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Diversifying Your Supply Chain

How can you eliminate prejudice from your supply chain?

19May

Implementing a policy of supplier diversity means ensuring that SMEs owned or operated by diverse individuals are given equal opportunity to receive supplier contracts. Companies such as Walmart are already recognizing the benefits of doing this, allocating a percentage of their supplier contracts to female-owned businesses and investing heavily in helping these firms grow. Coca-Cola’s 5X20 program, for example, was launched with the goal of “empowering” 5 million women entrepreneurs across their value chain.

Reconizing The Benefits

There are numerous benefits to having a diverse supply chain in place, for everyone involved. The first step in its development is recognizing what these are, and building a strong business case.

One of the primary advantages is that it helps the supplier grow, and subsequently contribute more to the local economy. This has the added bonus of promoting corporate social responsibility, which can bring with it a certain amount of good publicity.

Fostering such ties also helps improve the agility of your supply chain, as the enterprise is likely to be better placed to operate in the region, and it will probably have less bureaucracy and shorter management chains. This can lead to far quicker turnaround on orders and deliveries, as well as making it easier for them to tailor processes to suit your needs. A diverse supply chain also increases competition, encourages innovation, and helps the supplier become more capable of delivering exceptional products and services.

Making A Commitment

The next step in the process is making a firm commitment to build a chain in which purchases are made without bias. This can entail simply putting in writing a pledge to encourage and educate everyone in the company to work towards these goals, or it can involve setting targets to spend a certain amount of money on suppliers owned by females and minority groups. For example, six major US companies, including Walmart, Coca-Cola, IBM, and ExxonMobil, are committed to awarding $1.5 billion in contracts to women-owned enterprises between 2013 and 2018.

Adopting A Holistic Approach

It is important to provide education and training to buyers and managers within your chain about your commitment, why you have made it, and any policies you are introducing to make it happen. Developing a holistic approach is important. An organisation-wide communications plan that includes a variety of internal and external channels is useful, as it will help reinforce the benefits of the program to your staff and whether the aims are being met. Publicly reporting progress is another option, as it can drive your organization forwards in meeting targets.

Choosing A Supplier

Many of the best supplier programs operate a points system, scoring organizations highly that are either owned/led by minorities or that run their own supplier diversity program. There are also a number of groups that can aid in the search, such as the Minority Supplier Council and the Diversity Business Network.

It is also important to remember that collecting demographic information about current suppliers to gauge their level of diversity is not illegal, as collecting information on racial and ethnic characteristics is allowed if it is to address the underrepresentation of visible minorities and other groups that have been historically under-represented.

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