Two male workers shake hands in a warehouse, while a third female worker looks on

Why diversity in your supply chain will pay dividends

Adding diverse suppliers to your supply chain will not only make it more robust, you’ll see increased profits, greater levels of customer and employee satisfaction, plus the ability to pivot into new markets.

Diversifying your supply chain to add resilience to your business operations is both essential and ongoing. While the obvious thinking is to bring things physically closer to home in this post-pandemic, geopolitically uncertain world, don’t underestimate the power of adding diverse suppliers to the mix.  

Defining diversity

So, what does supplier diversity entail? In simple terms, it refers to the business practice of providing access for alternative, under-represented vendors to compete in your company’s procurement process, and ultimately, earn a place in your supply chain. 

 And who are those under-represented vendors? The standard definition of a diverse supplier is any company that’s majority-owned and controlled (51% or more) by members of an equity-seeking group, including those who identify as being: women, Indigenous, Black, racialized, having a disability, a veteran, or part of the 2SLGBTQI+ community. 

 To have a supplier diversity program means that you have a formalized, proactive process in place to engage diverse suppliers as vendors in your supply chain. Keep in mind, it’s not a social program. From a procurement perspective, there’s no compromise to you in terms of quality, cost, or service requirements. Diverse suppliers must still compete at every level, but you’ve now offered them a seat at the table—access to opportunities to compete that might not have existed otherwise.  

Learn more

Watch our on-demand webinar, Stimulating growth with supplier diversity, to learn more about supplier diversity programs, featuring expert panelists:

The U.S. example

Although still growing in Canada, supplier diversity programs have a long tradition in the U.S. Formally legislated during the Nixon administration in 1969, they stem from the civil rights movement of the 1950s and 1960s. Today, 97% of all Fortune 500 companies have supplier diversity programs.

If you’re looking to do business in the U.S., having your own supplier diversity program can position you with a competitive edge. In a market with mandated and regulated initiatives, many Canadian companies see the establishment of their own supplier diversity programs as fundamental to their international growth objectives.

The ESG angle

If you’re wondering where supplier diversity fits into the environmental, social and governance (ESG) equation, it falls into the S category. Not long ago, having good social credentials meant you screened your vendors for human rights violations, such as the use of modern slavery.

Of course, that’s still a given, but ESG has evolved in a relatively short period, and the stakes have risen demonstrably. To be considered a good, socially conscious corporate citizen, you need to look for ways to have impact: To address long-standing social inequities to improve the communities in which your company operates. It means having a more diverse workplace, and by extension, more diverse vendors in your supply chain. 

 Make no mistake: It's not just about being good for ESG sake; there’s an incredibly profitable upside to doing the right thing.

The business case for supplier diversity

According to a report by the Conference Board of Canada, companies that adopt supplier diversity programs can experience higher returns on investment from their procurement, lower operating costs, reduced supply chain risk, and increased innovation.  

 What does diversity have to do with innovation? A lot, according to a Harvard Business Review (HBR) article, that explored why diverse teams are smarter. Pulling from workplace diversity research, they concluded that non-homogenous teams are smarter for the simple reason that “working with people who are different from you may challenge your brain to overcome its stale ways of thinking and sharpen its performance.”

 In terms of the bottom line, there’s a compelling reason to have women on your corporate front line. Another HBR article found that increasing women in corporate leadership roles to a 30% share could translate into as much as a 15% increase in profitability.

Taking a step in the diversity direction

A recently released report from the Business Development Bank of Canada (BDC) found that 82% of major buyers in Canada expect their suppliers to meet at least one ESG criterion. That number’s likely to rise to 92% by 2024; which is to say, the momentum is building in Canada, fast.

 If you’re wondering when and where to start your own supplier diversity program, remember to not let the pursuit of perfection become the enemy of good. Even small adjustments in mindset can have huge ripple effects, especially when they come from the top.

 Consider the experience of Dionne Laslo-Baker, CEO and Founder of DeeBee’s Organics. The Medical Science PhD turned entrepreneur is herself a diverse supplier. A certified woman-owned company, DeeBee’s has found huge success in the U.S. selling through retail behemoths, Walmart, Kroger, Costco, Sam’s Club, and many other retailers as well. A critical expansion market for the fast-growth company, the U.S. now accounts for 96% of their annual sales.

 Laslo-Baker has been deeply committed to ESG values from Day 1. A Certified B Corporation, they’ve always pursued high standards of corporate social and environmental responsibility, as well as employee care.  

 They’re currently formalizing their own supplier diversity program, having spent years using a more instinctive approach. “You could say that we’ve had an informal supplier diversity program in place since the beginning. Whenever possible, I’ve tried to engage with diverse suppliers. So now it’s time to step that up, and develop more concrete goals and processes.”

 An activity that other companies would do well to emulate, in an age where reputation is everything, and doing the right thing has become highly lucrative.

Finding diverse suppliers

Look to advocacy organizations that certify companies as diverse. Six such groups in Canada are: Women Business Enterprises Canada (WBE Canada), WEConnect International, the Canadian Gay and Lesbian Chamber of Commerce (CGLCC), the Inclusive Workplace and Supply Council of Canada (IWSCC), the Canadian Aboriginal and Minority Supplier Council (CAMSC), and the Canadian Council for Aboriginal Business (CCAB).

EDC is a full corporate member of all six, which provides us with access to their diverse suppliers, to further our own supplier diversity goals.  




Date modified: 2023-10-24