The Status of Supplier Diversity in the UK, and Europe
Over the last 18 months we held ‘Supplier Diversity’ programme meetings with 178 corporate companies. Most are global organisations with an international presence, and feature in the S&P 500, FTSE 250, and FTSE 100 stock market.
60% Are in active discussions both internally, and externally on devising the delivery, and expansion of a Supplier Diversity programme.
30% Are looking to kick off their Supplier Diversity initiatives in 2023.
10% Said they will be looking at Supplier Diversity beyond 2023.
In this blog I discuss the status of Supplier Diversity in the UK, and Europe and use our unique access to these organisations to share perspective.
I will make some bold predictions at the end, then conclude with my 3 top tips to delivering a successful Supplier Diversity programme where you work.
For those who are new to Supplier Diversity, let’s recap what a Diverse Supplier programme is:
A Supplier Diversity programme is a proactive business programme which encourages the use of historically underutilised businesses. These programmes present an opportunity for Buyers to find competitive bids, discover innovation, and effectively deliver on the ‘S’ of their Environmental, Social and Governance (ESG) agenda.
Supplier diversity was born in the 1960s out of the US Black Power Movement, a political and social movement advocating for safety, self-sufficiency and equality for all people of Black and African descent.
Today Supplier Diversity seeks to provide access to commercial opportunities for businesses at least 51% owned and operated by: Women, Ethnic minorities, Disabled, Veterans, LGBTQ+, and those who are Neurodiverse.
The conversation around Supplier Diversity is one of the hottest topic taking place in boardrooms across Europe, however, as we consider the status of progress across the territories, the challenges faces, and the appetite to address these challenges, we have graded the combined EMEA region as ‘Amber’.
Executive endorsement, and written into approved company policy.
US firms with EMEA offices cannot leverage the same tools to help them implement supplier diversity in these EMEA territories.
Businesses are rationalising ‘why’, and if so, when, they should implement a Supplier Diversity programme.
Firms must cut through much red tape, and the business weigh up reputational risk to getting Supplier Diversity/Representation wrong, with the economic benefits to support marginalised communities. One sign that a firm will move forward with a Supplier Diversity programme is when the programme is written into company policy. This can take 12-24 months to happen from the start of initial discussions.
Corporate motivation
Businesses know that Supplier Diversity is not just the ethical thing to do, governed by their ESG targets, they know that it also make great financial sense too.
Investors in big corps know that there is a commercial return on their investment, recognised by a 3% market share gain where representation is done well.
There are some shared views that businesses should not benefit from Supplier Diversity. We believe that benefit is a by-product of conducting business ethically, and profit is inevitable. A fair exchange!
Talent & Recruitment
Finding talent is difficult, and takes time. When focused on recruiting for Supplier Diversity, there is added levels of complexity.
Professionals need to ‘get it’, and understand the purpose behind the ‘why’ of Supplier Diversity. Hiring a Supplier Diversity lead requires two notable talents: Proficiency in Procurement, and an Aptitude in Diversity, Equality & Inclusion.
Diversity Leads do not need to have a Diverse Identity background. We see greater levels of success where the Heads of Supplier Diversity are personally motivated to solve the inequalities that marginalised communities experience.
Observation: H/o DEI are strong advocates of Supplier Diversity. This alignment between Procurement and HR is new and an unexpected positive outcome for business, and representation throughout an organisation.
Data and Technology Partners
Technology has a huge role to play in the successful, scalable, and efficient delivery of a firm’s Supplier Diversity programme.
Today, finding diverse suppliers is time consuming as the process involves researching against multiple databases. In EMEA, outside of Kaleida, data is decentralised. Corporates need a way to distribute tenders, and engage with diverse suppliers irrespective of their founders diversity, from one central place. A golden source of Data.
Societal Adoption
A confluence of events has brought us to a period in the history of the world where hearts, minds, and attitudes are aligned as people, and businesses focus on Equality, Equity, Diversity and Inclusion.
Generations Y (born 1981-1996), and Z (born 1997-2012 ) expect equality for all, whilst Generations X (born 1965-1980) appear to be the ones spearheading delivering the programmes that make a difference to marginalised communities. Yet, there is still much work to be done. Not everyone gets it. Businesses, however, have budget, and do set aside time to educate their staff on DEI, and un/conscious bias. This all helps aid the successful delivery, and implementation of a Supplier Diversity programme.
Certification
The certification of Diverse Suppliers will grow in significance, importance and volume as firms look to begin to publish their Diverse Supplier spend, via their corporate annual reports.
Today there is a tolerance for suppliers who opt to ‘self-certify’ their diverse business but with a growing concern of dishonest suppliers trying to gain access to opportunities, business are looking to protect the integrity of their programmes, make an impact where equity is most needed, and mitigate against issues with Compliance and regulatory bodies.
Data Availability
Supplier Diversity data, on the whole, does not exist across the UK, Europe, EMEA and APAC regions. Whilst it has emerged that some firms do seek to scrape data from off the internet, many large blue chip corporates are questioning the practice, and the validity of the use of data that has not been approved by the Diverse Supplier.
Supplier pessimism
A common thread amongst Diverse Suppliers is a shared concern around the authenticity of a corporate’s intent to work with Diverse Suppliers. This could be explained due to a lack of education on what Supplier Diversity truly is, its purpose, and who exactly is it designed to support. Fears of being used as a PR stunt, and a box ticking exercise for is unfounded but should not be ignored as a prohibitor to adoption.
In addition, those who are familiar with Supplier Diversity recoil at the thought of being chosen by a Buyer because of their ‘noun’ founder status. They want to be selected because they are the best at what they do.
Another barrier impacting the adopting by Diverse Suppliers is Diversity certification. Whilst questions exist around the reason for validation, a main hesitation impacting adoption is the cost of certification, with some bodies charging between $500-$800 dollars for annual certification. You can prove you’re black, or a female through appearance; but how do you prove, in order to certify, that you’re LGBTQ+?
I’ll leave you with that one to ponder on.
3 Bold Prediction – The future of Supplier Diversity
New categories for supplier diversity will emerge with communities like ‘Social Enterprise’ entering the conversation to have access to Diverse Supplier opportunities.
Businesses will have higher demand on the quality, origination, and integrity to unverified diverse supplier data. With a greater demand for transparency as to the origination, and validity of data they use to power their reports, the practice scraping data from the internet will be frowned upon.
The Billion Dollar Roundtable will induct it’s 100th member into it’s community of corporates who spend at $1b with Minority-owned, and Woman-owned businesses.
Announcement
In Q4 we will be releasing the Supplier Diversity Blue print designed to inform those with responsibility of delivering a Supplier Diversity Programme for their organisation.
About Us
"Finding Diverse Suppliers is time-consuming as the process today involves researching against multiple databases."
Founded in 2019, Kaleida International is a B2B marketplace for Tenders connecting Buyers to Suppliers, and Diverse Suppliers. With a focus on helping the Chief Procurement Office achieve its ESG goals, and alerting companies to new revenue opportunities, Kaleida's fully-inclusive platform helps Buyers find, identify and assess Diverse Suppliers they can invite to Tender.
In 2022 Kaleida will publish £500b in both Public and Private sector tenders for suppliers, and Diverse suppliers to apply to. By increasing access to commercial opportunity, we believe we can drive equality through providing access to economic parity.