**London**: Major corporations, including Walmart, are reportedly reducing their diversity initiatives, sparking concerns over supplier diversity amidst global disruptions. Experts stress the importance of distinguishing supplier diversity from DEI efforts, as businesses grapple with increased supply chain risks and the potential for economic inclusivity.
Walmart and other major corporations are reportedly scaling back their diversity, equity, and inclusion (DEI) initiatives in recent weeks, raising concerns about the implications for supplier diversity and overall business practices within the supply chain. This trend has emerged against a backdrop of significant global disruptions, including the COVID-19 pandemic, ongoing conflicts such as the war in Ukraine, and logistical nightmares like the blockage of the Suez Canal. These events have underscored the vulnerabilities of single-sourced supply chains, prompting a reevaluation of supplier strategies.
Ralph G. Moore, president and founder of Ralph G. Moore Associates (RGMA), emphasised the distinct nature of supplier diversity as a business strategy separate from DEI. Speaking to SupplyChainBrain, Moore stated, “Supplier diversity is not DEI, and DEI is not supplier diversity. It’s a business strategy for engaging outstanding diverse suppliers throughout your value chain.”
In the context of these discussions, “diversity” serves a dual purpose: it refers not only to sourcing from a variety of suppliers to minimise risk but also to focusing on suppliers owned by historically underrepresented groups, such as women and minority entrepreneurs. This intersection is particularly relevant in the current climate of uncertainty. Moore explained that “supplier diversity is really the intersection of value and values,” highlighting its potential to not only mitigate risks but also foster economic inclusivity.
The concept of supplier diversity has roots dating back approximately 50 years, according to Moore, with over 40 global corporations each spending more than $1 billion annually on diverse suppliers forming the Billion Dollar Roundtable. This group aims to share best practices to enhance supplier diversity. However, some are questioning whether the group is shifting its focus, as indicated by a notice stating “Under Construction” on its website.
Additionally, the Business Roundtable, representing leading U.S. CEOs, issued a statement in 2019 that sought to redefine corporate priorities beyond shareholder profits, urging a focus on stakeholders including customers, employees, and suppliers.
Historically, the foundation for supplier diversity in the U.S. was laid by President Nixon’s 1969 executive order that established the Office of Minority Business Enterprise, later named the Minority Business Development Agency (MBDA). This initiative aimed to enhance opportunities for minority-owned businesses. However, the agency’s stability has fluctuated with changes in administration, and its funding faced cuts during President Trump’s tenure, though it was reinstated in subsequent years. President Biden also elevated its status, making it a permanent agency.
The future of MBDA, however, has become uncertain again with ongoing political changes. Trump’s earlier actions in January led to an executive order that aimed to eliminate federal programs related to affirmative action and DEI as well as revoking guidelines established in 1965 prohibiting discrimination in government contracting. This has resulted in considerable ambiguity surrounding the role of DEI in modern business practices and supply chains. Moore expressed concern over this uncertainty, stating, “It’s like being caught up in the undertow of a sinking ship.”
In 2008, RGMA collaborated with Walmart to promote diversity among second-tier suppliers. Moore characterised the retail giant’s recent withdrawal from DEI initiatives as a “reactionary move” whose effects on supplier diversity remain to be determined. He added that while supplier diversity is primarily focused on expanding the pool of suppliers and enhancing competition, it also contributes to economic development in diverse communities.
Reginald K. Layton, RGMA’s chief technology officer, reinforced this perspective by asserting that supplier diversity is not centred on internal corporate culture issues but rather on creating a robust supplier selection process. This, in turn, is crucial for building resilient global supply chains.
Despite the foundational efforts of international groups such as the Global Supplier Diversity Alliance, there are concerns that the retreat of American firms from DEI initiatives could undermine these efforts. Moore noted that the training of supplier diversity leaders has diminished in quality over time, with many lacking the understanding needed to defend these crucial programmes against pressures from the C-suite.
The trajectory of DEI initiatives in corporations poses a potential challenge for global sourcing and increases supply chain risks, unclear whether DEI and supplier diversity efforts will remain distinct or merge, affecting the future landscape of supplier relationships. Moore concluded, “This is no longer a social conversation. This is a business imperative.”
Source: Noah Wire Services
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