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Supply Chain Diversity and Inclusion

How to support innovation and business performance through inclusive and diverse supply chains.

Posted by: Zivio Reading time: 3 minutes

As described by CIPS, supply chain diversity is 'the proactive activity of ensuring that all relevant, potential suppliers have the fair and equal opportunity to compete for business'. The goal of supplier diversity and inclusion is to ensure small businesses, local businesses and minority-owned/run businesses all get a fair chance in an organisation's supply chain.
 
The importance of D&I in services procurement
 
When you boil services procurement down to its component parts, it's a way for an organisation to solve a problem - "In exchange for X, please provide Y". 
 
And here is where D&I in services procurement is really important (and exciting). In knowledge-work, consultancy, and services provision, when an organisation outsources a project to an external supplier, they are saying, "In exchange for X, please use your experience and expertise to provide Y".
 
Of course, the supplier's perspective has huge bearing on the solution it presents for any given problem. In other words, if you only ever work with the big-4 consultancies, you'll only ever get 'big-4' solutions.
 
D&I creates more innovative supply chains
 
Innovation, by definition, requires new ideas. Different ways of thinking, different types of people, different backgrounds, different approaches combine to give a better, broader view on achieving an objective.
 
As such, cognitive diversity is a source of competitive advantage
 
Using data to enable proactive D&I
 
Arguably, for most large organisations, D&I starts in the longtail of the services supply chain. This creates a couple of issues, which data can help address.
 
Visibility – surprisingly, even for those with significant services spend, low-tech/no-tech solutions (read: spreadsheets) are still being used to manage services procurement programs. Of course, this low level of digital maturity makes it very difficult to build a complete and accurate picture of supplier profiles at any meaningful scale.
 
Visibility is a relatively simple issue to tackle. By creating structured, consistent, profile templates that assess D&I and giving suppliers control and responsibility to maintain their profile information, dedicated, best-of-breed, services spend tech makes it easier for procurement category managers to understand how diverse and inclusive their suppliers are.
 
Risk – Mitigating risk is one of procurement's key responsibilities – How to ensure a supplier delivers the agreed outcome, at the right price, by the right date. Often this leads to risk-averse buying that defaults to bigger, 'safer', suppliers because "no one ever got fired for buying …"
 
Data can de-risk D&I in practice because quantitative and qualitative reporting can help procurement understand and make better sourcing decisions. In other words, data can prove that in some instances, big consultancies aren't the right fit for a project and that a smaller/local supplier has a better track record of delivering results against similar projects.
 
In summary
 
'Proactive' is probably the most important word in the definition of supply chain D&I. To enable procurement teams to proactively create fair and equal opportunities for all relevant suppliers, data powered by tech is a fundamental – it empowers more inclusive procurement programs through better visibility and understanding of how best to leverage suppliers of all shapes and sizes.

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