Organisations can experience many benefits when they diversify their supply chain.
By Michael Switow
Why should HR practitioners and leaders care about supply chain diversity? Globally, less than 1 per cent of corporate spending goes to female-owned businesses, yet nearly 40 per cent of the world’s companies are run by women, according to statistics from WEConnect International, a non-profit organisation that is working to improve supply chain diversity.
Not all of those female-owned businesses have the capacity to service multinationals and other large companies. Most, in fact, do not, as the statistic includes many micro-enterprises. Yet WEConnect International estimates there are more than 9 million female-owned businesses in southeast Asia alone that are capable of meeting the needs of major companies.
HRO Today APAC spoke with Mrinalini Venkatachalam, WEConnect International’s regional director for southeast Asia and Oceania, to discuss how supply chain diversity impacts HR as well as some of the challenges faced by female-owned businesses.
HRO Today APAC: What are the benefits of diversifying your company’s supply chain?
Venkatachalam: Companies that have better supplier diversity programmes attract better, more qualified talent. Professionals today, particularly millennials and Generation Z employees, prefer to work for a company that is strategic in all areas, both internal and external.
Diversifying your supply chain is not corporate social responsibility, nor is it a display of pity for female- or minority-owned businesses. It is simply good business.
The feedback we get is that the women we work with are more effective, more agile, do the work in half the time, and are extremely competitive in pricing. Research shows that these organisations spend less on procurement operations—in part, because they require fewer procurement staff—and generate a higher return on investment.
Female suppliers are good at what they do. They don’t run their businesses as a hobby. They do it because they’re very qualified. They deserve a seat at the table to pitch for request for proposals. If they’re good, they’ll win the contract. If they’re not, then they don’t.
HRO Today APAC: How does WEConnect International foster supply chain diversity?
Venkatachalam: WEConnect International identifies, educates, registers, and certifies women’s business enterprises based outside the U.S. that are at least 51 per cent owned, as well as managed and controlled, by one or more women. And we connect them to qualified buyers across the globe.
We start by examining the supply chains of large procurement organisations—in companies, governments, and multilateral agencies—to understand how much they currently source from female-owned businesses. We also identify relevant suppliers that are owned by women.
WEConnect International’s corporate members control over U.S.$1 trillion in annual purchasing decisions. These companies include Accenture, Apple, Cargill, Dun & Bradstreet, and WestPac, to name just a few.
As for suppliers, our network covers nearly every industry imaginable. Approximately one-third of WEConnect International’s suppliers offer professional services. Another 11 per cent are involved with manufacturing, whilst some 7 per cent are in F&B and food services. Other suppliers are more or less evenly divided between a host of sectors, including business support services, education, health care, human resources, IT, and travel.
Over the past year, WEConnect International has identified more than 6,500 specific leads for qualified suppliers to pitch our corporate members for new business.
HRO Today APAC: In addition to making connections, you also work to build the capacities of female-owned companies. How do you do this?
Venkatachalam: To help female-owned companies thrive and better meet client needs, we offer training on a broad range of topics, including finance, legal resources, and how to pitch large corporate organisations, and we do that in partnership with the Proctor & Gamble Company.
In addition, together with Moody’s and the International Finance Corporation, an affiliate of the World Bank, we also provide training on how to access finance.
HRO Today APAC: What sort of resistance do you face from companies in the region?
Venkatachalam: Sometimes, business leaders are surprised or even sceptical that female-owned businesses provide the products and services required by their companies. Worse yet, I’ve encountered male procurement officers who ask, “Do women really have the time to manage large contracts? Can they balance this with their responsibilities at home?”
To my surprise, a female entrepreneur expressed the same sentiment to me during a forum in Vietnam. “If you win a million-dollar contract, couldn’t you hire someone to help you at home?” I asked her in reply, earning the laughter of other women in the room.
At WEConnect International, we’re fighting for female suppliers to have a seat at the table. Even though the business case for this is strong, we must still address the cultural issues that foster and support discrimination.
HRO Today APAC: What advice or tips do you have for HR leaders?
Venkatachalam: If a business wants to truly be inclusive, it needs to closely link its internal and external diversity and inclusion initiatives. A holistic approach ensures that a company’s D&I credo is authentic and reflects all stakeholders.
Yet HR and procurement often work in separate silos. Procurement leaders seem to have problems talking to the human resources part of their organisation and vice versa. This dilutes the impact of inclusion programmes on both sides.
So, the number one thing I would like to encourage HR professionals to do is to build bridges with their counterparts in procurement.