Put Your Money Where Your Strategy Is – Inclusive Procurement & Supplier Diversity.
Supplier diversity – giving minority-owned businesses the opportunity to be on an equal footing to mainstream suppliers in the marketplace – is often overlooked in D&I conversations. Australian workplaces trail behind the US, who have a more sophisticated supplier diversity model than we do at present.
One area we are making headway, though, is Indigenous supplier diversity. Current efforts to pursue partnerships with Indigenous suppliers have made it clear we need alignment between HR D&I functions and procurement diversity objectives. We also need to learn from those who have walked the path before us – from the opportunities they have grasped, the challenges they have faced, and the successes they have achieved.
NEEOPA’s latest forum gave attendees a valuable opportunity to do just that.
The incredibly experienced panel included:
Erandi Samarakoon, Indigenous Supplier Diversity Manager, Lendlease
George Mifsud, Director, Indigenous Defence Consortium
Glenn Johnston, Director of Procurement Transport at NSW Trains & Board Member, Supply Nation.
Olivia Tyler, Director, Sustainable Business Services, Commercial Services at Westpac
Here are key learnings from the panel discussion and our panelists' insights in achieving greater levels of supplier diversity.
Start small and ask questions
There are many ways to achieve greater levels of supplier diversity. It’s often a process of trial and error, with plenty of lessons to learn along the way.
Many Australian organisations are just at the beginning of the journey. To get supplier diversity on the agenda, demonstrate how it is aligned to your organisation’s business objectives – in particular, how it will help employees, interested parties and customers achieve outcomes. Start small, ask questions, and network with diverse suppliers. Here are some organisations to get you started:
Raise awareness around bias
Leadership buy-in is crucial. Build awareness by asking leaders what they understand about supplier diversity and why it is important. Construct a framework – Reconciliation Action Plans (RAPs) are great examples of these as they mandate action and accountability.
There is a lot of systemic bias in our processes; we need to ensure we offer genuine opportunities, not to mention adequate lead time. Start small and build on quick wins to break down biases and stigma.
Beware of common pitfalls
One potential challenge is lack of capacity amongst diverse suppliers to service core areas of a large business. This requires a balance between providing enough work to enable suppliers to grow without overwhelming them.
Partnerships should explore how they can build capability in Indigenous businesses. Be careful of tokenism and avoid transactional contracts; focus on long-term, genuine and sustainable opportunities that help small companies grow.
It’s also worth noting that organisations often separate out Indigenous supplier diversity and Indigenous employment in their RAPs. Both about economic empowerment and shouldn’t compete, as they are intrinsically linked. Potential Indigenous employees will look for a safe and culturally inclusive employer, as evidenced by their partnerships with Indigenous organisations/suppliers.
Be aware of the challenges
Change can be tricky. Suppliers are often personal recommendations and there can be a big impact if the relationship doesn’t work. Other potential challenges include complex tender processes, legal contracts, understanding risks and timeframes, and a lack of feedback on unsuccessful tenders.
There can also be conflict in organisations looking to reduce the number of suppliers they work with – particularly SMEs. In some cases, consolidation can be a lazy way out, as SMEs bring innovation, nimbleness and competitive tension.
Speak the right language
Take time to understand your organisation’s procurement systems, language and motivations. Procurement teams are measured by benefit in terms of cost out, rather than a societal benefit. D&I practitioners need to understand how they measure; how they scope; what their targets are; what motivates them; how they manage risk.
Remember: targets around spend are important, and need to be built into strategic relationships. Don’t forget to consider the economic value and benefit of any supplier arrangement.
Think relationships, not just contracts
Relationship management rather than contract management is important to Indigenous people and organisations. Procurement teams need to appreciate this difference. High levels of EQ, an inclusive culture, good engagement skills, face-to-face conversations, building trust and rapport are important.
Instead of thinking purely on contractual terms, consider, “how do we, as humans, work with other humans?”. Remember that when it comes to Indigenous supplier diversity, we owe it to our nation’s first people to even the playing field.
Thank you to Deloitte for generously hosting NEEOPA forums.