INCLUSIVE SOURCING: A BUSINESS-WIDE STRATEGY FOR TRANSFORMATION

With geopolitical crises and the increasing impacts of climate change putting pressure on economies and threatening livelihoods around the world, companies everywhere are looking to enhance the resilience of their supply chains.

70% of leading companies in sustainable procurement ranked supply chain resilience as a top priority in 2021. [1] Inclusive sourcing, including supplier diversity, offers solutions and opportunities to build the resilience needed to weather these challenges – now and in the future.

How can senior business leaders embrace this opportunity to embed inclusive sourcing into their wider business strategy, addressing current challenges while seizing business benefits and scaling positive social impact?

Intersections between supply chains, climate, health and peace

This year, with many businesses – both big and small – still reeling in the wake of Covid-19, shock waves have continued to reverberate through global supply chains; driven by multiple and intersecting challenges. [2] The invasion of Ukraine and other geopolitical conflicts have further disrupted supply chains and caused devastating effects on communities’ mental and physical health. The rising cost of fuel and energy has affected suppliers and particularly the transportation sector we rely on for moving goods. Consumers are also bearing the brunt of disruption as the cost-of-living rises. While some consumers are equipped to cope with these rising costs, consumers from low-income and vulnerable communities will face increased risks from poor health. This can lead to more knock-on-effects; reduced access to nutritious food can cause increased mental & physical stress and result in increased social conflict. As we head into the winter months, the higher energy costs and resulting energy poverty will affect communities unequally.

At the same time, long term climate change and increased frequency of extreme weather events around the world are further exacerbating inequalities. The recent flooding in Pakistan and resulting supply chain disruption has revealed the challenge of supporting frontline communities who are already bearing the brunt of the crisis with limited capacity to adapt. As these domino effects spread through supply chains and communities, it is more important than ever to create and invest in sustainable, inclusive and resilient value chains .

These interactions between supply chains, climate, health and peace are deeply present, yet there is a need to deepen understanding of these links to stimulate action. The Women’s Forum Global Meeting this year will focus on these important intersections.

The value of inclusive sourcing In the midst of ongoing disruption, some procurement professionals have pivoted from business-as-usual to identify, implement and scale initiatives that build supply chains’ resilience and long-term profitability. For example, some businesses have widened sourcing pools, or increased long-term partnerships and agreements to strengthen mutual capacity.[3]

While inclusive sourcing is not a “silver bullet” to fix these complex systemic challenges, it can help to address them by harnessing solutions and innovative approaches across entire supply chains – diversifying risk, tapping into diverse thinking, and leveraging the flexibility of smaller enterprises.

Many large corporations, for example, have found that smaller, diverse suppliers are more agile and quicker to adapt and respond to changes.[4] According to research conducted by EcoVadis and the Value Chain Innovation Initiative at Stanford Graduate School of Business, 63% of buyers and 71% of suppliers stated that socially responsible, sustainable supply chains helped them endure the COVID-19 crisis.[5] Not only are diverse and inclusive supply chains more resilient and adaptable, they are increasingly being revealed as more profitable and innovative. According to the World Economic Forum, companies that lead on Diversity & Inclusion are up to 36% more profitable and have up to 20% higher rates of innovation.[6]

Senior level buy-in is a key step to embedding inclusive sourcing in business strategy 

A major focus for the Women4Business Daring Circlen, a collaborative working group committed to accelerating action on inclusive sourcing to empower women economically around the world, is the importance of senior level buy-in and commitment to expand the strategic potential of supply chain transformation.

“Real change means securing executive commitment and buy-in from leadership, and developing gender-inclusive strategies that tackle the root causes of inequality in the supply chain.”

– Imran Dassu, Partner at Kearney and Daring Circle member

Embarking on an inclusive sourcing journey requires resources, budget, supportive systems and policies, and organisation-wide interest, with senior-level leadership to steer the ship . A budget is needed to begin or advance a programme itself, as well as ensuring ongoing access to vital resources and databases; for example, partnering with organisations such as WeConnect International to provide valuable access to data, standards, and networking opportunities. The scale of inclusive sourcing initiatives requires input from a diverse range of stakeholders, including legal, financial and D&I departments. Supportive systems and policies can create channels for communication and coordination, as well as effective integration of strategy. For organisations with global supply chains, engaging regional leaders as well as senior company leaders may be necessary.

How to embed inclusive sourcing in your business strategy and why it matters

Uptake of inclusive sourcing remains slow due to limited awareness of its value, often enhanced by a lack of quantitative evidence for the commercial benefits it can bring to an organisation. These gaps present key opportunities for change, collaboration, and re-evaluation of business strategies .

Through research and consultation with experts & partners, the Women4Business Daring Circle has uncovered some best practices & key insights to embed inclusive sourcing in the business strategy while building an enabling environment to grow and develop the business case. 

• Secure senior level buy-in and commitment . Encourage senior leaders to set company-wide commitments, goals and targets for inclusive sourcing, by demonstrating the commercial and impact potential through compelling data, powerful stories and tried-and-tested case studies. Where possible, tie these stories and case studies to your specific industry, KPIs and existing targets to highlight the strategic value and secure the resources, budget and time needed to support business-wide integration and effective adoption.
• Increase capacity and coordination of functions . Establish strong internal communication across departments to integrate their goals, skills and understanding into your emerging strategy and business case. Build awareness and capacity by circulating best practice examples, guidance and case studies. After setting achievable targets for each function, aligned with your company-wide goals, implement regular progress updates and opportunities to share learnings and best practice across departments.
• Collect & amplify data and stories . Set clear measurement processes across functions to ensure data is consistent and supportive of your overarching commitments. Encourage each function to engage with diverse suppliers to uncover stories of positive impact and opportunities for improvement, while strengthening relationships within your programme. Share data and stories, both internally and externally, to celebrate and amplify your programme’s positive impact and business benefits.
  
  Through strategic action and commitment, companies can build and strengthen the business case for inclusive sourcing, both within and beyond the organisation. The Women4Business Communications Guide provides further practical guidance for companies and other organisations to communicate about the what, why and how of supplier diversity and inclusive sourcing.
  
  Women4Business Daring Circle partner, and WEConnect International award winner, Procter & Gamble highlights the value of integrating inclusive sourcing into business strategy: 
  
  “Inclusive Sourcing is a vital component of our corporate Equality and Inclusion (E&I) strategy. In fact, it is so important that it is called out as a specific pillar of focus. At P&G, Supplier Diversity is an intentional business imperative that is built into how we operate and run our businesses. So, at every instance, our leadership is actively engaged because we know that increasing supplier diversity enables us to be at our best. It brings creativity and innovation that creates value and builds resilience within the supply chain – this leadership mindset is intuitive to the way that we operate.  Said simply – it’s built in, not bolted on.”
  
  – Jo Gentle Haight, Purchasing Senior Director – Global Supplier Citizenship at P&G
  
  For every organisation, inclusive sourcing can be a powerful and transformative strategic initiative. The Inclusive Sourcing Journey assesses the maturity, reach and impact of an organisation’s supplier diversity and inclusive sourcing practices and provides customised recommendations on how to advance them – from beginning the journey to strategically scaling programmes for maximum impact.
  
  Interested in sharing your experiences of Inclusive Sourcing? Get in touch to find out more about the Women4Business Daring Circle and our initiatives.

[1] ‘Sustainable Procurement Barometer 2021’, Ecovadis & Stanford Business Value Chain Innovation Institute, 2021. [Accessed here]

[2] ‘Supply chain pressure to persist through 2022, leading to permanent changes in trade’ ING, 2022. [Accessed here]

[3] ‘Supply chain disruption changed buying patterns in 2022’s first half’, Supply Chain Drive, 2022. [Accessed here]

[4] ‘Why You Need A Supplier Diversity Program’, Harvard Business Review, 2020. [Accessed here]

[5] ‘Sustainable Procurement Barometer 2021’, EcoVadis, Stanford Graduate School of Business, 2021. [Accessed here]

[6] ‘Diversity, Equity and Inclusion 4.0: A toolkit for leaders to accelerate social progress in the future of work’, World Economic Forum, 2020. [Accessed here]