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Diversity and ESG in the services procurement supply chain

A wide ranging discussion on the importance of diversity and ESG in services procurement

Episode highlights


Cognitive diversity in the supply chain
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Understanding services supply chain diversity
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Supporting diversity in services tenders
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Diversity vs cost in the services supply chain
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Posted by: ZivioReading time: 64 minutes

With Andrea Fimina, CEO, fips consulting

00:00:00 - A background in global supplier diversity programmes
00:09:45 - Defining ESG in supply chains and understanding its value
00:14:10 - Global differences, patterns and future trends
00:21:30 - Services procurement's perspective on supply chain diversity
00:28:00 - Second-tier supplier diversity
00:36:00 - Advice for suppliers on their own diversity and ESG programmes
00:54:20 - The convergence of brand, D&I and employer and supplier values
00:58:30 - Thinking about diversity in services procurement processes

Transcript

Jonny Dunning:     
0:01       Okay, so I’m very pleased today to be joined by Andrea Fimian, who is the founder and CEO at Fips Consulting. Thank you very much for joining me, Andrea, how are you?

Andrea Fimian:      0:13       Thank you so much Jonny. I’m doing great. Thanks.

Jonny Dunning:     0:16       Excellent stuff. Now today we are going to be discussing an interesting topic and a fairly wide topic, we’re going to try and zero in on some specific areas. And that is Diversity and ESG in the services procurement supply chain. So we’ve got a lot to cover, some key points we want to kind of hone in on, and you obviously have a wealth of supply chain and consulting experience, would you just be able to give a bit of a background and kind of potted history of your journey through the market to where you are now?

Andrea Fimian:      0:50       Sure, thanks. Well, I’ve been working in supply chain for a bit more than 10 years, and I was leading a global corporation’s supplier diversity program for six plus years. And that was, for [unclear 0:01:07] a Europe, Middle East and Africa. That was for the first year supplier diversity as well as the second tier supplier diversity program. And during that time, since I was leading the program for IBM, which is one of the corporates who has a global established program, a global supplier diversity team, I was in a position where many corporates, I think it was about 50 or more corporates who were reaching out to IBM to get input and help how to build and enhance their supplier diversity programs in non-US regions. And that’s how I realized, “Well, this is something that is really needed. And I want to share my knowledge, not just within one Corporation and go into deeper topics and help more corporations to build and enhance their programs in Europe or non-US regions.”

Jonny Dunning:     2:11       Yeah, that’s great, really appreciate that. So, looking at that you, you’ve had a bit of a journey. And from the in house perspectives, you’ve obviously gained all this incredible experience within a very developed at a very mature and what sounds like quite a kind of market leading type of program. And what differences are you seeing now that you’re approaching it from a consulting angle? In terms of, what’s the initial, when people, I guess it’s mainly people coming to you back, how open are people initially? And how eager are they to do the right things?

Andrea Fimian:      2:48       Well, good question. But a lot of questions. But I think one thing is, when you’re working for one company, you have that company head on, so you’re always representing that Corporation. And you’re only able to do so and so much to help other corporates to build up their programs, because you cannot go into details. And it’s really kind of scratching at the surface. But having my own consulting business now focusing on supplier diversity, I can really dig deep into corporates programs, and help them grow with understanding their strategies and everything. And I think that’s the big difference of being employed by a corporate, sharing knowledge about supplier diversity or inclusive sourcing, compared to having my own business now where I can really dig deep and help corporates to build their programs, even from scratch. And also one thing is, you always have your policies and regulations and rules in the background from Corporation. So that’s kind of the difference between having my own business where I set my own rules, and I have my own policies, and I help corporates to build their policies and rules and guidelines around this topic.

Jonny Dunning:     4:16       And when you’re dealing with your customers, I imagine this type of market you’re operating in, probably some of your business comes from referrals, where you’ve worked with a company and they recommend you to somebody else, or contacts you had through IBM. Is that how you’re finding kind of some of your businesses growing at the moment for that kind of activity?

Andrea Fimian:      4:38       Yeah, that’s one side. But it’s also a lot of other things where we see right now in today’s world, that ESG or how to source products and services for any company, is a topic on the table. And that’s something that many, many companies are looking at right now if we think back to or not even thinking back, it’s a current issue that we have supply chain issues, products can be delivered. And that’s kind of a risk that many companies have, because they kind of buy from a couple of global suppliers rather than having their products and services, purchases and supply base spread on different suppliers. And that’s also what supplier diversity does, it helps you to build a supply chain, which is more diverse and more spread across all regions and areas.

Jonny Dunning:     5:43       So on the resilience side, that’s extremely important, and particularly in light of what we’ve all been through around the world with COVID over the last couple of years. And do you think that the impact of COVID has that had a noticeable effect on companies and their appetite to approach ESG? and diversity?

Andrea Fimian:      6:05       Yeah, I think it’s several things that came together. So of course, it’s COVID. But we also face Black Lives Matter movement in the US in the last year and even before and that has also created a lot of awareness looking into diversity and inclusion in the workplace, and also in the supply chain, not just in the US, but also in Europe. So I think that many factors actually came together, that increased the interest and the importance of looking into companies supply chain.

Jonny Dunning:     6:44       Yeah, it’s really interesting. And I think the point you made about Black Lives Matter is very relevant, because during that period, it highlighted the fact that, for a supplier to work with a company, if they’ve got strong values, then they want the company that they’re supplying to, to have strong values as well, and to represent the values and vice versa. If you’re a large end client, you’re dealing with suppliers, and you’ve got strong values, you need that represented within your supply chain, that’s certainly important. And I think it ties into this wider concept that, that companies really need to reflect broader society and real issues, and they can’t just exist in a vacuum, that they’re certainly not going to do very well if they tried to take that approach, because it’s just not accepting real life. I think that, this is certainly accelerated to the forefront for a lot of organizations now.

Andrea Fimian:      7:41       Right. So diversity. And inclusion is not just a topic that is something that is in the workforce, that you need to look at for your workforce. But it’s a holistic approach that you need to take, you need to look at your clients, you need to take your communities where you have your businesses, and obviously, next to the workforce, you also need to look at your supply chain, it’s still that department where you actually spend your money. So you really want to make sure that you also look at your suppliers because it’s also one of your areas where you have a lot of investment.

Jonny Dunning:     8:27       Yeah, and it ties back to this other concept of cognitive diversity as well. You’ve got different people from different backgrounds, there’s an overall net benefit, you get different ideas, different ways of looking thing, looking at things that you can achieve so much more than just being in a single viewpoint. And so I think that is now seeing that being reflected in supply chain management is really interesting. And we’ll come on to looking at that from a services procurement point of view specifically. But obviously, with ESG, it’s a broad, it’s talking about broad issues. And I was reading an interesting article the other day about ESG within the insurance industry. And it was specifically relating to environmental impacts. So obviously, from an insurance point of view, if you’ve got an increase in extreme weather events, whether it’s fires or floods or whatever it might be, that has a direct impact on the insurance industry, for example, and it’s just this whole thing of like, “Business can’t be divorced from the real world.” But if you look at this the whole diversity and ESG angle when it comes to the supply chain, do you have a way of kind of simply defining that?

Andrea Fimian:      9:48       Well, I think you know that the ESG is kind of spreading to three pillars, right? It’s doing environmental, social and governments and supplier diversity is obviously part of the social aspects. But it’s also everything because even if you look at suppliers that have an environmental system and are sustainable and everything, you also want them to have a diverse workforce or look at diversity and inclusion. So, it’s all combined. But also, the diversity and inclusion part is kind of sitting in the social pillar of the ESG. And it is not only the supplier diversity aspects, but it also covers the local community support which you cover automatically with having a diverse supply base.

Jonny Dunning:     10:46     Yeah, and I guess, if you look at it from a people centric point of view, so obviously, there’s the diversity within the organization, and how they interact with their local communities and environment. And it’s the people that make the business in a lot of cases, isn’t it, really. So definitely, you can see how that sits very centrally within the whole conversation. So for a lot of people, I think, the idea of addressing diversity in the workforce, and environments, social governance, concerns within an organization, often people are looking inwardly, at their business, their employees and their workforce effectively. So obviously, what you’re looking at here, or what you’re talking about here is specifically related to the supply chain. And what is it that you see in terms of the value and the perception of that, where people are looking at this externally rather than just internally?

Andrea Fimian:      11:46     Right. And I think that’s a very good question. Because there are so many studies about having diversity and inclusion in the workforce and how we create higher revenue and more innovation and everything? But at the end of the day, it’s similar or it’s mirroring what’s happening in the supply chain, if you have a diverse supply base, because usually diverse businesses are SMEs. So first of all, it helps make more business with small and medium sized businesses, which are 99% of the businesses in the EU. So that’s one thing that we also have to keep in mind, which is very important, because then the next one is having that innovation. It’s smaller, medium sized businesses, it’s diverse businesses, they have different thinking, more innovation, as we know from diverse teams. Usually when we talk about SMEs, its flexibility. It’s not the slow moving global companies who take forever to take a decision, but it’s the smaller businesses, which can take quick decisions. It’s also supporting, as we said, local communities, creating jobs, paying taxes, local taxes, and so on. So there’s a lot of advantages on that side as well. There is recent study that came out from MSD.UK Collaboration with Equip. It’s called Equity Procurement Report. And that has very interesting information about what it makes [why] increasingly diverse. Europe needs equality in procurement for ethnic minority entrepreneurs. This is just specifically focused on ethnic minority entrepreneurs, but it’s also something that can be applied for any other underrepresented group.

Jonny Dunning:     14:00     It’s very interesting that you bring that up, actually, because one of the things I wanted to talk to you about and get your opinion on was just what sort of differences you’re seeing geographically. And certainly from conversations I have with clients in the US, for example, minority owned businesses, women owned businesses, there seems to be much more going on in that space than for example, in Europe when is that correct? And why do you think there are the differences if there are?

Andrea Fimian:      14:28     Yeah, well, it has to do with having some kind of regulation stare so if you want to work with the government in the US, you have to have some kind of Supplier Diversity Program, more inclusive sourcing program that you need to report your data to the government. We don’t really have that in Europe. We do have it in some countries, in non-US like South Africa, after apartheid, they have created a program called Triple BE and that’s also something which is regulated, and you have to do it. But if we look at Europe, there are many countries which don’t even have a definition, like for ethnic minority days, where you can then create an organization to certify ethnic minority owned businesses, or you have issues with data privacy laws, or GDPR where you’re not allowed to differentiate people from their ethnicity, which is totally correct. But it’s then hard to actually find and define these ethnic minorities, to bring them into... To create such a network of businesses where we can really look into them and support that community.

Jonny Dunning:     15:55     That’s a really interesting point. I hadn’t actually considered that. But in Europe, yeah, GDPR, so many benefits and so many ways around privacy. But that must make it incredibly difficult from a diversity point of view. I’m sure there are ways to use the anonymity of data. But yeah, that’s a very, very relevant point. So if you’re dealing with say, I don’t know, a large US firm that also has operations in Europe, is that something that they just wouldn’t even have to consider? Is that does that cause difficulties for them, when they look at Europe and the element of GDPR?

Andrea Fimian:      16:36     Yes, for sure. Because every country in Europe, and we have around 50 countries, of course, we have GDPR. But they all have their own laws as well. So we really have to look at each country separately. And also, we look at women, for example, they are same everywhere. So women are women, if it’s in the UK, or in Bulgaria, or in Spain. But if we look at, for example, ethnic minorities, you cannot apply the same definition for an ethnic minority in the UK, and in Bulgaria, and in Spain, because it doesn’t reflect the people from these countries and the ethnic minorities, which are there, so it’s very difficult in terms of that. On the other hand, it’s also, for example, if we look at LBGTIQ+ owned businesses, where we have just recently it was revoked. But there were LBGT+ free zones in Poland. So we have other difficulties or even having it, in some countries in Africa or in in the Middle East where it’s illegal to be gay or lesbian. So it’s a very difficult with these aspects, and then also the definitions, which have to be looked at very individually.

Jonny Dunning:     18:09     Yeah, that’s a great point. I mean, if you look at US, obviously, there’s a lot of differences in depending on where you are in the US, you’ve got kind of like the devolved responsibility for local governance to a certain extent, but it’s still one country or [UK], it’s a very, very big country. But yeah, Europe’s just so diverse in its makeup, do you think... So, that does create hurdles as you discussed that different countries have different viewpoints on some of the issues that are within this. So that does create for particularly for global organizations, that does create quite a difficult, it creates hurdles. So Europe, in some ways is trickier than the US, for example. But do you think there’s a difference in the motivation within companies in the US versus for example, in Europe?

Andrea Fimian:      19:07     Well, it’s always difficult to kind of define the motivation, if there is a regulation, if you have to do it compared to its... I mean, it’s voluntary. And I think that’s where the companies come into play, where you can really have your own policies within the company and make sure it’s not a box ticking exercise for your employees. You need to educate, you need to share information about supplier diversity, what is it? Why does a company do it and so on? So that’s, I think, also the big difference that compared to having regulations from the government to having a program but it’s not really regulated. It doesn’t have an impact on winning business or the revenue, if you work with a diverse supplier? On the first side, of course, it has impact, as we also know, from diverse teams in a longer range, but not at the very, very first side.

Jonny Dunning:     20:17     Is that something you’re expecting to change in Europe in terms of the regulatory angle? And obviously, if you look at the EU, for example, I guess you could have some sort of central regulation, but European countries are very different. What are your expectations on that side?

Andrea Fimian:      20:36     Well, I think there’s a lot of talking going on in the background, I know there is some things going on in the UK with the government. But as we all know, with COVID, with Brexit, there are priorities right now. I know that also in the EU, it’s one of the topics that is being discussed. Because it’s also related to equality of the UN sustainability goals. The goal number five, so it’s also related to debt where we want to make sure everyone is equal and included.

Jonny Dunning:     21:21     Yeah, it’s such an interesting time for these type of changes. And so if you look at it from, let’s go back to the scenario within a large organization, so they are trying to ensure that they have a diverse and perhaps sustainable supply chain. Now, from a procurement side, if we break that out into the suppliers that are providing products, or goods or materials versus the suppliers that are delivering services, what do you see as the differences there? And what do you see as the challenges in each of those areas?

Andrea Fimian:      22:02     Well, I think, it’s not really a big difference, because everyone wants to sell something. So they all have to have their strategy, how to win clients, and how to increase visibility and win business and so on? So, I think what I can recommend, though, for diverse businesses is looking to the networks that are out there who certify or have a network of that diverse business definition. And also look at companies who have strong Supplier Diversity Program or live supplier diversity in their company, because that’s where you can have that additional value add to the company where you say, “Hey, look, I provide whatever service or whatever product and there are many others who do that as well. But we are a diverse own business.” And at the end of the day, it’s not about positive discrimination. It’s about giving companies the chance to have or to create positive action. And it’s not about giving advantages or anything. It’s about inclusion, and it’s about equality again.

Jonny Dunning:     23:29     And it makes sense. I think one of the things that we certainly see from a services procurement angle is that the way that services suppliers are managed is generally different to the way that goods suppliers are managed in terms of the type of systems that are used. The type of transaction is more binary, if you’re buying things that if you’re buying services and skills and knowledge. And so generally organizations seem to have a much greater understanding of their goods materials supply chain, than they do have their services suppliers in the sense that I think it’s easier for small, maybe diverse, definitely innovative businesses to kind of get lost on the services side, where organizations just be maybe very, very aware of three or four very big prime suppliers. But they might have a big long tail of supply chain that they don’t really have that visibility of. We’re certainly seeing very strong motivation from companies to understand that services procurement supply chain in more detail, partly because they need to know what they’re spending and whether they’re getting the results they need. But it absolutely ties into this side of it, where they can really assess their supply chain and say, “Okay, we’re relying on the big guys,” and they’re telling us they’re doing good things in these areas. But actually, that’s in itself in some ways, not very diverse. We spread it out to different sizes of suppliers in different locations, in different backgrounds etc. And that’s certainly something that that we’ve seen. But also, I think, if you look at the flow down, for example, your organization is dealing with a company that supplies some sort of materials for making a mobile phone, for example, then the implications for what they buy, and the sustainability, environmental factors, the factors relating to local communities where they might have manufacturing operations and things like that are quite different to, for example, a services supplier, because they might buy different things? What do you think are the key points of note within that scenario?

Andrea Fimian:      25:50     Well, first, going back to the production or the products businesses compared to the services businesses, and as I said before, I mean, if you have a niche product, of course, you are in a better position than selling a service, that is something that may be 10 artists, others are selling. So, that’s, I think, the big difference. But if you have a product that 10 others are selling as well, in the same size, same shape and everything, you’re in the same position as that services supplier. So I think that’s the big difference that you might have more chance to have a niche product in the products business than in the services business, because there are only so and so many services and products are kind of unlimited. So you can always have a new great invention. Obviously also for services, but that’s kind of over receivable. Can you say like that? Yeah.

Jonny Dunning:     26:56     Yeah, I know what you mean. I think there’s definitely opportunities where niche suppliers in, I don’t know, cybersecurity blockchain, AI, areas that are new and are in demand where there are shortages of, everyone can’t do it, you need to do [unclear 0:27:17] on the services side. There are definitely scenarios where there are very specialist suppliers. But if you look at the breadth of product or material, it could be supplied. It’s, like I say, almost unlimited. But I think also, if we look at that second tier level, that starts to get really interesting. I mean, that must be incredibly complicated when you’re... So when you IBM, you managed a full second tier scenario within... Was there a second scenario within that?

Andrea Fimian:      27:51     Yeah, so I was leading the global second tier program, which is a huge challenge, especially talking about non-US regions and non-US countries. So in the US, it’s pretty common that companies have a second tier program because they want to make sure not just their first tier suppliers are running or diverse or run a supplier diversity program. I mean, go back, you want to make sure that not just you have a supplier diversity program, but also your first tier suppliers have a supplier diversity program. So you ask your supplier to provide their diverse spend to you, which means that’s your second tier diverse spend, which also means to your first tier supplier that their client which is then, you understand right, is asking for that data. And if you want to make sure that you can continue with a client and you can satisfy the client you want to provide that data to your client as a tier one supplier. So that’s a very interesting approach and I think there’s so many opportunities there because you can really make sure that not just in the production, I totally see that it’s very common in the production but also as a services business, you are buying stuff. Obviously you’re not buying as much as a production supplier to produce something but you also have to run your business and you might buy training or marketing services or your facility management and you buy lots of other things to run your business, you buy all the pens and papers and everything that you have in your office. And you buy presents for your clients and all that stuff. So, there are lots of opportunities but obviously not as many as in a production environment where you have so many different suppliers choose to make your product.

Jonny Dunning:     30:05     Yeah. And how do you see the... One of this, I find really interesting, but I think sometimes feels like it’s not in the forefront for most of the conversation. Is it effect on local communities and how that flows down? And if you look at that, taking it from a good material supplier versus a services supplier, are there any differences there?

Andrea Fimian:      30:35     Well, I think yes, but it depends on where you have your production. So if you have your production company and you have your production somewhere offshore, in another country, it might be different than if you had your production right where you have your other offices, where you can then really create jobs and wealth and support a local community with that. And if you just have your offices to run the business and not to produce your product, you kind of are in a similar position as any services business where you just need the other things to run your business but not produce something, which is really where the factory or however you produce it, you need to buy all the different ingredients to make your product.

Jonny Dunning:     31:33     Yeah, so I guess on the kind of goods and materials side, there’s potentially a much deeper, more entrenched impact on local communities, that could be positive, or it could be negative, depending on working conditions and pay and how you’re affecting the environment in the place, you might be extracting minerals, or whatever it might be? I think on the services side, there’s definitely huge potential positive impact around workforce providing work. And I think with a lot of services suppliers, where its knowledge and talent base and skills based. I tend to think of that as not necessarily being geographically bound in some ways, like if you’re extracting minerals from a mine that’s geographically bound to where the mine is, if you’re bringing in talent, especially in today’s world, that could be remote talent, it could be talent all over the world. So maybe a services supplier is a bit more ephemeral, they’re not so tied to a location, okay, you might have a big consulting firm in a city where they have a permanent supply by workforce that are a very big community there. And it provides lots of jobs and wealth to that region. But it has the scope to reach much further than that. So that’s a really interesting one, I think, where organizations are struggling with talent shortages, with the, in the workforce, generally there is an increase in outsourcing. So outsourcing to bring in the expertise to get the work done. And also, with things, the way the workforce landscape is changing with things like for example, the rise of the gig economy, and some of the regulations around whether somebody is classed as employed or self employed as a kind of a contingent worker, certainly very strict rules in the UK, Germany, and the US around this sort of thing. More work is shifting to outsourcing. And I think in that way, it’s critical that the little suppliers get noticed, because that’s where it’s easier for people to go or people to get together to form these smaller organizations, particular specialists in particular areas, they might be quite small companies, but they might be very effective. And whereas the opportunities that exist in those small companies might not exist for people in a very large organization. And so I think from a global workforce perspective, and how that affects people’s job opportunities, not necessarily a specific area. I see that as pretty important on the on the services side.

Andrea Fimian:      34:21     Right, but that kind of goes back to diversity and inclusion in the workforce. So you want to make sure even though if you outsource, you don’t outsource 100%. You might outsource a small or a certain percentage, but you also have your local people and you might have outsourcing in several different locations which is totally something that almost every company does. It’s totally fair. But I think even there you need to make sure that you have that diversity and inclusion in the workforce still, even though you might not be local and have your employees you know every day in the office. We know how it is with COVID, most likely not everyone is going back to the office, like it was before. So we have that situation, many, many people are working remotely. And with that, you also need to make sure you have that diversity and inclusion feeling and making sure everyone is okay like if you were working face to face, and I think that’s what you can also mirror to your supply chain. So if you have your offshore factory that you want to make sure if you buy something there, “I want that reverse supply base for that product that I buy for that offshore factory.”

Jonny Dunning:     35:47     Okay. We were previously looking at this from the view of a large corporate, we are looking at their supply chain and addressing that and saying, “Okay, how do we ensure diversity and ESG, good ESG standards within our supply chain,” very important side of it. If we flip that around the other way, and look at it from a suppliers’ point of view, I think the point you’ve just brought up, there is a really, really good point around for example, diversity and services. Particularly, the social side of it, you’ve got diversity within the workforce and inclusion within the workforce. But then you’ve also got the fact that it’s not necessarily so location bound. So how do you see...? What advice would you give and appreciate that you consult professionally? So, don’t give everything away. But a very, very top level. What are the kind of key things for a supplier to look at their own diversity and ESG program, particularly on the diversity side in this scenario? How can they go about addressing that effectively?

Andrea Fimian:      36:57     You mean, diversity and inclusion in their workforce or overall?

Jonny Dunning:     37:00     Well, overall, because diversity inclusion, their workforce is one thing, but then there’s the other factor that you just talked about with regards to the impact on where they are, because it’s quite hard to pin down services providers these days, you know a lot of consulting firms and everything’s gone virtual. So it’s almost like, well, where are they? Does that matter so much in that scenario? 

Andrea Fimian:      37:22     Well, I think that’s a very, very valid question and point, I was just attending or participating in a panel discussion around LGBTIQ in SMEs. And how that is perceived and how also, lesbian women are choosing where they work? So they look at the diversity inclusion policies or information of a SME as well. So, no person of an underrepresented group wants to work for a company, if it’s big or small, that has no inclusive policy or not policy, but mindset. You want to work in a company where you can be totally yourself and you can share any information and don’t have to hide that you might, I don’t know who you meet or where you’re from, or what you believe, whatever. So I think that’s a very interesting or important point for any company that you need to have an inclusive environment to make sure you attract a diverse workforce. That’s where it starts.

Jonny Dunning:     38:45     Yeah, and in that way, it’s almost a self-fulfilling prophecy. If an organization has the right mindset, they’re gonna have the right policies and infrastructure in place, and they’re going to communicate that effectively. And that’s going to be attractive to a diverse range of people that could work with them or work for them.

Andrea Fimian:      39:06     Right. Maybe at the end of the day, if you’re a big or small business you want to work with the most innovative and best for your business suppliers and that is, if you’re big or small, is including any kind of supplier for your RFP and make sure that you are looking at a diversity of suppliers when you have your tenders and then choose from there. As I said before, it’s not about positive discrimination. So you usually don’t win a business just because you’re diverse owned, but you win a business because you are included in that RFP and then you are just providing great results.

Jonny Dunning:     39:56     Yeah, it’s inclusion on so many levels, isn’t it? Inclusion within the main corporate, it’s inclusion within the suppliers and its inclusion of the suppliers within the corporates decision making process. And I think from a systems point of view, that’s where we’re seeing that the services procurement market is far less mature than the [unclear 0:40:22] goods materials, for example. There’s a lot more that’s hidden that gets lost, and where the supply chain is really isn’t that visible on the services side. So I think that is a big issue for organizations where, yes, they might have great policies internally. And yes, they might have expected good standards from the suppliers they want to work with. But in terms of actually including them in the opportunities, I think that’s something where there’s a lot of work to be done, because firstly, it’s a mindset change where people within organizations, particularly big corporates, will quite often go for the safe option, very large supplier, use them for lots of other stuff before, there might be a lot more expensive, they might not be very innovative. But I’m never going to get in trouble for hiring X or engaging that company. Whereas actually, there were opportunities, there were smaller suppliers that are putting their hand up saying, “Please pick me,” I bet they have maybe a great service, they maybe go above and beyond there, maybe cheaper, definitely going to be more agile and maybe more innovative. And I think that’s quite a challenge on that side. 

Andrea Fimian:      41:31     Right. It’s kind of going back to the cluster risk. And we all know, we want to buy from suppliers that we know. And if you have been working with that business for the past 10 plus years, and they were okay, no issues and then you start suddenly choose another supplier or you make this huge RFP, where they might not be the best one. And that’s also not very a comfortable situation for a corporate to then share that information. But it is something that we have to do and to just put on the table. And that’s why having some kind of rules to include diverse businesses, just in your tenders, is already a huge game changer. It doesn’t mean that you’d need to choose them at the end of the day, but it’s an inclusion thing and also for you as a company to see, “Oh, there are others which are doing the same thing or which are doing similar things, but way more, whatever, they are more flexible, or they have other ideas that I never thought about.” So that’s something that it’s really a big issue that you always go with the same suppliers because it works and you don’t want to no transformation and no problems. But that’s also what we’ve seen right now with the cluster risks that if you have so many things that you buy from one supplier that you might have an issue if they can’t deliver.

Jonny Dunning:     43:14     Yeah, so in that respect, would you say that the governance and regulatory side of it is particularly important when it comes to that part of it?

Andrea Fimian:      43:26     Well, I think having some kind of governance is important, because it is something that you have to do at the end of the day. It’s not just voluntary, and we all know how it is with voluntary things you might have, your procurement folks are probably very motivated and to support supplier diversity or diversity and inclusion. But it’s a timing issue. So you have so many things you need to think about when you do a tender or an RFP. And if it’s not something that is always there on the list, it gets forgotten. It’s not intentional, but it’s something that is just whatever is not required if you’re under certain time, stress and need to deliver, you to skip whatever is not really required. And that’s I think the biggest issue with not having rules and regulations.

Jonny Dunning:     44:33     Yeah, it’s the motivating factors, isn’t it? It’s the prioritization. It’s like going back to that thing about, looking at environmental issues in the insurance sector. I can’t remember the stats, I won’t try to just get them wrong, but it was basically talking about the percentage increase in risk being this massive jumping in risk for life forever, and probably creasing over time. I mean, it’s funny, I studied Environmental Biology at university a good few years ago. And, you know, when I was at university, I was like, “Wow, this is going to be such a big change, when I come out of university, this is going to be so important.” And it’s only just getting important now, which just seems amazing to me. But businesses are trying to be successful, they’re trying to make profit for their shareholders. But you know what? They are part of the world. And they have to think like that. And I think that’s the change where they have to think like that, because if the world gets messed up, it’s messed up for them as well. And that has serious implications. And if they’re doing things that people don’t like, people won’t buy from them, people won’t work for them, people won’t supply to them. And then they’d have no business. So, I think change is happening for all the right reasons. But it’s the regulatory side of it, I can totally see why that is just [unclear 0:46:03], people are busy. You know?

Andrea Fimian:      46:08     Right, people are busy and I think one of the things you also said with the environmental stuff is that you have your... I forgot what I was about to say?

Jonny Dunning:     46:26     No, the thing that always strikes me about the environmental stuff is this, unless you’re Elon Musk, and you can go and live on Mars, you can’t get away from a bad environment, it doesn’t matter how rich you are, you stuck on the planet, and we’ve all got to live together on the planet. And if we make a mess of it, it’s going to affect everybody, it doesn’t matter if you’re rich or poor, it’s just gonna affect the whole world.

Andrea Fimian:      46:50     Right. So what I wanted to add, came back. That’s where I think second tier program really comes into play positively, because you ask your suppliers to do something, no matter if it’s environmental or diversity. And we’ve seen it a lot with diversity and inclusion in the workforce in RFPs. So when you as a client respond to an RFP, you usually have to state, “Yes, we do have diversity and inclusion in our workforce, we do have some kind of program, whatever.” And there are also usually some parts about environmental, social, but not really about supplier diversity yet. But I think that’s very important that it will have an impact if you as company have such programs to win business at the end of the day. And that’s what I think can really help to. Because, I mean, if you have to provide your data to your client, or if you ask your supplier to provide the data, it has a total different impact than if they would just be like internally, well, they will be nice to have a supplier diversity program. But nobody’s asking for it. I mean, nobody from our clients. So I think that’s very important that the more corporates who are jumping on the train to ask for diverse spend from their suppliers, the more suppliers which are also usually bigger companies are thinking about setting up such programs.

Jonny Dunning:     48:38     So that’s gonna have a huge impact on the whole market, effectively in the senses. What we’re basically talking about here is a flow down of responsibility. The responsibility of being driven by the large corporates with their first tier suppliers, who are then saying, “Well, we’ve got to get our house in order to be able to supply to this end client and therefore we need to make sure our suppliers have their house in order.” 

Andrea Fimian:      49:01     Yeah, so in the US, they actually I think they go down in an automobile area, I think they go down to fourth tier. So first, second, third, fourth tier, really not end to end, but it’s going down pretty far into supply chain to make sure that it’s really not that you don’t have somebody in between to cover that topic, but you really have it in your supply chain pretty far down.

Jonny Dunning:     49:37     I wonder why that’s particularly in the automotive sector. Is it driven by regulations in the automotive sector specifically, or is it just the fact that the automotive sector may be a bit ahead of the curve?

Andrea Fimian:      49:51     Yeah, good question. And I really, to be honest, I really don’t know but I believe that it’s because of the production. They buy so many any product, and that’s why it’s what we’re talking about compared to a services company. It’s not that they have several tiers. But in a production, you just have usually several tiers or more tears than in a services company.

Jonny Dunning:     50:17     Yeah, because I was saying, if you look at goods materials versus services, the services are very complex. Whereas the goods are, it’s a thing to read widget, or it’s a bag of sand or whatever it might be. It’s quite easily defined. In services, it’s very difficult to define that. But the complexity on the goods and materials side comes in that supply chain. That’s where that there’s the real levels of complexity. I guess, if you think about a large automotive manufacturer in the US, the brand is so important. And even if it’s not, from a regulatory standpoint, if nobody likes to think of a shiny product, or a shiny brand, that actually where there’s some pretty murky stuff and bad things happening down the line, or impacts that by them being there and having their supply chain that’s causing and okay, it might not be them doing it. But ultimately, it’s their suppliers, then that’s definitely not a good looking. And I guess, in an industry, no idea whether this is right or not, but if you look at automotive, maybe one of the large automotive manufacturers decided to pursue this strategy. And if you get one of them doing it, then everybody’s really got to do it to try and keep up because otherwise it’s just not been a good look, it’s not going to be appealing to people who are potentially going to buy their cars.

Andrea Fimian:      51:45     Right. So it’s also a big difference between b2c companies or b2b companies, because if you’re a b2c company, and you do something wrong, it has a direct impact on your revenue, because people are like, “Whatever, if you put some wrong information on an advert,” whatever, I don’t want to mention anything.

Jonny Dunning:     52:20     I can’t remember the exactly the companies. But there were certain things that I really noticed happening in the market around Black Lives Matter whether it was certain companies didn’t take a stance on it or whether they took a stance that other people felt was unacceptable. But there was some real fundamental business risk involved in how they were treating their engagement with the world. Or in the cases of the people who weren’t doing it. Now, they weren’t taking any notice of that.

Andrea Fimian:      52:53     Future impact. And there are companies who had such cases, which then really turned around 360 degrees or 180 degrees instead, “Well, we need to do something here because we get a reputation issue.” So there are companies which have really started and grown their supplier diversity programs, because they had such a case. So that’s obviously not the best example, but it happens, and you see what he can make if you... What can happen if something like that, if you do something wrong publicly, like if you have a wrong statement, or especially b2c companies, which have a direct impact on revenue and clients buying your product or service.

Jonny Dunning:     53:47     Yeah, I find that side of it fascinating, I think. Would you say that the growth and importance for businesses of social media, for example, has had an impact on it?

Andrea Fimian:      53:59     I think, well, yeah, I think so. Because it’s so visible. Everyone is using social media, and especially also younger people. But I think it’s different audience. So if you look at, I don’t know, grocery store, you might have different clients then on social media. So if you have a product that is labeled, I don’t know, wrong callers or a wrong statement, it might have a different audience that is impacted or that it takes it back then if you put something on social media, which has a different clientele, so I think that’s the difference where you post what, who receives it or who sees it? But yeah, I mean, social media has a huge impact on everything.

Jonny Dunning:     54:58     Yeah, it’s really interesting. In the sense that companies are having some sort of social profile, the personification of the company and having characteristics around that company that they obviously want to know if they believe in or that they want to communicate, or that they want to resonate with their customer base or their audience. Because one of the things I was going to ask you was kind of just going around my head earlier was just in terms of what you were talking about with, for example, people looking for jobs and looking, seeking out companies and being more attracted to companies that have this inclusive mindset. And one of the things I was going to ask you was, really, how should they be communicating that? But I guess it kind of ties into this side of it really, doesn’t it?

Andrea Fimian:      55:53     Yeah, well, I think also, businesses, which are not selling to customers directly, which are b2b companies, it’s all about their statements, their visibility, or do they have some kind of diversity and inclusion information on their webpage, some kind of policy they might share or to salary information that helps to understand their feeling and how their company works? But also, I think it’s important that no matter for the workforce or for the supply chain of that company to be engaged in local networks. So as I said, with that, panel discussion, I was saying that were representative from local LBGTIQ+ networks that know exactly which companies are working with them, and which one are engaged and which one are visible to that topic, and totally tolerant. And I think it’s the same way with supplier diversity, where you have two networks, like we connect or ETL, CC and MST, UK, where you can get a member as a corporate and say, “Okay, look, we are supporting supplier diversity. And we are really becoming a member of these organizations. So we have access to the databases and to the networks.”

Jonny Dunning:     57:33     Yeah, that makes sense. So I think we come to a good point to just kind of round things up. Couple of quick questions for you before we finish, I found this conversation really fascinating. And so bearing in mind, in some ways, there’s not that much difference between what you need to do when you’re looking at goods materials suppliers, versus services suppliers? But when we look at the differences that do exist, with services, suppliers being more people centric, and maybe more spread out, maybe less depth in the supply chain. Is there any particular advice that you would give to companies just at a very top level when they’re trying to address diversity and ESG within their services supply chain specifically?

Andrea Fimian:      58:28     You mean, where they really only buy services?

Jonny Dunning:     58:32     Yeah. So for example, if you look at some banks, for example, okay, they might spend lots of money on newspapers or facilities management, for example. Or I don’t know, certain types of things that they will buy computers, phones, they will have a massive proportion of their spend that is on services. And yeah, it’s just really looking at it in that specific scenario of where even if it’s a company that buys lots of materials, and goods and lots of services. Are there any things that you think they need to particularly take into consideration when they’re looking at those services suppliers?

Andrea Fimian:      59:13     Well, I think, having an open, tender, don’t just focus on the few suppliers you’ve been working with the past years. One of the things I also recommend, and obviously it’s something that is not very well received all the time is don’t just put everything on price because sometimes there are cases where you have maybe a higher price but what you get from that supplier is 10 times more than from a supplier that has a lower price. So I think that’s very important to underline, how much are you waiting work in your attender? And be open for any business. And if they have a pitch and they don’t deliver, then they don’t deliver. But if they have a pitch and they deliver great, then it might be something you need to look at.

Jonny Dunning:     1:00:23  Yeah. And ultimately, if they have a pitch and they don’t deliver, you’re probably not going to use them again. But ultimately, it comes down to having visibility of that supply chain being open. And yeah, I think that’s a very sound advice. And last question I have for you. It’s always a bit of a difficult one, because trying to look forward in time. But it just wondered if you look at say, the next six months, and then the next, I don’t know, 18 months, do you have any particular predictions of what you think we might see in this space? In the kind of shorter term and then the longer term? 

Andrea Fimian:      1:01:02  Well, predictions or missions? Wishes? 

Jonny Dunning:     1:01:10  Aspirations. What would you like to see, being realistic? So in the next six months, what sort of things would you like to see happening moving forward?

Andrea Fimian:      1:01:20  Well, I think, I would love to see more corporates, first talking about corporates, I mean, any SME is very, very welcome to supplier diversity as well. But I think it’s very much driven by the global corporations, especially the US corporations who have programs in the US and now realize it would also be good to have something in other parts of the world where they make business. So I think that’s kind of my expectation or aspiration for the next six months that are more especially big companies rolling out their programs in Europe or non-US regions. And then in the long term, it will be great to have some kind of laws and regulations governance on an EU level so that would be great, because then it’s just nobody’s really questioning it. Nobody’s really asking, “Why and all that stuff?” It’s all about, it’s something that it’s just needed, we have to do it. And obviously, I would love to have no such programs because the world is all inclusive, and everyone has the same possibilities. But I think that’s probably not going to happen. So that’s why I go for the other answer.

Jonny Dunning:     1:02:59  Yeah, like you say, I think there’s a definitely a long way to go. But the driving factors that are making this so important for people, and for organizations around the world at the moment are very real. And they make sense on every side of it. So I think it’s a very exciting time for ESG and diversity within the business world as a whole. [Unclear 1:03:23] have been a fascinating conversation. I really, really enjoyed that. Thank you so much for joining me. And I think with your aspirations for the next six to 18 months. Yeah, I think they’re very valid. And yeah, I’m sure you’ll be doing some great work to help make these things happen for the companies that working with, but thank you very much for your time. I do really appreciate it. 

Andrea Fimian:      1:03:48  It was a great conversation and very, very interesting. Thank you.

Jonny Dunning:     1:03:53  Excellent stuff. Well, listen, let’s stay in touch. And maybe we can have a look at this a bit further down the line and see how many of your predictions and aspirations came true?

Andrea Fimian:      1:04:03  Yeah, fingers crossed. Thank you so much.

Jonny Dunning:     1:04:07  Thanks a lot. Take care. I’ll speak to you soon.

Andrea Fimian:      1:04:09  You too. 

Jonny Dunning:     1:04:10  Bye.

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