Supplier Diversity: The Strategic Tool for Women Owned Businesses
By Silvia Pencak
Supplier diversity is one of the untapped resources for Canadian women-owned businesses. It is a very important tool that opens the door for women founders to large corporate and government supply chains. Let’s have a closer look at what it is and how it can benefit your business.
In the USA, the supplier diversity journey began over 50 years ago as a strategic initiative of the federal government to advance the minorities’ population in the wake of racial unrest. In 1995, after women had lobbied for the same recognition as an underserved group, supplier diversity for women’s businesses began in the USA. Because of this history, supplier diversity is quite advanced in the USA. For example, over 95% of Fortune 500 companies have supplier diversity programs that target historically underutilized businesses, expand buyers’ choice, and boost innovation, competitiveness and market knowledge.
With the trend towards contract bundling in the US, over 80% of multinational corporations are now requiring supplier diversity efforts from their tier one and tier two suppliers. They advertise this “spend” with diverse populations, and are taking their business practice global, setting new benchmarks for measuring and celebrating diversity in supply chain contracts they award.
Supplier Diversity spread to Canada fifteen years ago with the launch of the Canadian Aboriginal and Minorities Supplier Council (CAMSC). WBE Canada’s roots go back to 2009. Women Business Enterprises Canada Council (WBE Canada) is a Canadian non-profit organization certifying Canadian businesses that are majority owned, managed and controlled by women. The organization was founded by corporations looking to diversify their supply chain as a certification body for Canadian women-owned businesses. The number of organizations committed to supplier diversity has been growing ever since.
According to Statistics Canada, “A 20 percent increase in total revenues among majority female-owned enterprises will contribute an additional $2 billion per annum to the Canadian economy.” The estimate is based on extrapolation of Statistics Canada data presented by Industry Canada (June, 2010) where, in 2007, majority female-owned enterprises account for 16% of Canada’s 1.3 million Canadian small and medium-sized enterprises or 208,000 enterprises. The average total revenue of majority female-owned firms was approximately $563,000. The average profit margin (ratio of pre-tax profit to sales) was 8.5% which reflects an aggregate net contribution of $117 billion per annum. WBE Canada certified women-owned businesses have an average revenue of $14.1 million and aggregate revenue of $4.3 billion per annum. (WBE Canada, January 2019)
We still have a long journey ahead of us. While spend with women-owned businesses averages 20-30% in the US, Canadian corporations tracking their diversity spend average 1-5% spend with all diverse suppliers. The role of WBE Canada and other certifying councils is to ensure the increase of such opportunities in the Canadian market. We are excited to see more and more organizations committing to embrace supplier diversity initiatives and procuring from diverse suppliers, specifically from women-owned businesses.
While supplier diversity is still relatively unknown in Canada, 87% of women-owned businesses selling to corporations and government in the US have their WBE certification. Through its events and programs WBE Canada aims to educate women-owned businesses about procurement and corporate supplier diversity programs, connect them with buyers across industries, promote successes on both sides (corporate and WBE) and reward achievements in this space.
“Joining WBE Canada was a strategic move for us,” says Lisa Bragg, CEO and Founder, MediaFace. “Being a part of the network has opened so many doors. It has allowed me to connect with like-minded female leaders, give and get much-appreciated advice and engage with brands of all sizes.”
While the hustle and bustle of your day job can be distracting, you can’t forget to get in front of your audience, market yourself and leverage existing and potential professional contacts.
“Take it from me, you have to get involved, show up to networking events and make a concerted effort,” stresses Lisa. “In my case, it has paid off in several ways.”
Over the years, Lisa has met so many inspiring and influential women through WBE Canada. Women who can relate to similar challenges and growing pains in their careers.
“The support of such a strong network and my incredible team have landed us sought-after work with international brands, it has also led to budding friendships and alliances. It can be lonely being an entrepreneur. Lifelong friends just don’t understand what it’s really like to run a successful business, but other women business owners, well, they get it,” adds Lisa.
And those women include Marty Britton, President and CEO, Britton Management Profiles and Kathy Cheng, Founder and President, Redwood Classics Apparel.
MediaFace joined WBE Canada in 2017, a decade after Lisa founded the award-winning content creation company. MediaFace creates transformative content that changes the way audiences think about your brand, products and you.
Lisa accepted a prestigious award for women business owners at the 2019 Enterprising Women of the Year Awards. MediaFace is listed as one of Canada’s fastest growing media and marketing companies by the Growth 500 in 2017 and 2018.
This article was originally published in Canadian SME Magazine.