Diversifying Your Supply Chain – For More Than the Greater Good

The conversation around supporting diverse-owned businesses is an important one, especially in an age where we’re seeing both social and political discourse being used against various marginalized groups. Research has shown that diverse suppliers (businesses owned by racialized, Indigenous, women, 2SLGBTQI+ and persons with disabilities) are significantly underrepresented in both public and corporate supply chains. Not only does this limit the economic empowerment of these communities, but it also reduces the growth potential for Canadian corporations and governments, ultimately restricting Canada’s economic growth. 

Challenges Faced by Canadian 2SLGBTQI+ Entrepreneurs

There are over 100,000 2SLGBTQI+-owned businesses in Canada, contributing $22 billion to the economy and creating over 435,000 jobs for Canadians. However, these businesses continue to face systemic barriers.

A CGLCC and Deloitte study reported that 20% of respondents experienced challenges scaling their business as a result of being part of the 2SLGBTQI+ community, citing barriers such as access to mentorship, financing and global trade. The same study revealed that more than one in three people reported they intentionally withheld their 2SLGBTQI+ identity for fear of discrimination, and one in four said they lost opportunities due to their 2SLGBTQI+ identity. These barriers ultimately impact the ability of Canadian businesses to grow.

Small and medium-sized businesses (SMEs) represent over 97% of Canadian businesses, and according to the CGLCC and Deloitte study, over 90% of 2SLGBTQI+ respondents owned small-sized businesses. Canada is dependent on SMEs to help drive innovation, create employment, grow the tax base, and more. With fewer startups opening and continued barriers in place for diverse-owned businesses, Canada’s ability to grow and compete could be at risk. Increasing access to procurement opportunities is the strongest way for us to support the continued establishment and growth of these SMEs. 

Procurement and Supplier Diversity

Supplier diversity also means diversifying your supply chain structure. Many businesses still use a monolithic supply chain, reducing the ability to work with various suppliers. Not only does this model limit your flexibility as a vendor, but it can also disrupt business when one link in the chain stops working. When a single part of your supply chain stops working, the whole system can follow suit since everything is connected to one supplier. Diversifying your supply chain mitigates this risk because every issue can be resolved independently. 

Without diverse suppliers in your supply chain, there’s also less opportunity to engage different perspectives, which reduces your business’ innovation and creativity, and subsequently, your financial return too. On top of that, McKinsey & Company research also shows that companies with a diverse workforce are 35% more likely to experience greater financial returns than their respective non-diverse counterparts. 

Including 2SLGBTQI+ businesses in the supply chain drives economic growth for Canada while exclusionary practices limit economic growth – simple as that.

Additionally, Gen Zs and millennials place a lot of value on advocacy for diversity, equity, and inclusion. Millennials are currently the largest population, followed by Baby Boomers and Gen Z. A 2018 Accenture study showed that over half of younger millennials are more likely to shop at a retailer that demonstrates awareness of diversity and inclusion issues. Listening to the younger generations’ needs can increase your business’ success.

Strengthening the Canadian Economy

2SLGBTQI+-owned businesses make a substantial impact on the Canadian economy. Diversifying your supply and demand process brings socio-economic benefits, and you can sleep well at night knowing you’re helping build a strong ecosystem that supports diversity and inclusion. Take this opportunity to broaden your horizons as a company and be at the forefront of economic change.

Three concrete actions businesses can take to diversify their supply chain:

• Work with a certifying body, council, or Chamber of Commerce: Organizations such as the CGLCC can help you access a network of supplier diversity professionals and benefit from their diverse procurement practices.
• Set up a supplier diversity program: Leverage existing tools to support your goals and ensure a more inclusive supply chain.
• Partner with like-minded businesses: Collaborate to expand your network and create more opportunities down the line.