Future-Proof Your Organisation with a Diverse Supplier Base

Serving the under-represented and fostering economic growth, supplier diversity is a strategic business practice encouraging the inclusion of suppliers from a diverse background. Such organisations include small and medium enterprises (SMEs), voluntary, community and social enterprises (VCSEs), ethnic minority-owned, women-owned and other underrepresented groups. 

Reflecting on Sodexo’s own supplier strategy, Aoife Wycherley, Head of Food Procurement and Supply Chain explains: “At Sodexo, we recognise the importance of supplier diversity in building a resilient and agile supply chain and bringing innovation to the market with speed.

“We are committed to promoting equitable opportunities, valuing diversity and creating an inclusive working environment for all. Our strategy is built on the ethos of the power of positive conversations that take place within a psychologically safe culture. This enables us to increasingly harness the benefits which diversity and inclusion bring to our colleagues, clients, customers and communities.”

Benefiting both businesses and communities, supplier diversity encourages innovation, drives economic growth and enhances resilience in the supply chain by leveraging the flexibility and innovation that often comes with a smaller and more diverse enterprise. 

“Morally, all organisations should ensure supplier diversity,” says Gemma Thompson, a Senior Consultant for Strategy and Growth at Proxima. “There is a strong business case to supplier diversity that supports maintaining a competitive advantage in a rapidly evolving business landscape, and fostering meaningful supplier relationships in a diverse supply base can drive economic growth and job creation.”

Supplier diversity and its benefits for all

Presenting opportunities for both buyer and supplier, having a diverse supplier base “sets an organisation apart by creating a more inclusive and dynamic supply chain,” says Wycherley. By embracing diversity, organisations can future-proof their business and promote adaptability and sustainability in an ever-changing landscape.

Supplier diversity also encourages innovation by broadening the pool of perspectives, as well as new resources, technologies and ideas. It can also enable greater agility and flexibility. 

Improving supplier diversity presents opportunities for both the buyer and supplier. Supplier diversity can drive competition on price and quality as diverse suppliers seek a USP and it can improve sustainability both in when it comes to practicality and reputation. It also encourages innovation by broadening the pool of perspectives from which you are sourcing from, and in turn provides access to new resources, technologies, and ideas. 

“Supplier diversity also opens new markets. Encouraging you to look at alternative supply, locations, and solutions to business requirements, supporting a culture of openness and continuous improvement,” adds Thompson. 

But where to start…?

When it comes to diversifying suppliers it is important to first determine the ‘why’. “It needs executive sponsorship, clear, concrete goals, and a supporting plan that can be communicated across the business to gain buy-in and alignment,” explains Thompson.

Once the foundations are in place, organisations can then begin the task of understanding supply chain demographics. “Focus on expanding your business’ external diverse supplier network by broadening the thinking on what a ‘suitable supplier’ looks like and join industry groups, associations and attend events to learn about the diversity available and how best to align with your business objectives,” says Thompson. 

Agreeing, Wycherley adds: “This is where supplier diversity organisations such as MSD UK, Social Enterprise UK and WeConnect come into play as they can support in supply chain diagnostics to understand which suppliers are already accredited under the specific schemes. These organisations can also support in accessing local and diverse opportunities through various databases and networking opportunities.”

However, Thompson urges organisations to “allow procurement teams to lead” when it comes to the day-to-day operations of supplier diversity. “They have the best view of business ecosystems and the relationship between the business and the supply base,” she adds. “To support the initiative further, appoint dedicated resource to it within the team,.”

The all important challenges to consider and the technology that can help

Primary challenges for organisations implementing a supplier diversity strategy is ensuring equal opportunities, supporting the growth strategy of diverse suppliers and addressing potential burdens such as carbon data reporting for smaller businesses. This is all as well as addressing any unconscious bias business-wide. “Until this is addressed, it will act as a barrier to any change,” explains Thompson. 

“In addition, work needs to be done on changing the perception of value; beyond simple monetary terms, we need to see value in ‘doing good’ and creating opportunities for benefits outside of profits. However, a further challenge is balancing this business value with cost value, and aligning as a business on how the two interact,” she adds.

Collaboration will be crucial to overcome these challenges and achieve a more diverse supply chain. “Sodexo has developed a comprehensive, tailored programme that provides support to navigate our onboarding process for new suppliers, one-to-one mentoring and a guaranteed meeting with a relevant category manager,” explains Wycherley. 

“The programme is all about sharing information on our business requirements and breaking down barriers which historically may have put off some suppliers from pitching to our supply contracts.”

Also playing a pivotal role in a successful supplier diversity strategy is technology and the capabilities it provides when it comes to identifying, onboarding and collaborating with diverse suppliers. “At Sodexo, we leverage technology to streamline the process, ensuring that diverse suppliers have equal opportunities and can seamlessly integrate into our supply chain,” notes Wycherley.

Today, there is a wide variety of technology that exists — and will continue to emerge — that can help diversify suppliers. Whether it is systems that enable organisations to measure their own use of diverse suppliers, identify new, or a dynamic purchasing system that encourages involvement from and access to diverse suppliers. “What works for you will depend on what it is you are seeking to achieve,” says Thompson. 

But the bigger question Thompson raises is: “How do you drive behavioural change across the use of available technology? The functionality of supporting supplier diversification is to no effect if the user is operating in the same way as before.”

With this in mind, Thompson concludes: “There is a need to educate alongside technology, ensuring both the purpose of what is trying to be achieved is clear, as well as the role of the chosen technology and the responsibility of those interacting with it.”

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