Supplier diversity: building Pride in Canadian business
(As originally published in the Financial Post, June 2013)
By Uros Karadzic, National Leader, Talent & Reward, EY
The Pride celebrations that are getting underway in Toronto this week – and that happen across the country over the summer months – serve as a good reminder that businesses both large and small stand to benefit from a more inclusive approach to their business processes. One of the hidden opportunities with tangible pay-off in today’s marketplace lies in supplier diversity.
Knowing that diversity has emerged as a critical factor in the ability to innovate, attract customers, and retain and cultivate the best talent in today's competitive environment, best-practice business leaders are weaving diversity and inclusiveness strategies into many of their processes, from recruitment to talent development to customer interaction and more. Leaders looking to capitalize further on the considerable business potential of diversity are now turning their attention to their supply chain where a more inclusive approach can yield important bottom-line benefits.
Supplier diversity initiatives are those that promote the sourcing of products and services from groups not traditionally included in supply chains. These businesses may include those owned by members of the LGBT community, Aboriginal Canadians, women or people who have disabilities, among others.
Originally driven by legislation of the late 1970s and mid-1980s governing federal procurement policies, supplier diversity programs are well-established in the United States across most sectors, and are evident in Canada in large multinational operations particularly in the manufacturing and automotive sectors. Although Canada has no comparable regulatory requirements, a growing number of companies – especially the small-to-medium size enterprises which power this country’s economy – are seeing tangible benefits to seeking a more diverse supply chain.
Supplier diversity does more than simply level the playing field. By building inclusive supplier chains, organizations of all sizes are better able to reflect Canada’s changing marketplace, engage current and new customer audiences, and meet important corporate responsibility goals.
For businesses large and small, pursuing supplier diversity goes beyond simply helping to foster a vibrant community and economy. As part of their drive to compete, diverse suppliers often deliver innovation, flexibility and responsiveness that can generate meaningful cost savings through unique product or service offerings tailored to your company’s needs.
Meanwhile, in response to the growing demand from leading Canadian companies to source products and services from diverse-owned businesses, savvy business leaders in the LGBT, Aboriginal, disabled and other communities are pursuing formal third-party certification to demonstrate their organization’s diversity credentials. To qualify for certification, a business must be at least 51 per cent owned and operated by members of the identified diversity group; and in doing so, supplier companies gain a meaningful competitive edge which may enable them to grow their businesses, access new purchasing opportunities and contracts, develop valuable alliances, and build capacity.
As a founding partner of the Supplier Diversity program of the Canadian Gay & Lesbian Chamber of Commerce (CGLCC) and WeConnect (supporting female entrepreneurs) and as a sponsor of Canadian Aboriginal & Minority Supplier Council (CAMSC), EY is a proud supporter of several organizations that offer such certification programs. What’s more, organizations like CGLCC offer resources and a growing database designed to match businesses seeking to broaden their procurement network with diverse-owned suppliers across the country.
Companies who want to start benefitting from the cost and community benefits of supplier diversity can undertake these best-practice steps to adopting the necessary shift in mindset and process:
- Define measurable goals and metrics to benchmark success. This means understanding your current supply chain environment, and defining specific targets, such as growth in year-over-year percentage of procurement spends with certified LGBT suppliers, as one example. Understanding the current spend, defining the potential for growth, and tracking cost savings and other success metrics will help frame the necessary analytics to sustain management buy-in.
- Build LGBT and other diversity requirements into your RFP/RFQ and other procurement processes so that potential suppliers are prepared to demonstrate how they meet your requirements. Consider whether your primary suppliers also need to demonstrate their own supplier diversity as part of securing and keeping your business.
- Become a member of the organizations dedicated to fostering supplier diversity. Membership allows your organization’s leaders to build networks and competitive alliances, and to tap into the databases, software and other resources available to connect with diverse suppliers. Actively participate in their education and mentoring programs to support the growth of suppliers ready to meet the needs of your organization and your industry.
Amidst the joy of Pride celebrations from coast to coast to coast, LGBT-owned businesses are an important segment of the Canadian economy. As more and more organizations recognize the business case for diversity in their operations both internally and externally, Canadian leaders seeking to solidify their competitive advantage know that building a diverse supply chain that incorporates these and similar diverse-owned businesses is not simply a best-practice, but the “next-practice” in today’s changing marketplace.