Given the realities of today’s workforce and business community, supplier diversity is an increasingly important topic for entrepreneurs, large buyers, and society at large. Indeed, the unique value and innovation brought about by taking this concept into consideration should not be ignored.
While this offers an initial look at supplier diversity, Maïa Inclusive Growth will be exploring various aspects and practical applications in greater detail in a series of blogs. Topics will include factors to focus on in a supplier diversity strategy, associated challenges, economic benefits and governmental and regulatory policies.
Although supplier diversity may be a new topic for some, the idea has been around for some time. Its origins can be traced back to the 1960s, when U.S. President John F. Kennedy took steps to incorporate affirmative action into federal contracts. This was followed by the Civil Rights Act in 1964, which prohibited discrimination on the basis of race, colour, religion, sex, and national origin. Next, came the creation of the Office of Minority Business Enterprise (OMBE) and the launch of a supplier diversity program by businesses such as IBM, General Motors and AT&T.
2020 marked another significant moment for supplier diversity. The COVID-19 pandemic highlighted the difficulties that can arise depending on a limited number of suppliers. The disruptions created by shortages were proof that a broader network is an effective way to mitigate risk and guarantee continuity.
Today, supplier diversity is an essential strategy and deliberate effort to enhance commercial partners of a business by including suppliers from typically under-represented groups, such as minorities, women, veterans, LGBT+ community.
With Maïa, the focus is on women entrepreneurs and women-owned businesses. One of the reasons we consider this to be important is that 18% of businesses, including small, medium and large businesses, are majority owned by women in Canada, yet only 4% of venture capital funding is received by them. Also, programs are less developed in Canada, despite being the second largest creator of businesses through entrepreneurship. However, it is a growing trend and the Quebec Business Women’s Network (RFAQ) has been monitoring it for over a decade both within the province and on a national level.
At the heart of supplier diversity, is the belief that diverse suppliers offer unique perspectives and stimulate innovation and global competition. To properly apply it requires in-depth knowledge of market requirements, obtaining certification, reinforcing operational capacities and efficient communication. It is also a key component of ESG (environmental, social, and governance) practices of a business, particularly the social aspect.
While the origins of supplier diversity are in the United States, it has expanded to other countries, including Canada, South Africa, the United Kingdom and Australia. International companies doing business in these places are also becoming more aware of these practices and the associated requirements.
When discussing supplier diversity, it’s also important to understand other concepts, such as a supply chain, which refers to the entire process of providing raw materials to a manufacturer, manufacturing a product, and finally delivering finished goods to consumers using a network of distributors.
Also, inclusive procurement signifies the process of diversifying a company’s supply chain by choosing to do business with newer, smaller, diverse or innovative suppliers. Diverse suppliers are defined as being at least 51% owned by women, racial/ethnic minorities, immigrants, veterans, people with disabilities, or other disadvantaged groups.
As a project of the RFAQ, one of our main goals is building awareness, educating and inspiring large enterprises and women entrepreneurs. In addition, we supply training and workshops on an array of topics. We also hold networking events spanning across the country along with our partners. Another vital activity is intelligent matching between suppliers and buyers, which will also be enhanced through upcoming revolutionary web platform.
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