Supply chain diversityManaging diversity in your supply chain

Minority Business Enterprises - Indirect supply chain diversity

Claritum is committed to supporting you in sourcing from Minority Business Enterprises.

Tapping into a Minority Owned Businesses (MBE), as part of your supplier network, has become an essential part of most organisations sourcing strategy. Drivers include opening up new markets/customer groups, supporting investors initiatives for diversity, brand awareness and to encourage increased levels of innovation in your supply chain.

However, this is not just a drive for larger organisations. Many medium sized business customers are also looking at diversity in their supply chains, for the reasons explained below.

Why is diversity of supply important?

Supplier diversity is good for your business. Studies and real-world results have proven that a diverse supply chain provides a number of benefits:

  • Agility of the suppliers
  • Diversity of thought and approach to Innovation of the suppliers
  • Cost savings, including those associated with tax incentives, rebates and breaks
  • Investor support for these initiatives
  • Accessing new supply channels
  • Meeting compliance requirements
  • Build resilience into your supply chain
  • Fuels wider corporate responsibility initiatives
  • Building stronger customer engagement
  • Building community relationships
  • Employee satisfaction
  • Attracting new talent
  • Brand image

Plus, there is a particular focus in government supply chains on diversity of supply. Whether this is specifically legislated, or is a target set within a government department, it can affect you when trying to contract with government organisations This is whether you directly or indirectly contract to supply government.

In addition, the focus of investors and consumers on transparency of supply chains is increasingly raising questions on supply diversity.

Also, depending on geography, there may also be financial tax breaks available to both the sourcing company and the supplier.

Indirect Spend and supply diversity

Indirect Spend is the perfect domain for using diverse suppliers. There are many needs and requirements in this domain providing opportunities to use diverse suppliers.

Selecting MBE suppliers for Indirect Spend Categories will rapidly build up the number of suppliers and also build up the spend volumes, by including those significant Indirect spend categories for your organisation.

In fact, focusing on significant Indirect spend categories first will ensure quick results. However, it is also important to ensure that you have Indirect Spend focused automation in place to manage this spend.

Managing the diverse suppliers and ensuring that orders are allocated to these suppliers has to be automated in a way that makes it easy for users, throughout the organisation, to make purchases from these suppliers. This is also the basis for your reporting and communication of success of supply diversity initiatives.

See additional articles relating to managing diversity in the supply chain:

European and US legislation areas on Diversity

EU Legislation:

The EU lays down reporting requirements for large companies on disclosure of non-financial and diversity information.

Information on EU legislation can be found here: 2014/95/EU lays down the rules on disclosure of non-financial and diversity information by large companies. Applying to an organisation with average number of employees in excess of 500

US Legislation:

The US federal government legislates on use of Minority Business Enterprises in government supply contracts and tax breaks associated with these organisations. This not only applies to the directly contracted supplier, but also to their suppliers as well.

In the US case there are also state level laws and state level government supply requirements. For example, in the general diversification domain, California mandating the number of female directors for companies incorporated in California.

Many US organisations have adopted supply diversity policies in a more general sense and not just applied to government supply contracts