Supplier diversity is a growing trend that aims to ensure that businesses source their goods and services from a diverse range of suppliers.
This not only promotes inclusivity and social responsibility, but it can also lead to improved business outcomes such as increased innovation and cost savings.
In Australia, supplier diversity is gaining traction as more businesses recognise the benefits of working with a diverse range of suppliers.
According to a report by the Supply Nation, the Indigenous business sector alone is worth over $1.3 billion and is growing at an annual rate of 12.5%. Additionally, a 2018 report by Diversity Council Australia found that organizations with a diverse supplier base were more likely to report increased innovation, improved brand reputation, and better financial performance.
In this article, we’ll explore some of the key strategies outlined by Forbes Business Council that can help businesses get the most out of their supplier diversity investments.
- Set clear goals and communicate them: Define your supplier diversity goals and make them known to everyone in your organisation. Communicate these goals to your procurement team, suppliers, and stakeholders, so they understand the importance of supplier diversity and how it aligns with your organisation’s values.
- Conduct regular training: Training is essential to ensure your procurement team understands how to identify and work with diverse suppliers. Regular training sessions can help your team understand the benefits of working with diverse suppliers and how to find them.
- Build relationships with diverse suppliers: Build relationships with diverse suppliers by attending networking events, industry conferences, and supplier diversity events. These events provide opportunities to meet and connect with diverse suppliers and learn about their products and services.
- Monitor supplier performance: Monitoring supplier performance is critical to the success of your supplier diversity program. Regularly track supplier performance to ensure that diverse suppliers are meeting your expectations, and you are receiving high-quality goods and services.
- Hold suppliers accountable: Ensure that your diverse suppliers are meeting your expectations by holding them accountable. Develop metrics to measure supplier performance and establish consequences for suppliers who fail to meet your expectations.
- Integrate supplier diversity into your procurement process: Embed supplier diversity into your procurement process by including supplier diversity goals and objectives in your procurement policies and procedures. By making supplier diversity a core part of your procurement process, you can ensure that it is a priority for your procurement team.
Supplier diversity programs in Australasia
A program implemented by Westpac focuses on increasing the participation of minority-owned and women-owned businesses in their supply chain.
Under the program, Westpac sets targets for the percentage of their procurement spend to be allocated to diverse suppliers. The bank also provides support to diverse suppliers by offering training and development programs, networking opportunities, and mentoring.
In addition, Westpac requires all of its suppliers to comply with their Supplier Diversity Code of Conduct, which outlines the bank’s expectations around diversity and inclusion in their supply chain.
In New Zealand, the government initiative “Māori Procurement Capability Development Programme” is aimed at increasing the number of Māori-owned businesses in the government supply chain.
Māori businesses made up 6% of the total of government procurement contracts for the 2021/22 financial year, the New Zealand Government say. This equated to more than 3,200 contracts awarded to Māori businesses worth a total value of about $930 million.
Final word on supplier diversity
In conclusion, supplier diversity programs offer significant benefits to businesses, including promoting inclusivity and increasing opportunities for diverse suppliers.
Getting the most out of your supplier diversity program requires clear goals, regular training, building relationships, monitoring supplier performance, holding suppliers accountable, and integrating supplier diversity into your procurement process. By following these tips, your business can maximise the benefits of its supplier diversity investments.