Founder, Diversity Institute at Toronto Metropolitan University & the Women Entrepreneurship Knowledge Hub
Diverse supply chain management not only fosters innovation and resilience but also enhances overall business performance, making it a strategic imperative for sustainable success in today’s dynamic market.
Supplier diversity programs have been around for decades but the COVID-19 pandemic has really focused attention on their value from several perspectives. “Businesses with an over-reliance on a limited number of suppliers were vulnerable, particularly when the suppliers were overseas or international given the massive disruption of transportation and logistics in supply chains,” says Wendy Cukier, founder of the Diversity Institute at Toronto Metropolitan University and Academic Director of the Women Entrepreneurship Knowledge Hub (WEKH). “The value of having local suppliers was showcased in great relief during the pandemic. We also know that supplier diversity is not just associated with resilience but also innovation. And, from our perspective, organizations which say they are committed to equity, diversity, and inclusion but lack supplier diversity programs are not putting their money where their mouth is.”
In Canada, 90 per cent of private-sector employment is with small, medium, and large businesses (SMEs) compared to only 50 per cent in the US. Supporting SMEs is therefore critical to our prosperity. In the US, both government and large businesses have long had aggressive supplier diversity programs aimed at supporting SMEs led by women and other equity-deserving groups, but the concept is newer to Canada.
According to WEKH’s 2023 State of Women’s Entrepreneurship research report, an estimated 18 per cent of businesses in Canada, including SMEs, are majority owned by women, and women account for nearly 40 per cent of self-employed Canadians. Yet in 2020, only 2.8 per cent of majority women-owned SMEs were likely to have a portion of their sales come from the federal government compared to 5.6 per cent of men-owned SMEs. The Government of Canada’s Women Entrepreneurship Strategy is addressing barriers to advancement of women entrepreneurs. “While access to financing is critical, access to markets is even more important,” says Cukier.
From our perspective, organizations which say they are committed to equity, diversity and inclusion but lack supplier diversity programs are not putting their money where their mouth is.
In 2022, Statistics Canada also reported that 15.4 per cent of private-sector businesses are majority owned by people who are racialized, 1.7 per cent are majority owned by Indigenous Peoples, and about the same proportion are owned by people who identify as 2SLGBTQ+. There is no shortage of diverse suppliers.
The opportunity is massive. “Our research shows that 40 per cent of large organizations already have formal supplier diversity programs,” Cukier says. “But often they are not well designed or implemented. Targets need to be set and tracked, and staff across the process need to be aligned. Setting targets is necessary but insufficient. Buyers need to actively engage and build capacity among diverse suppliers.”
An estimated 13 to 20 per cent of Canada’s GDP is through government procurement. The Canadian government alone has about $22 billion in spending annually. Government supplier diversity programs offer companies owned by equity-deserving entrepreneurs the opportunity to grow through new markets and supply chains. “I am a big fan of some of the new initiatives like Procurement Assistance Canada which are designed to help entrepreneurs to understand the opportunities and navigate complex purchasing processes.”
As an ecosystem partner of the 50 – 30 Challenge and Future Skills Centre research lead, the Diversity Institute also provides tools and resources for both entrepreneurs interested in supplier diversity programs and organizations interested in becoming more inclusive. Organizations that offer certification of diverse suppliers and help build capacity include the Canadian Aboriginal and Minority Supply Council, Canadian Council for Aboriginal Business, Women Business Enterprises Canada Council, WEConnect International, Canada’s 2SLGBTQI+ Chamber of Commerce and the Inclusive Workplace and Supply Council of Canada, among others.
To learn more, visit wekh.ca.