Given the increasing need for inclusion, diversity in the supply chain is an important topic for a variety of stakeholders associated with large buyers, as well as consultants and advisors and professional organizations and associations. Indeed, there are a number of benefits, and taking this concept into consideration should not be ignored.
While this offers an initial look at diversity in the supply chain, Maïa Inclusive Growth will be exploring various aspects and practical applications in greater detail in a series of blogs. Topics will include factors of a supplier diversity strategy, associated challenges, case studies, assessing the impact of supplier diversity, and governmental policies and regulations.
Definition of supplier diversity
What does supplier diversity entail? It is considered to be the deliberate integration of businesses owned by visible minorities and underrepresented groups into the supply chain. The latter refers to the entire process of providing raw materials to a manufacturer, manufacturing a product, and then delivering these finished goods to consumers using a network of distributors.
Although the definition of a diverse supplier varies from country to country and sector to sector, it is largely thought of as a company with 51% of ownership or more being women, racial/ethnic minorities, immigrants, veterans, members of the LGBTQ+ community, individuals with disabilities or other disadvantaged groups.
Origin of supplier diversity
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 as a response to the civil rights movements, which shed the light on racial and economic inequalities in the U.S. As a result, President John F. Kennedy took steps to incorporate affirmative action into federal contracts, followed by the Civil Rights Act in 1964, prohibiting discrimination on the basis of race, colour, religion, sex, and national origin. Next, the federal government established programs to encourage the participation of Minority Business Enterprises (MBEs) and Women Business Enterprises (WBEs) in public and private contracts.
The 1980s and 1990s saw the rise of socially responsible purchasing (SRP), with concepts such as the triple bottom line (People, Planet, Profit) and the fair trade movement gaining in popularity. This also led to standards and certifications being established by the bodies such as the International Labour Organization (ILO), and increased awareness among the greater public.
Supplier diversity was further formalized in the 2000s with initiatives such as the United Nations Global Compact and Sustainable Development Goals (SDGs), and legislation including the French Duty of Vigilance Law.
2020 marked another significant moment for supplier diversity. The COVID-19 pandemic highlighted the difficulties that can arise from 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.
Current status
Today, supplier diversity within the supply chain has been widely adopted by companies into their daily operations, along with a push for measurement, reporting and transparency.
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.
Importance and advantages of supplier diversity
There are a great number of advantages connected to incorporating supplier diversity in your supply chain, from an ethical and an economical point of view. Indeed, it’s possible to do good for your company as well as society at large.
First among these is that it can help you achieve your ESG targets. On the environmental front, using local suppliers increases sustainability while decreasing a company’s carbon footprint. In terms of the social aspect is the fact that it promotes historically underrepresented groups, which can also lead to inclusive labour practices. As for governance, supplier diversity has a positive impact on transparency, risk management and ethical procurement.
In addition to ESG targets, companies also benefit from an enhanced reputation, which can attract both diverse talent as well as loyal customers who share a commitment to an inclusive economy. This can improve your company’s economic performance with new opportunities for growth.
Innovation and creativity are the result of fresh perspectives from diverse suppliers, and both of these aspects enrich a company’s value chain. By offering more options, you can reach new markets and customers. Another way innovation and creativity can contribute to your company’s economic success is by finding more competitive cost solutions.
Thanks to having multiple sources of supply, you can better protect yourself from shortages and other supply issues. This is because diverse suppliers are often smaller and can more easily adapt to market changes. You can therefore enjoy a more resilient and flexible supply chain.
These are just some of the positive aspects of supplier diversity that make it worthwhile to incorporate this into your company’s operations.
Maïa Inclusive Growth's role
As a project of the Quebec Business Women's Network (QBWN/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. So, if the subject of supplier diversity seems overly complex or you don’t know where to start, we are here to provide with the information you need and to offer guidance on how to apply your learnings to. 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 our upcoming revolutionary web platform.
Regardless of where you are in your journey with supplier diversity, we encourage you to sign up for our training programs, which are offered online here
We also invite you to sign up to stay tuned for future blog posts. In addition, you will be notified of any updates and upcoming workshops
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