12 Nov How to Build a Successful Supplier Diversity Programme in the UK: A Comprehensive Guide

By – Matt Dabrowski
(Founder & CEO)

Supplier diversity is increasingly recognized as a key strategic initiative within UK organizations, offering significant benefits to companies, diverse suppliers, and the broader economy. In addition to contributing to innovation and competitiveness, supplier diversity now aligns with the evolving legal framework around public procurement, notably the UK Procurement Act, which has introduced new opportunities to integrate social value into procurement practices. By embedding supplier diversity within an ESG framework, organizations can support social and environmental goals, enhance governance practices, and ensure alignment with the expectations of stakeholders and consumers. This guide outlines the critical steps for building a successful supplier diversity program that not only promotes equity and inclusion but also drives ESG performance in line with the social impact goals of the UK Procurement Act.

1. Building the Business Case

The starting point for any successful supplier diversity program is a solid business case that aligns the initiative with the company’s mission, vision, and core objectives. By linking supplier diversity to financial performance and social value, organizations not only enhance their competitiveness and resilience but also bring their values to life, fostering a more inclusive and sustainable business ecosystem. This alignment enables companies to fulfil their vision of positive social impact and community engagement, while meeting strategic goals like driving innovation, improving market responsiveness, and creating long-term value for stakeholders.

• • Align with UK Procurement Act Goals: The UK Procurement Act emphasizes the importance of social value, which includes supporting underrepresented groups in the supply chain. By highlighting how supplier diversity contributes to these objectives, companies can position themselves as proactive leaders in social responsibility.

• • Quantify Economic and Social Impact: Supplier diversity not only promotes competition and innovation but also fosters inclusive economic growth. By tracking spend with diverse suppliers, companies can quantify the economic impact of their supplier diversity initiatives. This involves measuring the direct and indirect contributions of diverse suppliers to the organization and its broader economic footprint. Demonstrate how engaging with diverse suppliers can enhance corporate reputation, fulfill CSR goals, and meet the requirements of the Procurement Act’s focus on social impact. Tracking these metrics not only supports transparency but also provides data-driven insights to optimize the program’s effectiveness and align it with strategic objectives.

• • Cater to UK’s Legal Context: The business case must consider the Equality Act 2010 and the social value principles of the Procurement Act, underscoring how a diverse supply chain mitigates risk, drives innovation, and aligns with legal obligations for inclusion.

2. Securing Leadership Commitment

Leadership commitment is critical in embedding supplier diversity as a priority that spans the entire organization, ensuring sustained success.

• • Top-Down Advocacy for Social Value: The UK Procurement Act calls for public and private sector buyers to consider social value in procurement decisions. This makes leadership buy-in crucial to champion a supplier diversity strategy that complements these new requirements.

• • Executive Sponsorship: Appoint executive sponsors or leaders to champion supplier diversity within the company. They should be vocal advocates, linking supplier diversity to broader goals like the company’s Environmental, Social, and Governance (ESG) strategy.

• • Cultural Alignment: Ensure leadership conveys the strategic importance of supplier diversity, positioning it as a means of improving company performance while also contributing to the wider social impact objectives promoted by the Procurement Act.

3. Establishing Programme Infrastructure

A well-structured supplier diversity programme requires robust infrastructure that ensures sustainability and scalability.

• • Form a Cross-Functional Team: Establish a dedicated supplier diversity team that includes members from procurement, legal, sustainability, marketing, and sales teams. By involving marketing and sales, the company can leverage its leadership in supplier diversity as a differentiator in the marketplace, demonstrating its commitment to social impact and responsible procurement. This cross-functional approach not only ensures alignment with the Procurement Act’s focus on responsible procurement but also enhances brand reputation and opens new business development opportunities. Marketing can amplify supplier diversity achievements to strengthen corporate image, while sales teams can highlight these efforts to appeal to socially-conscious clients and partners, ultimately driving growth and expanding market reach.

• • Resource Allocation for Social Value: Allocate sufficient resources to meet the demands of both increasing diverse supplier engagement and fulfilling social value criteria in procurement. This might include tools for supplier engagement, capacity building, and monitoring supplier diversity’s contribution to social value outcomes.

• • Objective Setting: Set measurable goals that align with your organization’s social value targets, such as increasing diverse supplier spend or engaging with underrepresented businesses. These goals should also reflect the social value aspects of the UK Procurement Act.

4. Developing Policy and Process

A clear and inclusive procurement policy is essential for embedding supplier diversity into the organization’s operations, ensuring alignment with social value principles.

• • Supplier Diversity Policy: Draft and publish a supplier diversity policy that aligns with your organization’s ESG strategy and the social value priorities of the Procurement Act. This policy should be transparent, ensuring diverse suppliers understand diversity definitions themselves and the organization’s commitment to inclusivity.

• • Inclusive Procurement Framework: Modify procurement processes to ensure diverse suppliers have the opportunity to compete on equal footing. In the context of the Procurement Act, these processes should explicitly factor in how suppliers contribute to social value and community development.

• • Certification and Compliance: Partner with certification bodies such as OutBritain, MSDUK, WEConnect International, Veteran Owned UK, and Social Enterprise UK to identify, classify, and engage diverse suppliers. These organizations not only help build trust among suppliers but also foster a culture of growth and development, offering resources and support for diverse suppliers to thrive and succeed. By collaborating with these certification bodies, you can also identify existing suppliers within your supply chain who are diverse-owned. In line with the Procurement Act, ensure that procurement procedures are transparent and socially responsible, demonstrating compliance with new regulations while supporting the long-term success of diverse businesses.

5. Providing Tools and Training

Both internal teams and external suppliers need the right tools and training to fully engage with and benefit from a supplier diversity programme.

• • Training for Procurement Teams: Provide tailored training to procurement teams on the social impact of supplier diversity, focusing on the new UK Procurement Act’s emphasis on social value. This will ensure that internal stakeholders understand how diverse suppliers contribute to both company goals and broader social outcomes.

• • Support for Diverse Suppliers: Offer workshops, mentoring, and capacity-building resources to help diverse suppliers meet procurement requirements and scale their businesses. This support is crucial in driving social value through business growth and job creation, key elements of the Procurement Act’s social objectives.

• • Use of Technology: Implement digital tools to streamline procurement and reporting processes, allowing you to track diverse supplier engagement and measure the social impact in accordance with the Procurement Act.

6. Measurement and Reporting

Continuous monitoring, measurement, and reporting are vital to ensure the programme’s success and demonstrate compliance with social value expectations under the UK Procurement Act.

• • Social Value KPIs: In addition to tracking spend with diverse suppliers, develop KPIs that measure how diverse suppliers contribute to social impact. These might include community
    engagement, job creation in underrepresented areas, and environmental sustainability.

• • Data Collection: Use technology to gather and analyse data on supplier diversity, social value impact, and supplier contributions to meeting the UK Procurement Act’s objectives.

• • Public Reporting: Publish regular reports on supplier diversity progress and its social impact. Transparent reporting not only fulfils legal obligations but also enhances your organization’s reputation as a socially responsible entity.

7. Marketing and Promotion

Effectively marketing your supplier diversity programme can help position your company as a leader in social responsibility and procurement innovation.

• • Internal and External Communication: Promote your supplier diversity program internally to educate employees on its social impact and build a culture that values inclusive procurement. Employee networks, such as LGBTQ+ and other diversity-focused groups, play a vital role in advocating for authentic purchasing from diverse suppliers, particularly during key observances like Pride Month, LGBTQ+ History Month, or Trans Day of Visibility. These networks can help drive awareness, encourage genuine engagement with diverse suppliers, and foster allyship across the organization. Externally, highlight your commitment to supplier diversity and compliance with the UK Procurement Act’s social value provisions through marketing materials, industry forums, and social media, showcasing how your organization supports diverse communities throughout the year.

• • Success Stories: Showcase the success stories of diverse suppliers that have contributed to both business growth and social value. Demonstrating these dual benefits reinforces the importance of supplier diversity in achieving business and societal goals.

• • External Events: Partner with organizations like OutBritain, MSDUK, WEConnect international, Veteran Owned UK, and Social Enterprise UK to raise awareness and promote your company’s commitment to supplier diversity and social impact.

8. Advocacy and Engagement

Advocacy and engagement are essential to driving supplier diversity beyond your organization, influencing the broader business ecosystem and ensuring the social value goals of the UK Procurement Act are realized.

• • Engage with Policymakers and Industry Leaders: Join conversations with industry bodies, policymakers, and supplier diversity advocacy groups to promote social value in procurement. Align your company’s advocacy efforts with the UK Procurement Act’s push for greater inclusion and social impact in supply chains.

• • Support Supplier Diversity Organizations: Collaborate with supplier diversity organizations like OutBritain, MSDUK, WEConnect International, Veteran Owned UK and Social Enterprise UK to advocate for policy changes that promote the growth of diverse suppliers. By doing so, your company can lead efforts to create more inclusive supply chains in the UK.

• • Mentorship and Networking: Support diverse suppliers through mentorship and networking opportunities that help them grow and thrive. Creating these opportunities fosters a culture of inclusivity and enhances your company’s role in driving social impact.

Conclusion: Linking Supplier Diversity to the UK Procurement Act’s Social Impact

Building a successful supplier diversity programme in the UK not only strengthens your company’s supply chain but also aligns with the social impact requirements of the UK Procurement Act. By promoting diverse suppliers, you contribute to job creation, economic growth, and community development, all while fostering innovation and maintaining competitive advantage. From creating a business case to advocacy and engagement, every step of the process enhances your company’s ability to deliver both financial performance and meaningful social value in today’s complex business environment.