Building a Resilient Supply Chain through Supplier Diversity

A supply chain must be ready for anything given the external risks, from geopolitical tension to natural disasters. At any moment, a supply chain could be faced with seemingly insurmountable odds.

That is why resilience has become a critical factor for success.

One powerful strategy which many leading companies are embracing is resilience through supplier diversity. By cultivating a diverse supplier base, companies can not only strengthen their supply chains but also drive innovation, boost competitiveness and contribute to economic growth across various communities.

Amazon Business, Mars Wrigley and Kaleida International discuss with Procurement Magazine how their supplier diversity has built a more robust and adaptable supply chain.

Fortifying the foundation

Through a more diverse supplier base, companies can enhance their overall resilience. With a broadening base, companies can reduce how much they depend on a single source, thus mitigating the risks associated with supply chain disruptions. This also provides greater flexibility and gives them a new perspective.

As Kavita Jain, VP of Supply Chain at Mars Wrigley, explains: "A broad and diverse supplier base mitigates risk by reducing reliance on a single source and fosters a supply chain that is responsive to local demands. This is particularly important in scenarios where geopolitical issues, economic sanctions and other factors could otherwise compromise the stability of the supply chain.

"Additionally, by prioritising elements such as gender balance and cultural diversity, businesses can better align with evolving consumer demographics. This alignment not only expands market reach but also strengthens the supply chain's ability to predict, anticipate and react to diverse consumer needs, thereby enhancing overall resilience."

Jason Roberts is CEO of Kaleida International, a fully-inclusive B2B marketplace for tenders connecting buyers to suppliers and diverse suppliers. With a focus on helping the chief procurement function achieve its ESG goals and alerting companies to new revenue opportunities, Kaleida's platform helps buyers find, identify and assess diverse suppliers they can then invite to participate in tenders.

He believes that purchasing from diverse suppliers who offer innovative, high-quality and agile products, solutions and customer service can enhance profitability.

“By minimising the bureaucratic hurdles often linked to Tier 2 vendors, diverse suppliers can quickly respond to client demands,” he adds. 

“They provide commercial flexibility that aligns with buyers' budget constraints, while also nurturing strong buyer-supplier relationships that encourage long-term partnerships.

“Additionally, they can expand geographical reach by delivering products and services to hard-to-access areas and they can enhance business performance by offering customised services tailored to the unique characteristics of each buyer.”

Cultivating diversity

Embracing an inclusive strategy for sourcing diverse suppliers allows companies to extend opportunities to marginalised groups, regardless of their diverse identities and enables them to concentrate on awarding contracts based on competence.

Moreover, evaluating suppliers who self-identify their diversity, rather than only recognising those certified by advocacy organisations, broadens the supplier base and enhances access to opportunities.

Jason says: "Collaborating with internal diversity and inclusion leaders helps create programme sponsors who advocate for representation, extending from employees to the supply chain.

"When granting a tender to a diverse supplier, splitting the award 80/20 and partnering them with a larger, established vendor can facilitate the supplier's growth in revenue while gaining valuable business insights from the major player. This active mentoring can significantly support the growth of small to medium enterprises."

Overcoming hurdles

The benefits of a supplier diversity programme are clear, but implementing such a programme can present challenges.

As Kavita explains, understanding and accounting for the complexity of the supply chain is crucial to ensure that the actions taken are having the desired impact.

"While audits will take you so far, you have to take a first principles approach to ensure that the relationships you have with suppliers are strategically aligned to have real impact," she adds. "At Mars, this begins with having suppliers aligned with our supplier code of conduct, which helps to affect change both in direct and indirect supply chains."

When these agreements are in place, uncovering the right metrics and then measuring them in a robust way is critical to ensuring that impact is served across social, ethical and environmental aspects. Overcoming economic and cultural barriers can also present challenges and require significant commitment.

"Businesses need to invest in long-term collaboration strategies that give those in their supply chain access to third party expert support, mentorship and technologies that can improve how they do business, improve standards and deliver greater transparency to continue to reinforce these practices and drive change," Kavita advises.

For Jason, finding diverse suppliers in the UK can be "a time-consuming task", with the current process requiring extensive research across various, disparate databases.

"By partnering with a technology or advocacy firm that supports a fully inclusive approach to supplier diversity, you can ensure that your procurement programme is genuinely inclusive rather than exclusive," he says.

Measuring success

Organisations can measure the impact of supplier diversity on business performance by using a variety of metrics that go beyond simple financial returns. It is important to think not only of the immediate organisation in your supply chain that you are impacting, but also the broader community.

As Kavita explains: "One of our five principles at Mars is that of mutuality and we have a deeply held belief that supporting local communities can have a positive impact on them and our business at the same time.

"A great example of this is the Thriving Lives programme, which in markets like India and Mexico is training shop owners in good business practices and digitalisation. The support helps them take advantage of new technology, such as ordering goods through platforms like WhatsApp and supports their running more efficient and profitable businesses.

"Through this programme, we are set to impact around a million people across emerging markets — including business owners and their families — and it is a great demonstration of how business objectives and corporate social responsibility goals can align to the benefit of all."

To read the full article in the magazine, click HERE.

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