Diversity Europe

Potential Economic Power of Supplier Diversity in the European Union

The EU is in turmoil due to many uncertainties concerning the global economy and Brexit. It is important to not lose sight of the importance of supplier diversity to maintaining strong economic performance at the regional and business levels.
— By Jill Motley

Supplier diversity really took hold as an economic and equality issue in 2000 when the United Kingdom introduced relevant legislation under the Local Government Act. Since then, more countries and the European Union have formally addressed supplier diversity for public procurement, requiring transparency and prohibiting discrimination.

The importance of supplier diversity has intensified as Europe's supplier entrepreneurs grow more diverse. Europe's focus has a strong emphasis on social responsibility in public procurement. Despite the government's emphasis on social procurement, businesses have been slow to adopt the same principle.

Global corporations have a tremendous opportunity to take leadership roles in implementing supplier diversity as a success strategy and economic driver.

Continuous Circle of Economic Prosperity Through Supplier Diversity
Immigration and migration have created a much more diverse European Union, a fact that MSDUK (Minority Supplier Development UK) embraces. The nonprofit focuses on assisting Ethnic Minority-Owned Businesses (EMBs are equivalent to Minority Business Enterprises or MBEs in the U.S.) through networking, match-making suppliers and global corporations, and education.

In the EU, the language differs, but the core principals are the same. Supplier diversity benefits business innovation and promotes entrepreneurship.

The MSDUK has been instrumental in focusing attention on inclusive procurement practices in the UK, which in turn influences many other European businesses, much like the nonprofits the National Minority Supplier Development Council (NMSDC) and the Women's Business Enterprise Council (WBENC) do in the U.S. MSDUK research indicates there are more than 300,000 EMBs in the UK alone, making up 7 percent of all SMEs.

The organization brings buyers and EMBs together and holds numerous events. The reason is not just to correct under-representation of EMBs in the public and private sectors. An equally important goal is to generate inclusive economic growth and to bring new ideas to businesses that generate more profit which in turns spurs economic growth.

Leveraging Available Support To Grow Suppliers
There are minority supplier development nonprofits available to assist domestic and international firms with diversifying their supply chains.

For example, WEConnect International for Europe identifies, educates, registers, and certifies women business enterprises located outside the U.S. Eligible women-owned businesses are connected to multinational corporate buyers. WEConnect International – Europe can provide a list of nonprofit organizations across the European Union that are actively involved in migrant and refugee entrepreneurship, integration, and procurement. U.S. companies that want to build a diverse supply chain by including EU businesses can use supplier diversity to also encourage inclusion in the workforce.

One of the newer organizations is the European Migrant Entrepreneurship Network (EMEN) project. The nonprofit's goal is to build support for Europe's migrant entrepreneurs who in turn support local economics and reinforce integration. Supplier diversity is often structured around the EU's laws and regulations, but social procurement is national or local because it must reflect the unique needs of the country and its communities in order to be effective. EMEN holds events like the Eurochambres Economic Forum and the Global Refugee Entrepreneurship Summit.

The EBN is a network of approximately 150 quality certified European Union business and innovation centers, plus another 70 organizations that support innovative entrepreneurs, start-ups, and SMEs. The EBN supports entrepreneurs in general by providing a variety of tools, but it also assists members with finding opportunities to support migrant entrepreneurs, host inclusive entrepreneurship workshops, learn best practices for inclusion, and understand social procurement. The member organizations and professionals connect and coach innovators, SMEs, and entrepreneurs at all stages of business development.

Flourishing Amid Turmoil
The Brexit delay is causing turmoil, and no knows at this point how the final break from the European Union will impact supply chains, logistics, and distribution. If the UK and EU have a no-deal exit, the World Trade Organization rules will take precedent.

It is important to remember that supplier diversity is a core value and should not suffer as a result of Brexit. Developing and implementing sourcing strategies that mitigate risks of supply chain disruptions can also help a business maintain diversity in its supply chain. Strategies include what-if situation modeling, identifying alternative suppliers, and putting a process in place for recognizing and taking advantage of new opportunities.

The European Union's 2020 Action Plan lays out actions that can be taken to promote “smart, sustainable, and inclusive growth.” The plan is directed at member governments, but businesses must play a big role in order for the plan to be effective.

One of its key goals is to reignite entrepreneurship in Europe, and procurement functions can be major contributors by including migrant and refugee small businesses in their supply chains, followed by the organization helping the supplier's business grow. Assistance is delivered through entrepreneurial education and training opportunities, mentoring by a larger supplier, and working directly with the supplier to grow capacity and scale.

The EU report points out that without the jobs created by new businesses, net employment growth would be negative. New companies create 4 million jobs annually.

Focused on the Economy and Social Inclusion
Supplier diversity is crucial to Europe's economy. Public procurement policies and supplier diversity support organizations are leading the way, but businesses need to also become proactive in utilizing migrant and refugee entrepreneur businesses. It is important to the economy and to social inclusion.

Responsible supply chains, according to Carol Cravero in "Promoting Supplier Diversity in Public Procurement: A Further Step in Responsible Supply Chain," have two features. One is the respect of human and labor rights. The second is a social-oriented proactive promotion of inclusion and supplier diversity for economic and policy-making purposes.

Global supplier diversity programs are growing in number. A CVM Solutions 2019 survey of supplier diversity professionals found that 29 percent of the organizations currently have a global supplier diversity program, up 6 percent from the prior year. Forty-four percent of the companies planned on starting a global program, up from 28 percent.

Supplier diversity in Europe is not a "nice to have" or "give away" program. It is a way to grow the economic power of Europe's economy while also growing the bottom line – all through inclusion.