How Supplier Diversity Programs are Limiting the Success of Diverse Suppliers

In late 2016, our company was in discussions with leading brands that support supplier diversity in Canada. At that time, disabled and veteran-owned businesses were not represented in supplier diversity. With the help of RBC, City of Toronto and a few other generous corporations, we were able to start a new non-profit called Inclusive Work and Supply Council of Canada (IWSCC) to certify, nurture and represent disabled and veteran entrepreneurs to a small but growing list of large procurement organizations. It has been a slog and took a while to see any significant gains in both members and corporate sponsors but over the past several years that has improved to the point where IWSCC now has over 25 corporate sponsors and well over 100 certified members and growing.

The whole point for me was to create a path for companies like mine to access meaningful procurement opportunities with big business — To step out of obscurity and build businesses for people that are truly marginalized. But that isn’t how it’s worked out unfortunately and lately, that thought has troubled me.  

To understand why it’s not working the way I hoped boils down to how the supplier diversity industry structures it’s relationships and this, in my opinion, has put the diverse supplier last in priority rather than first in priority.   

How supplier diversity works in Canada

Supplier Diversity Councils have two main sources of revenue – suppliers and corporate sponsors. The revenue from suppliers is insignificant compared to what corporate sponsors pay to supply councils. This revenue is realized in several ways, first corporate sponsors pay for access to the list of certified suppliers. This revenue is realized annually and is typically based on the size of the corporate sponsor by revenue. The second major type of revenue from corporate sponsorship is for events which, depending on the council, can be annual, quarterly, etc. Conversely, the revenue from suppliers mainly stems from annual membership fees and event attendance which has been declining for physical events specifically.

This is a pretty typical set-up for non-profits and absolutely nothing wrong with how it works. But, when we look at the industry from a 30,000 foot level, the issue comes into greater focus.

The industry-wide issue

There are 5 official supplier diversity councils in Canada
representing specific diverse segments of suppliers:

• Inclusive Work and Supply Council of Canada (IWSCC) represents disabled and veteran-owned businesses
• Women Business Enterprises Canada (WBE) represents women-owned businesses
• Canadian Council of Indigenous Business (CCIB) represents Indigenous-owned businesses
• Canadian Gay and Lesbian Chamber of Commerce (CGLCC) represents LGBTQ-owned businesses
• Canadian Aboriginal and Minority Supply Council (CAMSC) represents black, Indigenous and other visible minority-owned businesses

When a corporate sponsor supports a council, they get access to that certified diverse supplier list of that council and that council only. If a bank sponsors IWSCC, they get access to the IWSCC list only and not the other councils. So, if a corporate sponsor wants all diverse supplier lists from all councils, it represents a significant annual investment.

The impact on certified diverse suppliers

Based on research, my company, Adaptability Canada has undertaken in collaboration with IWSCC and Carleton University, there are currently approximately 220 large procurement organizations across Canada, including all levels of the public sector. Of those, very few, perhaps less than 10 support all main councils and less than one third represent 3 councils. What does this mean for certified diverse suppliers?

As a certified disabled supplier, only the corporations sponsoring IWSCC have access to my business profile. As the newest supplier diversity council, IWSCC has fewer than 30 corporate sponsors meaning that IWSCC suppliers likely do not have access to opportunities at 190 corporate sponsors who have supplier diversity programs. This same math applies to other segments of diverse suppliers in other councils who, while they may have more corporate sponsors, are still missing out because of how the relationship is structured between councils and corporations/government.

The direct impact to suppliers is fewer opportunities, slower growth and a growing frustration with being used to generate corporate sponsorship without the direct benefits thereof.

There is no clear answer for how to fix this, but one thing is clear, diverse suppliers do not have equitable access to procurement opportunities in Canada. It is a pay-to-play scenario where your success as a certified supplier is tied directly to the relationship between councils and corporations. Change is needed, particularly now, as Canada faces increased economic uncertainty and calls for buying Canadian are echoing coast-to-coast. Are diverse suppliers included in this call or are we going to be further marginalized as corporations dial back sponsorship and exit DEI programs?