Study finds GTA companies lag in supplier diversity programs.
The report, Supplier Diversity in the GTA: Business Case and Best Practices finds that most organizations in the Greater Toronto Area (GTA) are not actively seeking to spend money with companies owned by visible minorities.
While 73% of the organizations under study, some of the GTA’s largest, have employee diversity programs, only 13% have supplier diversity programs. These companies account for at least $100 billion in spending annually, or about 33 per cent of the region’s economic activity.
Not having a supplier diversity program in place is a missed opportunity.
“Supplier diversity makes good business sense. Companies that ensure they have the most bids when they are making their purchases will get the best price,” explains report author Dr. Paul D. Larson, CN Professor of Supply Chain Management, University of Manitoba. “Billions of dollars are spent in the region of the GTA, dollars that can create opportunities for small businesses.”
“In a region as diverse as the GTA,” adds John Tory, chair, Greater Toronto CivicAction Alliance and co-chair, DiverseCity, “ensuring visible minority run companies have access to these opportunities is important to the GTA’s prosperity.”
The report finds that the corporate sector is more open to supplier diversity than the non-profit or government sectors. As well, those GTA organizations with operations in the U.S are far more likely than other organizations to have supplier diversity programs. The report also compares the GTA to the region of Chicago and finds Chicago companies are three times more likely to have a supplier diversity program.
The report recommends that the leadership of large GTA organizations make a commitment to this issue, train their staff, set targets, and develop partnerships with organizations, such as the Canadian Aboriginal and Minority Supplier Council, to help them set up their program.
“With whom do you do business? That’s the new question GTA organizations should be asking themselves,” adds Ratna Omidvar, president of Maytree and co-chair of DiverseCity. “Our latest research makes clear that diversity led suppliers are being shut out despite the advantages they bring. That should be everyone’s business.”
The report highlights the following benefits of supplier diversity:
- Results in better value for money by having more competition for bids
- Helps companies reach new markets or provide new products
- Increases investor confidence and access to capital
- Improves the organization’s reputation with customers resulting in increased sales
- Improves the organization’s reputation with employees resulting in increased staff retention
- Helps small and medium-sized businesses grow, creating opportunities for the region
- Builds the capacity and profile of visible minority leaders thereby increasing leadership diversity overall
Supplier Diversity in the GTA: Business Case and Best Practices is the sixth report in a series called DiverseCity Counts that commissions research measuring the levels of diversity in leadership in the GTA. Download the full report, as well as examples of good practice.
About the supply chain and supplier diversity:
The supply chain includes every organization that is involved in bringing a good or service to the consumer. In this chain, companies purchase raw materials, products and professional services from other, often smaller organizations. Supplier diversity means that small and medium-sized organizations owned or operated by visible minorities have equal access to these opportunities, allowing them to grow their business and providing benefits to our economy.
About the author:
Dr. Paul D. Larson is the CN Professor of Supply Chain Management at the University of Manitoba. An award-winning academic and former head of the Supply Chain Management Department, Dr. Larson’s research interests include humanitarian logistics, sustainable transportation and supplier diversity. In early February 2012, Paul reached the summit of Mt. Kilimanjaro with the CARE Canada expedition.
DiverseCity: The Greater Toronto Leadership Project is a joint project of Maytree and the Greater Toronto CivicAction Alliance, funded in part by the government of Ontario. With its nine initiatives, the project is changing the face of our region’s leadership. www.diversecitytoronto.ca.