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Diversifying the Federal Supply Chain

By 21/03/2019March 25th, 2019No Comments

Diversifying the Federal Supply Chain Summit was held March 5, 2019 in Ottawa, with the purpose of introducing federal government procurement to diverse suppliers.  A diverse supplier is a business that is at least 51 per cent owned, operated, and controlled by either women, members of an Indigenous community (e.g., First Nations, Inuit, or Metis people), members of a visible minority group, members of the lesbian, gay, bisexual and transgender (LGBT) community or persons with disabilities [1].

In her keynote address, Cassandra Dorrington, president of Canadian Aboriginal and Minority Supplier Council (CAMSC) outlined the importance of the summit, the first ever of its kind and a major milestone in the 15-year push for equal opportunity for minority owned, managed, or controlled businesses.  Thanks to the work of CAMSC and many other organizations, Canada’s federal government has awakened to the opportunity of a diverse supply chain and is taking real action. 

“It is more than just the right thing to do” explained Dorrington, presenting a strong business case that supply chain diversity equates to real economic benefits. 

The benefits of supply chain diversification have been noted over the past several decades in the United States.  According to a 2006 Wall Street Journal article by Steven D. Jones, research by Hackett Group found companies that “focus heavily on supplier diversity” generate a 133% greater return on procurement investments than typical businesses.  The Hackett Group report concluded that procurement organizations (such as Walmart, Accenture, and Johnson and Johnson) who work with a diverse supplier base also had lower overall operating costs and spent 20% less on their buying operations [2].

In the 2017 report The Business Case for Supplier Diversity in Canada, by The Conference Board of Canada [3], evidence showed that a diverse supply chain had potential to:

  • better represent an organization’s diverse customer base, thereby increasing customer satisfaction and revenues;
  • better reflect the diverse backgrounds of employees, thereby increasing their job satisfaction and retention;
  • build more robust supply chains by identifying a wide range of qualified suppliers and reducing the risk associated with streamlined supplier pipelines;
  • open new markets, which can lead to economic development for the organization and the local economy.

At the summit, Lorenzo Ieraci, Director General of Canada’s Office of Small and Medium Enterprises (OSME), outlined federal government procurement and the new opportunities available to minority-led organizations. 

In 2017, the federal government spent $25 billion on over 300,000 contracts for goods, services, construction, and maintenance projects. Ieraci expanded upon the federal procurement process, controlled by the Treasury Board of Canada, and noted some of the initiatives, such as e-bid submissions, 15-day payment, the introduction of “plain language” to requests for proposals (RFP’s) and procurement contracts, to remedy some of the notorious barriers to potential government vendors.

Ieraci detailed OSME’s major role in bridging the gap between minority-run businesses and the federal government.  With six locations across the country, OSME is mandated to ensure fairness, openness and transparency in government procurement and to support the government’s agenda to provide value to Canadians.

OSME’s activities include information, counseling and training services to SMEs that want to do business with government, identification and assistance encouraging the introduction of innovative new products and services, and acting as a collaborator between government and vendors to ensure SME community concerns are brought forward and heard to improve procurement policies and best practices.

Other government measures intended to encourage minority-led suppliers include new grant and outreach programs and recognition of certification as a “diverse supplier” by a number of associations like CAMSC, Woman Business Enterprises Canada (WBE), and the Canadian LGBT+ Chamber of Commerce, just to mention a few.

Applicable new grants and programs created under this initiative will be included in our Map of Federal Programs that Support Technology-Based Canadian Business, to be updated later this year.