience in strategic executive leadership having led large business units at Fujitsu. Steven has had full and operational delivery responsibility for $1bn annual revenue business, including sales / growth, of full-service range (consultancy and change programmes, to operational IT services) to multiple clients. Leading business through changes in strategic direction, crisis management, transformational turnarounds especially those delivering business critical services to clients such as Public Sector / National Government. Steven engages well with C-suite executives and senior stakeholders, including in previous roles with UK Government Cabinet Ministers.

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