Diversifying your supply chain

Adding more diversity among your suppliers, whether you’re a CPG company or a grocery retailer, is an effective way to promote social equity and economic inclusion, outcomes that align directly with ESG and IDEA goals. 

By sourcing from diverse suppliers, companies meet ESG goals such as fostering economic opportunities, job creation and entrepreneurship within marginalized communities, explains AJ Stewart, business development manager at Canada’s 2SLGBTQI+ Chamber of Commerce (CGLCC). 

Beyond social equity, boosting supplier diversity also enhances a company’s overall innovation and competitive edge on several fronts, says Stewart. This stems broadly from the fact that diverse suppliers bring a wealth of unique perspectives, ideas and approaches to the business table.

Devin Powell, general manager at London, Ont.-based health food maker Pulp & Press, adds that supply chain diversification also enhances supply chain resilience and fosters social cohesion within the business ecosystem. He explains, “Diversity of thought leads to the development of new products, packaging, marketing strategies and business practices that better meet the needs of a diverse customer base.” Powell stresses that CPG success, of course, requires many other factors like quality products, strong brand identity and effective marketing.

AJ Stewart. Photo © CGLCC

Benefits and detractions

While many of the benefits of diversifying your supply chain are extremely significant, there are some potential pitfalls of identifying yourself as a diverse business. 

“One potential risk is opening oneself or one’s employees up to discrimination, harassment and/or potential loss of business from individuals who may not espouse the same inclusive values,” says Stewart. “Would we want to subject ourselves or staff to the potential risk of having such customers frequent our otherwise-safe workplaces?”

Indeed, to avoid discrimination and to be included in more supply chains, as well as gain more retail customers, CGLCC data shows that a third of 2SLGBTQI+ business owners in Canada have purposely concealed the diverse ownership of their businesses. Additionally, one in four business owners in the research believe they’ve lost opportunities due to the diverse ownership of their companies.

Direct bias aside, discrimination against companies identifying as diverse could include performance stereotypes, perceived competence bias and microaggressions.

“These biases can undermine credibility, limit opportunities, create exclusion and question qualifications,” Powell notes, “so companies should actively address these biases through diversity and inclusion strategies and by fostering an inclusive culture.”

Diverse companies may also have challenges getting access to funding so that they can grow to a size that fits into larger supply chains. There is especially a significant lack of holistic financial support specifically for the 2SLGBTQI+ business community, says Stewart. Entrepreneurs in this group may also have limited access to other types of resources specifically tailored to them.

“Enhancing visibility is essential for our community to readily access resources,” he says, “It is through the support of member-based organizations and corporations actively embracing supplier diversity that this broader visibility can be achieved.”

Devin Powell. Photo © Pulp & Press

Resources and supports

Organizations like CGLCC are actively working to address business resource gaps and provide specific programs. For example, CGLCC runs the EY Pitch Competition and the ‘OUT For Business’ Youth Mentorship Program, which offer guidance, networking opportunities and other forms of support for diverse business owners. The first-ever 2SLGBTQI+ entrepreneurship program, supported by the federal government and administered by CGLCC, aims to address barriers and build a more inclusive economy.

Among other resources, the Canadian Chamber of Commerce provides many programs for women business owners. Canada’s first-ever Black Entrepreneurship Program was launched by the federal government in 2020. In addition, in recent years, a wide range of supportive organizations have formed, including the Canadian South Asian Women’s Chamber of Commerce. Trade Canada offers certification for Indigenous-owned businesses to help unlock opportunities in international markets and enable access to supplier diversity programs.

Awareness

Those who want to increase their supply chain, or have already done so, should also recognize that diversity is not a static destination or a checkbox to be ticked off, but an ongoing journey.

“Organizations need to continually strive for deeper levels of diversity, constantly challenging themselves to uncover new layers of diversity that may not have previously been considered or addressed,” says Stewart. “It is crucial to dig deep, engage in regular professional and personal self-reflection, and keep peeling back layers of diversity to foster a truly inclusive work environment.”

Stewart notes that a big development within the Canadian supplier diversity space is that major corporations in Canada are turning to their tier 1 suppliers and urging them to also embrace greater supplier diversity.

“They are leveraging these medium-sized organizations to drive further diversity and inclusion within their supply chains,” he explains. “This approach has two significant effects: it promotes ED&I practices within smaller corporations and opens up business opportunities for smaller diverse businesses. It allows one- or two-person companies that may lack the capacity to directly engage with large corporations like EY, Kellogg’s, TD, or Telus to work on a tier-2 level and scale into that market.”

It is through these collective efforts to create more opportunities, he says, “that we can combat biases and create a more inclusive business landscape in Canada.”

In all, Stewart, Powell, and others believe that despite the challenges to diversifying supply chains, the benefits greatly outweigh any real or perceived risks.

“Diverse businesses offer unique advantages that appeal to clients seeking diversity and inclusion in their partnerships,” says Stewart. “By embracing diversity, we can tap into a wide range of perspectives, skills and capabilities that drive innovation and success in today’s dynamic business landscape.” 

This article was originally published in the October 2023 issue of Food in Canada.