Opening up your supply chain

Overview

Supplier diversity means ensuring that your procurement processes provide equal opportunities for all suppliers to compete for contracts.

Opening up your supply chain can offer real bottom-line benefits. In the US, where supplier diversity is much more established, research shows that companies that 'focus heavily on supplier diversity' generate a 133% greater return on procurement investments than the typical business. Such companies spend on average 20% less on their buying operations and have procurement teams half the size of their peers whose supplier programmes aren't as diverse.

What do I need to know?

Contracting with diverse suppliers

Promoting equality and eliminating unlawful discrimination is now a legal requirement for public sector organisations under the Equality Duties on race, gender and disability. These duties require most public sector bodies to ensure that their suppliers are active regarding equality and diversity. This can include ensuring that suppliers are monitoring the diversity make-up of their staff, have their own diversity and equality policy, and apply this policy in practice. It is good practice to include the additional grounds of age, sexual orientation and religion or belief in you processes.

While there is no legal requirement for private sector organisations to diversify their supply base, there is now growing acceptance that this can help to achieve real business benefits, including:

• Increasing competitiveness through encouraging innovative suppliers
• Providing access to new markets
• Accessing new customer bases
• Adding competitive advantage when tendering for public contracts
• Helping meet corporate social responsibility (CSR) objectives
• Improving engagement with ethnic minority communities
• Engaging with suppliers who are more efficient, flexible, innovative and committed
• Helping public sector bodies to meet statutory duties.

Increasing the diversity of your suppliers also includes working more closely with minority owned businesses, which are businesses at least 51% owned by people from one or more than one minority background including women.