Diversity Sourcing

2 comments August 10th, 2006 David Bush - Iasta

According the article Diverse Interests on SupplyManagement.com, under-represented suppliers can offer flexibility and innovation, but schemes to include them in supply chains are still at an early stage. However, what is even more eye-catching is the sharp contrast between the state of supplier diversity in the US and the UK.

In the US, supplier diversity, or the concept of opening supply contracts to minority businesses, is well established. In 2004, the 3,500 corporate members of The National Minority Supplier Development Council spent more than $87.4 Billion with minority-owned businesses. In contrast, most purchasers in the UK are unaware of their spend with businesses owned by ethnic minorities, women, and other under-represented groups.

Considering that there is a limit to how many under-represented groups you can hire into your workforce (as there is always a fixed number of available positions in your company), supplier diversity is probably the best way to reach into the diverse communities that surround you. Considering that it is these diverse communities that are among the cornerstones of innovation and strong customer focus in today’s dynamic marketplace, there are strong commercial reason to focus on diversity beyond the positive image projected through ethically accepting your corporate social responsibility (CSR).

When you consider that the number of entrepreneurs and business start-ups headed by ethnic minorities in the UK percentage-wise is now considerably more then the percentage of minorities in the total population, it is now easier then ever to include diversity in your supply base. (Specifically, the article indicates that a 1999 study from the Bank of England determined that 10% of start-ups were headed by ethnic minorities even though they represent only 7.9% of the UK population and a 2005 Glasgow University study found that 55% of entrepreneurs in London were ethnic, although they comprise only 30% of the local population.) In addition, the percentage of ethnic minorities in the UK expected to double over the next 25 years.

In addition, supplier diversity programs provide a way for organizations to demonstrate equality in their procurement processes and meet with the requirements of the new EU anti-discrimination legislation and UK legislation, including the Race Relations Act. To help companies comply the European Supplier Diversity Business Forum and De Montfort University’s Supplier Development East Midlands program are compiling databases of under-represented suppliers. In addition, De Montfort University has a Centre for Research in Ethnic Minority Entrepreneurship, Creme to assist interested parties.

Entry Filed under: General, Suppliers