The Impact of Diversity and Inclusion in Supply Chains

Mayank Shah is one of the founders and chief executive of MSDUK which focuses on looking at equality and diversity within procurement and supply chains. I first came across MSDUK when I was working at the BBC. I was looking at how we could improve the procurement process so that we could get more diverse suppliers into our supply chain and the organisations that we partnered with.

We began by exploring what MSD does in more detail and how Mayank came to found the company.

Mayank started by telling me, ‘If I go back nearly 20 years to 2002, I came from India and was born and brought up in Delhi. I came as a student to the UK. Before that in India, I had nearly 15 years of experience running my own small business. When I came to this country as an immigrant, and a student, I gradually moved through doing my PhD in this whole area of supplier diversity. I could see the challenges that immigrant entrepreneurs or all minority businesses face when it comes to getting into the mainstream economy. My PhD was on this, and it took me to America where supplier diversity has been mandated for the last 50 years.

I studied the history of American history of supply diversity for my PhD. At the same time, there was a growing interest in American corporations extending their programme outside of America. The UK was their first choice of interest. Whilst I was in the USA doing my research, I was asked, “Can you can help us in connecting with ethnic minority businesses, as part of our supplier diversity program in the UK? Can you set up an organisation that represents minority businesses? Can you identify those businesses and connect them with our procurement teams?”

That’s how MSDUK was born in 2006. We set it up as a not-for-profit organisation. It was initially purely a membership network, for big companies who wanted to diversify their supply chain and be more inclusive of under-represented businesses in their supply chain.

It started as almost like a match-maker where we matched buyers and suppliers but gradually it has moved on… Over the last 16 years, we’ve worked with more than 200 corporations, both public and private sector, helping them in their diversity supply chain journey. We’ve also represented over 3000 ethnic minority businesses from all across the UK. Over the last 20 years, more than a billion pounds worth of contracts have been generated for minority businesses. So that’s what we are.’

I’d was intrigued by Mayank’s point that supplier diversity is mandated in the USA. I asked him if he could explain more about what has been done in the US that we’re don’t do in the UK?

‘If you look at the history of supplier diversity in the US, it all started after the racial riots in the ’60s, during the time of Martin Luther King. The riots impacted the Black community. Detroit was the hardest hit city because it had a majority population Black community,

Detroit was also home to the four automakers; Ford, Chrysler, General Motors and Toyota. I think it all started there when the leadership of those four automakers came together to say, “What can we do to stop this ever happening again?”

They thought that the best way of doing this is to encourage entrepreneurship in those communities so that it increases the disposable income, it has a big impact, jobs are created, and that leads to better health access, so that was the model that all started in the 1960s.

In 1972, President Nixon came up with a public law that mandated that any private sector organisation contracting with federal government anywhere in the US, had to apportion 8% of their contract spent with minority businesses. Gradually over the years that has expanded into also, including what they call women-owned businesses, disabled-owned businesses, so mostly the undersold, under-represented business communities.

It had a big impact, I have seen major minority businesses turning over billions of dollars, they started their journey 50 years back, and they started from a garage and now they have become multi-billion dollar businesses, and the impact they have on the local community by creating jobs, creating wealth, is immense. Unfortunately, not only in the UK but across Europe, we don’t have a mandate, we talk about equal opportunities.

I certainly think that there are advantages of having a mandate, but also it has disadvantages because sometimes it leads to some bad procurement practices. What we want are fairer opportunities. I always think supplier diversity is about opening doors and creating a level playing field. You allow under-represented businesses to compete with others and let the best one win the business.’

This is similar to how organisations approach their recruitment. When they’re hiring people, it’s about opening the doors, creating those opportunities and a level playing field, so that everyone is competing with equal chances.

Mayank has spent the last couple of decades working in this area so I was keen to hear from him why businesses should be thinking about diversity within their supply chain and the organisations that they partner with?

There are social and economic reasons. When you talk about social, during the last two years of the pandemic, we have all seen social, economic and racial injustices happening and also growing inequality in our societies. The rich are becoming richer and the poor are becoming poorer. So, as a corporate organisation, how can you make an impact on that? By encouraging entrepreneurship and encouraging entrepreneurs to try in those disadvantaged communities. That way you are tackling a big social issue and you’re going to make an impact.

As responsible corporate citizens, everyone has that responsibility. But at the same time, it has got its commercial economic benefit. The pandemic has shown how supply chains were disrupted all around the world. Take the case of PPE. What Amnesty UK did at that time was created a marketplace where we had so many suppliers including minority businesses who were offering PPE products. That became a lifeline for so many purchasing organisations because they could source locally. Diversifying gives you an alternate supply chain option.

Immigrant entrepreneurs are hungry to become successful. This means better service and competitive rates, different ideas, and thought processes that people from different backgrounds bring. How they run their businesses is different. And I think those are the real benefits driving innovation, driving competitiveness is the economic advantage of supplier diversity.’

I love what Mayank says because it reminds me of what I say to my clients about trying to link diversity and inclusion back to something bigger than their organisation. Thinking about the impact that they can make in their community or the world. And I get my clients to think about the United Nation’s sustainability goals. And one of those goals, which is actually why I set up my business, which was about decent work and economic growth, which is exactly what Mayank is talking about, as well as what we are seeing in inequality which is another UN goal.

It’s useful for businesses to think about how they are impacting society at large. My conversation with Mayank reminds me of the interview I did with Mark Lomas of HS2 who also talked about developing diversity in the supply chain and the positive impact on local communities and businesses.

Mayank agreed. ‘I’ve worked with Mark very closely. The critical thing about HS2 is that the whole new railway line connects south and north and goes through some of the most deprived communities and areas in this country. Working with those communities, giving them opportunities to become part of the supply chain, from a local catering to corporate wear and things that can be done to engage local communities through that railway line can have a major social and economic impact on communities.

Last year we conducted one of the largest ever research projects anyone has conducted in this country to analyse how many ethnic minority-owned businesses are there in this country. We looked at what contribution they made to the UK economy. We used artificial intelligence because there’s a lack of data, and government doesn’t monitor the ownership of the business in this country, so we used artificial intelligence and data scientists. The team of data scientists looked into the six million businesses that are registered on Company House. And you won’t believe it but one million businesses out of six million registered on Company House are ethnic-minority owned. They employ three million people, which is 10% of the UK’s workforce, contributing 78 billion. These are all small and medium-sized businesses that are creating jobs in our local economies. I always say that’s what diversity brings. You mentioned diversity in recruitment. We at MSDUK now have a team of 23. We’ve grown from 6 to 23 over two years. I’m so proud to say that 80% of that staff are women.

Out of 23 people that we have in our team, they represent 14 different nationalities. Now that diversity of thought, diversity of background, brings so much innovation into MSDUK.

When people ask about the business case for diversity, I get angry sometimes and say, “There’s no need for us to discuss the business case.” The different ideas, different thoughts, people of different backgrounds bring so much to the table — the business case is already there.’

I agree with Mayank that people asking for the business case sometimes gets my goat as well. I was speaking to a Diversity and Inclusion Consultant recently, who said, often her response, when she gets asked for the business case is, “Show me the business case for not having diversity in your organisation, and then we can talk.”

Stephen Frost, who is a Diversity and Inclusion Consultant has a saying, “Diversity is a given, but inclusion is a choice.” So based on the research that you’ve done, we’ve got that diversity. With one in six businesses owned by somebody from a minority background, it’s a given that businesses should be engaging with those suppliers.

I asked Mayank, ‘If a person reading this sees it’s a no-brainer for them, and they want to influence their procurement person or department, on getting more diversity into the supply chain, trying to level the playing field, what should they do?’

‘The easiest way is to go to our website. There are several resources. We have done some white papers. We have supplier diversity toolkits and podcasts. It’s all there on our website, which is www.msduk.org.uk. There’s a contact form on there. To have further discussion about what we can do to help them set up a roadmap for supply diversity, we have a Centre of Excellence in supplier diversity that helps organisations create a roadmap for supplier diversity. We also give them access to some of the most amazing innovative young talent.

Our Innovation Hub connects young entrepreneurs from colleges and universities across the country, with brilliant ideas. We give them a platform to present those ideas to the industry. Plus, we have got more than 3000 high-growth businesses that we have access to. So we can help an organisation not only put together a roadmap, get access to best practice, but also provide them with access to some of the most amazing entrepreneurs.’

As well as the Innovation Hub, MSD also has a Knowledge Hub and a Procurement Hub. There are tons more information and resources on MSDUK’s website so it’s definitely worth logging on. Before I let Mayank go, I wanted to know what inclusive growth means to him?

‘You know, I go back to a famous quote from Reverend Jesse Jackson, which says, “When everyone is included, everyone wins.” And I think, for me, inclusive growth is about including everyone so that everyone has a fair share in the economy, a fair share in the wealth. And supplier diversity does exactly the same, creating a fairer economy, fairer society, where everyone is included so that everyone can prosper.’

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