How diverse suppliers bring value to your business

22 March 2019

Building a diverse supply chain requires commitment but ultimately will provide value to your business, a joint MSDUK and CIPS event was told.

The CPO Forum: Supplier Diversity: Unlocking Innovation, Driving Competitiveness and Enhancing Reputation event was held to discuss the role of diverse suppliers in unlocking innovation and to mark the launch of a white paper on supplier diversity.

Agility

Kai Nowosel, CPO at Accenture, said diversity within supply chains should be completely embedded into the organisational structure of your business, rather than just “a flavour of the month”.

Large businesses are often prevented from being agile due to their size and working with small and diverse suppliers can improve agility, he said.

“I always use this example that Accenture is like a big ship and we are buying a lot of companies right now that are smaller boats, which I call the zodiac.

“I would say five years ago, we tried to make the zodiac look like the mothership but now we are doing the opposite. We are trying to use them to get the mothership turning faster and we are becoming much more agile as well,” he said.

It is important for businesses to meet the needs of smaller diverse suppliers to ensure they have the ability to drive ideas and bring agility to life, he said.

Value

Megan Stowe, EMEA strategic sourcing director & international supplier diversity manager at Intel, said one of the main challenges with building a diverse supply chain is finding the suppliers.

She said: “The procurement organisation is changing, we have got to bring value. We are not the penny counters or the cost cutters anymore.”

Stakeholders and those holding the purse strings often have their favourite suppliers but procurement teams can offer diverse suppliers a foot in the door, she said.

“We've got an example. It was for the sales and marketing team and we brought a new supplier in and the team was blown away. Now that supplier is one of our top suppliers,” she said.

Stowe said that all suppliers need to prove the value they can deliver and what problems they can solve for your business, which makes choosing a supplier easy.

Local impact

Andy Horne, head of supply chain at EDF Energy, said instead of using the same group of suppliers for each project, driving diversity within the supply chain can expand your reach and find the best supplier for the job at hand.

By using a wide range of suppliers, businesses are also able to see the socio-economic impact of projects, especially on local communities, he said.  

He said: “If you look at Hinkley Point C [HPC], it's a £19bn project, and a third of that investment is going into the local economy, whether that's through people, through construction or through suppliers providing goods and services.

“We are also mandated for HPC to work with SMEs. It's a government stipulation and part of the contract and I think that's a good thing as it enables us to think differently,” he said.

Education

Paul Harvey, head of global procurement operations at Marsh & McLennan Companies, said that while procurement is a numbers-driven function, it is important for sourcing teams not to narrow supplier diversity strategy to focus on numbers.

“We gave our sourcing teams the time to engage with these local diverse vendors from the perspective of teaching them how to deal with the monsters that we are,” he said.

Harvey said digital development will also have an impact on how vendors are able to network with businesses in the future which is critical to advance awareness of diverse SMEs.

He said: “A lot of the innovators in this space are actually small to medium enterprise businesses and a lot of them are diverse vendors as well.”

Malcolm Harrison, group CEO of CIPS said: “Diverse suppliers can bring innovation as well as profit to an organisation, along with socio economic benefits to the wider communities. 

"They are by their very nature smaller, more flexible and agile. This is the perfect environment for incubating innovative ideas that businesses can deliver to market quickly. 

"Innovative businesses rarely create the innovation themselves; it is mostly unlocked through their supply chain," he said. 

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