The business case for supplier diversity
Several groups of women sat huddled at tables at the Sutton Place Hotel in Toronto earlier this week, speaking in hushed but enthusiastic tones during a conference to support supplier diversity. A sense of camaraderie filled the room but there was no mistaking that these women – and several men – from across Canada had congregated with a clear objective in mind: to expand their businesses.
It was the third conference run by WeConnect Canada, a not-for-profit organization that certifies businesses that are at least 51-per-cent owned, managed and controlled by women. It connect those businesses with companies looking for diverse suppliers.
The trend of certifying female-owned businesses has a longer history in the United States, but remains relatively new in Canada. So far, WeConnect Canada has certified about 150 companies and momentum is increasing.
Brenda VanDuinkerken counts herself as an early adopter. Her Charlottetown-based company, Duinkerken Foods, which sells gluten-free baking products, received one of the first certifications in Canada.
“Certification opened doors and helped me build a brand,” Ms. VanDuinkerken said. It certainly helped her company grow, since it was through a relationship fostered by WeConnect Canada that Duinkerken Foods secured a distribution line with Walmart.com to sell all 12 of her products.
Supplier diversity adds another level of social responsibility to a company’s internal diversity programs. And it isn’t a handout: Advocates of supplier diversity believe major corporations benefit greatly from these relationships.
“Corporations look at it as an opportunity to meet innovative suppliers and also to reflect the marketplace,” explained Betty Wood, WeConnect Canada’s lead strategist.
“If you want to sell to women, you also need to support them. It’s doing good business by doing good things.”
To detractors, the issue of supplier diversity may smack of reverse discrimination and even appear anti-competitive. Surely the best businesses should find their way into the supply chain of major companies.
But let’s look at the numbers. Female-owned businesses are the fastest-growing segment of the business sector in Canada, according to Foreign Affairs and International Trade Canada. The number of female entrepreneurs in Canada increased 208 per cent between 1981 and 2001, compared with 38 per cent for men. However, WeConnect estimates that female-owned businesses make up less than 5 per cent of domestic and international suppliers in Canada.
“When we ask corporations about the number of women-owned businesses they have in their supply chain, it’s very small,” Ms. Wood said. “Obviously there is some need for intervention.”
It may be difficult to comprehend why women, who start businesses at faster rates than men, find it difficult to gain access to distributors. Buyers receive multiple requests from many companies seeking to access their supply chain, and women, traditionally, have not played a part in those networks, Ms. Wood explained.
She and others at the conference stress that matching companies with innovative and flexible suppliers – who happen to be women – is good business practice. “It isn’t just about corporate social responsibility,” Ms. Wood said.
John Priddy, one of the few men in the room, echoed that view. “We believe there is a tremendous business case for this,” said Mr. Priddy of Idaho-based Full Circle Exchange, which helps small- and medium-sized female-owned enterprises to do business with major retailers and large multinational corporations.
“In consumer products, over 80 per cent of purchases are made by women. Women are the consumers; they are the decision makers for the purchases in the home,” he argued.
Full Circle recently partnered with Wal-Mart Stores Inc. to create a dedicated page on Walmart.com that features products created by women. Separately, Wal-Mart is committed over the next five years to sourcing $20-billion (U.S.) from female-owned businesses in the United States while doubling its sourcing from female suppliers internationally.
Although the mandate of Mr. Priddy’s company is “to promote justice and cultivate good,” he insists that social responsibility translates into sales.
“We believe that the consumer in North America is becoming very conscientious,” Mr. Priddy said. Consumers, he noted, want quality products at good prices that are sourced in a way that is not only sustainable but also helps bring out improvements at the product’s source. That’s why the supply chain is very important.
Aside from access to major companies, owners of these certified female-run businesses also benefit from being part of a network of like-minded companies. They frequently do business with each other. Ms. VanDuinkerken cites the network as a major boon. “It helps to meet other women in businesses that have the same struggles you do,” she said. “To have their input is a major accomplishment.”
Category: Women in the World, Women@Work
