Tips to Overcoming the Obstacles of Supplier Diversity

Implementing a Supplier Diversity (SD) program can be a rewarding journey for any organisation  committed to increasing the opportunities for Indigenous owned businesses to supply their goods and services to their business. But like with any new initiative gaining support and traction throughout the company can have its challenges. This article seeks to provide advice about overcoming those potential obstacles.       

Supplier Diversity offers substantial benefits for corporate and government buyers, such as adding value to their supply chain by increasing competition amongst suppliers and the fulfilling and aligning of the company’s supplier diversity initiatives with the company’s  Reconciliation Action Plan (RAP). However, implementing a supplier diversity program can present a challenge for participating member organisations, particularly larger companies:

The top seven obstacles faced by Supply Nation Member companies include:

  1. CEO/Executive level commitment – CEO’s/Executive ‘buy-in’ to SD that is not filtered across the company
  2. Poor Communication – internal communication not reaching those that need to know
  3. Understanding the supplier diversity concept – staff and key personnel lack of understanding of supplier diversity
  4. Resource allocation –no specific allocation of resources to embed supplier diversity
  5. Resistance to change – staff and key personnel resisting implementation of supplier diversity
  6. Identifying suitable Indigenous businesses – identifying the right Indigenous business to procure goods and services from, and;
  7. Indigenous capacity and capabilities – the perception and ability for Indigenous business’ to deliver  their goods and services to scale

Our top suggestions to overcome these obstacles

Effective communication

  • Develop and regularly review a communication plan, which introduces and maintains an understanding of the company’s SD commitment. It should also be aligned with the overall marketing strategy. The target of these plans would be both internal (cross functional and upwards to senior management) and external (Indigenous suppliers, primes suppliers and customers) to the organisation.
  • Engage the CEO/Executives to publicly display and be involved in SD initiatives. Promote SD within your organisation; this can be done through internal communications such as memos, newsletters, educational seminars and having a statement of commitment from the CEO.

Attend the First Step Supplier Diversity training

The First Step is a SD training program that assists organisations in building a world-class SD program which consists of gaining an understanding of what supplier diversity is, the key features and benefits and  how to apply it to your organisation. Check out the Supply Nation website to find out when the next one is on.

Set aside resources

Implement a project management approach which includes realistic planning about SD objectives and goals within the available resources. Ideally you may wish to appoint a program manager or key person in charge to lead SD initiatives. Set a company target of how much you want to spend as part of your budget with Indigenous businesses, and consider other costs for communicating about your efforts. An effective project management approach will ensure the success of the SD program.

Manage resistance

Managing resistance is necessary if supplier diversity is to work.  Take a “situational approach” to managing resistance, because the contextual factors involved will differ from company to company.

There are a few actions organisations can do to manage the resistance, including:

  • Having a business case for supplier diversity highlighting the value proposition, the outcomes to be achieved and how it aligns with the overall corporate objectives.
  • Effectively communicating the above components
  • Facilitation with all key staff who are impacted with the change. This will also assist with creating an environment of collaboration
  • Creating a supplier diversity committee with the sole purpose of embedding the initiative, recruiting Indigenous suppliers and creating the communication strategy

Use the Supply Nation Supplier directory

Supply Nation has developed a user friendly search function to help you identify Indigenous businesses. If the business you’re looking for isn’t there, then let your account manager know.

Attend Supply Nation events

Supply Nation holds numerous events throughout the year,  an example being Connect, our biggest annual event. Connect is inclusive of a conference, Indigenous business tradeshow and gala dinner. Attendees include Indigenous entrepreneurs, corporate and government leaders, politicians and minority business owners from the United States and Canada. This is a great opportunity to meet and identify suitable and potential Indigenous businesses. 

Support Indigenous business capacity and capability through supplier development programs

Indigenous capacity and capabilities is one of the significant barriers for corporate and government buyers and procurement departments. Encourage access to opportunity and processes to enhance Indigenous businesses abilities to perform and tender for business. Members can assist Indigenous suppliers to implement a supplier development program which might include mentoring or coaching.

Another way companies can support the development of Indigenous businesses (capacity and capabilities) is through joint ventures. A joint venture is a business partnership that is built on cooperation and trust. It will allow companies to share their expertise, build relationships with Indigenous suppliers and build reputation and therefore raise the credibility of all parties involved.

Overcoming the seven obstacles faced by member companies when implementing supplier diversity is crucial to the success and sustainability of the initiative. By exhausting the appropriate resources available to you and utilising the above suggestions, your company will conquer anything that may hinder your success.