How to achieve supplier diversity: 4 experts explain

In a world where the COVID-19 pandemic has contributed to an increase in the global gender gap by a generation and where we see growing socio-economic inequality, encouraging signs for social reform and equality are emerging in supplier diversity.

Supplier diversity is becoming a top priority for the private sector, highlighting a shift of corporate objectives from compliance towards social and economic inclusion. A 2021 study by Hackett of 100 large global and US-based companies found that almost three quarters of organizations either already run or plan to expand their global supplier diversity programs by 2023, and that the average 2025 target is to spend 13% with suppliers that are more than 51% owned or controlled by an individual or group that is traditionally underrepresented or marginalized.

To understand how organizations can achieve supplier diversity, we reached out to four experts. Here are their views on overcoming obstacles and realizing the benefits of supplier diversity.

Mayank Shah, Founder and CEO of Minority Supplier Diversity UK (MSDUK)

Supplier diversity enables companies to encourage entrepreneurship in underserved, underrepresented communities, which in-turn creates jobs, wealth, better health and education in those disadvantaged communities. And a more diverse supply chain impacts the bottom line through innovation, competitiveness and sustainability.

In the UK, a recent government policy statement on public procurement has made supplier diversity a priority area for local governments. These are positive steps in the right direction, but they also need to be backed by real commitment and outcomes. Here are some recommendations to make it happen.

Let supplier diversity take centre stage in driving economic inclusion and build future generation of entrepreneurs that represent the multi-cultural, multi-dimensional society we all live in.

Pavel Subrt, Board Member and Head of Supplier Diversity Programme at the European LGBTI Chamber of Commerce

We at the European LGBTIQ Chamber of Commerce (EGLCC) believe in role models. They are very important for every society and community. We believe if we support people, they will grow not only as persons, but also as business professionals. As an outcome, the community will see them as a living example that “being out as LGBTIQ” in business is possible, and this does not mean losing customers or business partners.

The next outcome is that also society will see the whole community differently than many times in media at present, as successful business professionals. Regardless if representing a business, a corporation or government organization, every person can make a difference and contribute to creating role models (or even becoming one).

The way to start in procurement and sourcing is to be conscious and to be proactive. Conscious means to keep asking “from whom do we procure?” and “is our supply chain as diverse as our customer base is?”. Proactive means being curious, showing an interest and offering a helping hand. Diverse businesses are experts in their work but have many times no experience how apply for an RFPs (request for proposals), how to prepare a pitch or how to run their business in a long-term sustainable way.

Every person can make a difference. Why don’t you try it tomorrow – when it comes to businesses currently underrepresented in supply chains, make one proactive business action, or start a conversation.

Alexandra Tarmo, Head of Partnerships and Social Procurement at Unilever

A successful supplier diversity program presents a real opportunity to answer the resilience, savings and innovation needs of businesses, while also delivering sustainable, positive social impact. At present, the COVID-19 pandemic has shown that there is a strong need for equitable, inclusive economic recovery to address the growing inequality experienced by diverse and underrepresented groups.

For corporate procurement organizations, this presents a major divergence from the consolidation and simplification strategies of old, where many suppliers gave way to the few, leading to over-dependence and economic exclusion. To practically address these challenges and create an inclusive business environment, both mindset and policy changes are needed to work in parallel: unconscious bias must be met with education; supplier development programs should be implemented to bridge any capability gaps. A UK first, Unilever has backed the launch of the MSDUK Accelerator, with partners Dow, Google and WPP, to support UK minority businesses catalyse their corporate partnership potential through mentorship and networking opportunities.

While we’re looking to scale our supplier diversity efforts globally, we are committed to discovering and developing local solutions to address the unique challenges faced in each country. Government advocacy and collaboration will be critical to paving the way in markets without established supplier diversity infrastructure. In June this year, Unilever Thailand partnered with the Office of SMEs Promotion (OSMEP) to launch a nationwide search for local and diverse small-medium enterprises to join our supplier development program.

While it may be tempting to only set spend targets to drive and ascertain progress, a successful supplier diversity programme is however one which targets innovation, growth and positive social impact as key outcomes - diverse spend growth will be an organic outcome of what is essentially just good business.

Peter Zerp, Supplier Inclusion and Diversity Program Lead at Accenture

At Accenture, one of our key objectives as a responsible business is to help build supply chains that are more sustainable and inclusive. By encouraging a mindset of responsible buying both inside and outside our company, we are helping to generate long-term value for our clients, supplier partners and communities. Supplier inclusion, diversity and sustainability are at the core of this mindset and our procurement strategy.

Developing a strategy for launching a supplier diversity program requires proper research and engaging the right people. Some of the considerations for doing this successfully include:

The information you gain from above checkpoints can help to decide which of your markets make most sense to start your supplier diversity journey. Based on best practices and learnings from this you can further develop a program that brings down barriers for diverse owned businesses to connect with opportunities to scale.