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 on this area.

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:

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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: