EDC gets serious about supplier diversity

EDC hopes to help balance the diversity equation, by creating more opportunities for diverse businesses through its supply chain.

COVID-19’s disproportionate effects on diverse companies serves as a stark reminder that we’re not all on equal footing. Not yet. 

One report by the Canadian Women’s Chamber of Commerce found that 61 percent of women founders of small businesses reported losing contracts, customers and clients due to COVID-19. This was nearly double the percentage reported by the broader small business population. 

McKinsey reported on similar disparities among minority-owned small businesses, which signals that the pandemic is magnifying the economic inequalities that existed prior to COVID-19. It’s a worrisome trend that drives home the importance of inclusion, diversity and equity (IDE) in this moment, and the important role it will play in the recovery ahead. 

One way that EDC hopes to help balance the equation, is by creating more opportunities for diverse businesses through its supply chain. 

“We decided at the start of the year to incorporate a supplier diversity program into our procurement activities, and the economic fallout of the pandemic has only added gravity to that initiative,” says Melanie Travers, Director of Sourcing and Supplier Management. 

“It’s one way we can walk the talk. For a few years now EDC’s been working to promote more diverse companies in global supply chains, so it only makes sense that we do the same in our own supply chain.”

Supplier diversity programs help level the playing field for diverse companies, defined as those that are at least 51% owned, operated and controlled by one or more historically disadvantaged groups, such as different racialized communities, LGBTQ2+, people with disabilities, veterans, Indigenous peoples and women. 

These businesses are traditionally underrepresented in supply chains on account of specific roadblocks they face, like the systemic bias that exists within many large organizations. EDC itself is seeking to better understand and address bias internally through its inclusion, diversity and equity strategy in parallel with this focus on suppliers. Further, diverse companies tend to be smaller in size and therefore less able to take on large contracts. And when they choose to scale up and become better equipped to take on large contracts, studies show that diverse companies face more challenges accessing capital. The pandemic has only compounded these challenges.

Supplier diversity programs can help fuel growth for diverse companies by encouraging buyers like EDC to proactively seek out those companies for procurement opportunities. One contract can help a diverse company build capacity and prove its capabilities. This can in turn open access to new markets and, ideally, larger global supply chain opportunities. 

Finding Suppliers

The most effective way for buyers to find these suppliers is through advocacy organizations that certify companies as diverse. Four such groups in Canada are Women Business Enterprises Canada (WBE Canada), WEConnect International,the Canadian Gay and Lesbian Chamber of Commerce (CGLCC)and the Canadian Council for Aboriginal Business (CCAB).

EDC has worked with these organizations as a corporate sponsor but, earlier this year, became a full corporate member of all four, thereby gaining access to their lists of suppliers. With the CGLCC, for example, EDC can now engage with its list of 100-plus certified businesses when procurement opportunities arise.

“Diverse-owned businesses continue to be underrepresented in corporate and public supply chains, and progressive corporations are recognizing the social and economic benefits of diversifying their supplier base,” said Darrell Schuurman, Co-Founder and CEO of the CGLCC.

“By certifying diverse-owned businesses and connecting them to organizations looking to contribute to an inclusive Canadian economy, CGLCC and Canada’s other certifying bodies are helping to create a more level playing field in the corporate supply world.”

Becoming a member of these groups marks a significant step forward for EDC’s supplier diversity program, which is still in its formative stage. The goal for 2020 was to establish a foundation on which the program can expand in 2021. That meant studying what other major firms were doing with their programs, attending conferences and learning as much as possible about best practices. It also meant identifying a supplier diversity champion within the procurement team.

That happens to be me. My job is to oversee the development of the program and ensure it stays a priority for EDC. Most recently, we’ve been busy establishing a baseline for the program by cross referencing our existing supplier list with the diverse company lists we can now access. We’ve identified nearly 20 diverse companies that are already registered suppliers with EDC, so that’s the baseline number we’re committed to growing (lots of room for improvement!). And while our formal program is still in build-mode, we’ve already managed to procure from new diverse suppliers.

Just a few months ago, EDC was looking for personal protective equipment (PPE) to hand out to EDC employees voluntarily returning to the office. Drawing on our growing network of contacts in the supplier diversity space, we were able to identify a list of potential suiters for contracts. In the end, we chose to buy from indigenous-owned and women-owned businesses.  

Why Supplier Diversity

EDC’s decision to launch a supplier diversity program was driven by both moral and business imperatives. Helping more diverse companies grow and succeed means enriching the communities they represent. It’s one way to help address economic inequality in Canada. 

Doing good business is also good for business. According to a report by the Conference Board of Canada, companies that adopt supplier diversity programs can see a higher return on investment from their procurement, lower operating costs, lower supply chain risk thanks to a more diversified list of suppliers, and they can increase innovation by using the insights they gain from tapping into a diverse consumer base. 

In this way a supplier diversity program is mutually beneficial. It helps buyers as well as the companies they procure from. 

The goal at the end of the day is impact, to be an agent of change when it comes to promoting our focus on inclusion, diversity and equity. While it’s still early days for EDC’s program, it’s encouraging that these important steps are being taken. The impact part comes next and given the context we are in, it can’t come soon enough.