Five tips for achieving supplier diversity

Engaging with the market on a regular basis and offering constructive feedback to suppliers are essential to building a diverse supplier base in the public sector, an event was told. 

Lindsay Maguire, head of small business policy at the Cabinet Office, shared her tips for ensuring supplier diversity with delegates at the CIPS SM Forum.

1. Talk about supplier diversity early and often

“If you’re going into an approval process and you’re asked how to engage with SMEs and you have to scramble around to find an answer, it’s already far too late,” Maguire said. 

The idea of having a marketplace of diverse suppliers must be embedded early on in the lifecycle and should drive strategy rather than be an afterthought.  

“If you come to the table with a ready requirement and it hasn’t gone through that lens, chances are the requirement is going to favour an incumbent that may be a larger organisation,” she said. 

Maguire recommended sharing commercial pipelines as it allows small businesses to understand what is going to happen and to plan for that. There should also be a champion who is extremely passionate about supplier diversity to ask the right questions and push the agenda forwards.

2. Engage the market as much as possible

Maguire recognised there are sometimes resource barriers but engaging with the marketplace on a regular basis will significantly make a difference for most organisations. 

“Ask the market what they can deliver. Ask what innovation they can bring gives you a slightly different outcome to telling the market what you want. 

“You could set up innovation days if you’ve got a specific problem you need to address. Ask the market what they can do as they may be able to do something we haven’t really thought about,” she suggested. 

Buyers should identify something unique their suppliers are offering and share best practice with peers. However, Maguire noted it’s also important to test strategies and make sure they work for everyone. Public sector buyers can also take advantage of cross-government work and tap into this information.

3. Work with your prime contractors

For some projects, there may only be a select few large strategic suppliers that can deliver. In this case, Maguire said it’s important to test how much key suppliers are held to account for the work they’re doing within their own supply chains. 

“There’s a balance here about how we use our risk. In certain instances, you want to pass it on to the prime contractor to take all the risk and manage the supply chain. But there is an argument to use supplier diversity KPIs and link to social value in what you’re doing with those large suppliers,” she said. 

“Do you ask suppliers within their supply chain how they act as a prime? That might tell you how things are flowing down and whether that prime contractor is truly embedding the ideas we want to embed and the behaviours we want them to carry out as a contractor.”

Buyers should be promoting transparency of opportunities and use contractual mechanisms to ensure their prime suppliers are acting in the same way. “Once our strategic suppliers know we are serious about this, they will move with us,” Maguire said. 

4. Consider taking risks

One of the biggest challenges for SMEs and startups is a lack of past performance information which prohibits them from being considered for projects, Maguire said.

“It takes a senior person to really be able to challenge that risk and understand by doing something different, you may be opening up the market to something and you may be delivering really positive services.”

Buyers should ensure proportional contract risk, and doing something like guaranteeing throughput of contracts and challenging policy colleagues could help to ensure supplier diversity, she said. 

5. Offer constructive and continuous feedback

Maguire said one of the most valuable things buyers can offer small suppliers is constructive and continuous feedback on bids. By doing so, SMEs will be able to grow and develop which could lead to a contract win later down the line. 

“If we’re really trying to help SMEs and social enterprises, we need to give them space to get that feedback and we need to be generous with that. There are power dynamics in place but the more we can be open with suppliers and the more we can signal to suppliers in the future that they may want to engage with us in a slightly different way, the better.”

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