Summer, February 2013

Hand up for supplier diversity

"It comes as a surprise to most people, but the majority of indigenous enterprises are located in urban or metro areas,” says Natalie Walker, outgoing CEO of Supply Nation (formerly AIMSIC), a membership based organisation aimed at building a more prosperous and sustainable indigenous enterprise sector.

Speaking at The MURRA Project, a Melbourne Business School (MBS) initiative dedicated to growing the capability of indigenous entrepreneurs, Walker notes:  “There is a strong misconception that indigenous businesses only operate in niche markets, usually in very remote areas. In reality, the breadth and depth of the indigenous sector is staggering – ranging from construction to fashion and textiles, through to education and training, horticulture, security services, legal and accounting consultancies, through to film, print, internet and radio.” 

Of growing interest to Government and the private sector, supplier diversity aims to increase opportunities for minority owned businesses to compete on equal footing for the supply of goods and services to corporate buyers.  

“The error is in thinking that doing businesses with minority suppliers is an act of charity rather than a competitive advantage,” insists Walker who is herself a Kuku Yalanji woman from the Daintree Rainforest in Queensland.

“The majority of Australian companies still come at corporate social responsibility initiatives through a compliance lens.  They have a reconciliation action plan in place or they need to meet government regulations, when in fact, supplier diversity provides access to the widest, most competitive pool of suppliers. This is not about a hand out, it’s about a hand up.”  

Despite stated commitment to supplier diversity, the procurement practices of the public and private sector often mean that minority enterprises struggle to compete in an open tender process.  “Generic evaluation criteria and threshold requirements around organisation size, scope of services or length of experience, often preclude indigenous businesses from the outset,” says Walker.  

Of any local industry, the mining and resources sector is probably the most mature in terms supplier diversity, although according to Walker:  “If you define engagement on the basis of strategic spend and sophistication of policies promoting engaging minority suppliers, all have a long way to go.  

“In the US, minority businesses contribute $1 trillion dollars to the economy.  Minority suppliers are considered business as usual.” 

Though lagging, Walker points to some impressive case studies starting to occur here:  “Take the Yaru Water and Sofitel supply agreement,” she says. “It’s a great example of where a corporate buyer has engaged with an indigenous business to generate competitive advantage.”  

Producers of bottled water, sourced from springs belonging to the The Bundajalung Nation, Yaru Water offers Sofitel a premium product which has an aesthetic and narrative that creates a unique, on-brand experience for Sofitel guests. 

On the role procurement has to play in developing the market for indigenous enterprises, Walker believes it’s fundamental:  “To give weight to diversity principles, companies need to see a business imperative.  Once they value this imperative, the weighting in procurement decisions will necessarily follow.  

“Some of our corporate members now include weighted criteria in their tenders which rewards those companies certified through Supply Nation.”  

As any procurement professional will know, building supplier capability does not end with the signing of a contract.  It is an ongoing and joint challenge for both buyer and supplier.  Even success stories like Yaru are not without challenge – despite Sofitel’s delight with Yaru‘s product, Walker agrees there has been time and effort on both sides to build supplier capability and allow Yaru to develop as a business.   

“Yaru has had to work hard to professionalise their distribution channels. With Sofitel’s business, they have had the viability to establish a nationwide distribution system, providing much greater flexibility to not only meet, but exceed Sofitel’s and other corporate clients’ expectations.” 

About The Murra Project – An initiative of Asia-Pacific Social Impact Centre (part of Melbourne Business School) The MURRA Indigenous Business Master Class Program is a series of six classes for indigenous business owners.  Open to applicants from all over Australia and with the aim of strengthening the capabity of indigenous entrepreneurs, The Faculty was engaged to facilitate Master Class #6 Becoming a Great Supplier, to assist indigenous entrepreneurs compete more effectively for the procurement contracts with large Australian firms.   

Learn more about The Murra Project here

Learn more about Supply Nation and how your business might benefit from membership here.

Watch more about ‘The Yaru Water and Sofitel’ story here.