Supplier Diversity is in the spotlight, thanks to the outcomes of the recent Closing the Gap refresh report, which recommended jurisdiction-specific procurement policies for each state. WA’s IPP policy will come into effect on July 1, where WA government departments will be required to award one per cent of contracts to registered Aboriginal businesses. But what is supplier diversity, and who benefits?
What is Supplier Diversity?
Supplier Diversity in its rawest form is procuring a good or a service from a diverse business: for example, a business which is owned and run by Aboriginal people.
What are the benefits of supplier diversity?
Supply Nation research (The Sleeping Giant, September 18 2015) found that for every dollar of revenue, Indigenous businesses create $4.41 of economic and social value.
This value is found through offering Indigenous people employment, opportunities through training, and creating self-determined individuals and organisations.
Supply Nation’s key findings from a sample of five Indigenous businesses also found that:
Why is it so important to IPS?
IPS is an advocate of supplier diversity. IPS knows firsthand the positive benefits that a focus on supplier diversity, particularly Indigenous procurement, can make for an Indigenous business. IPS has grown its business through the Federal Government’s Indigenous Procurement Policy (IPP). IPS also practices what they preach by demonstrating supplier diversity within their own supply chain, by using other Indigenous businesses for booking travel or purchasing stationary to name a few.
“It’s not about paying extra for services,” IPS Director Damien Chalk said. “What you find with most small business is they have a lot of overheads – it’s not the same cost structure as bigger business. It’s about buying a competitive price for an Indigenous business.
“Before the Federal IPP came in there was a $6.5million spend from the Government on Indigenous business. That’s now over a billion dollars.”
However in the corporate world, there is nowhere near this level of take up. IPS’s focus on supplier diversity seeks to lead the way on this.
“The biggest effect we have on communities is jobs,” Damien said.
“For example, if IPS wasn’t in Bunbury, there would be eight full time equivalent jobs not in Bunbury, and it’s similar in other areas. Our model is to set up regionally: in one way it would be more strategic to set up in Perth, but because of our model we have a direct effect on jobs in regional areas instead.”
IPS's focus on creating new opportunities for supplier diversity took a huge step forward with the signing of a Memorandum of Understanding (MOU) with Nous Group recently – a partnership which will enable governments and organisations to access world class management consulting services, whilst building capacity for Indigenous communities and increasing opportunities for Indigenous people.
The significance and benefits of Supplier Diversity for people, communities and businesses will continue to grow into the future, and to be a major focus for IPS.