Sustainable Procurement: How Asia & Australia Lead with Diversity and Technology
In recent years, the focus on Environmental, Social, and Governance (ESG) principles has shifted from being a trendy topic to a core movement. Nowadays, diversity and inclusivity are important factors that drive procurement strategies and impact everything from how suppliers are chosen to the way internal practices are shaped.
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The Economic Necessity for Inclusive Procurement
The drive for inclusivity in procurement is more than a moral imperative; it's a financial strategy that strengthens supply chains and opens new markets:
- Diverse Supplier Networks: Embracing inclusivity in procurement leads to varied organizational and supplier relationships. This not only strengthens supply chains but also taps into new markets. Studies also show that focusing on supplier diversity can save companies an extra 0.7% on what they spend buying goods and services. This proves that bringing in a range of suppliers doesn't have to cost more.
- Cost Savings: Industry studies show partnering with minority and female-owned enterprises (MWBEs) leads to an average annual cost reduction of 8.5%. This is due to the competitive bidding environment inclusivity creates. This results in better pricing, improved quality, and innovative solutions.
- Enhanced Innovation and Quality: Incorporating MWBEs means fostering social responsibility while creating more cost-efficient supply chains – enriched with diverse perspectives and expertise.
- Impact on Workforce Attitudes: The changing attitudes among millennials, with 64 per cent of millennials unwilling to work for companies lagging in corporate social responsibility, highlight the importance of practising what is preached in terms of social values.
- Diversity in Leadership: Having a diverse senior leadership team enhances procurement efficiency. Diversity across ethnic and professional backgrounds introduces varied experiences and perspectives, improving procurement functions. In particular, a diversity of professional backgrounds — ranging from engineering to finance, marketing, and beyond — plays an important role in enriching procurement strategies with a wide range of industry knowledge, innovative problem-solving techniques, and diverse operational approaches. This diversity:
- Leads to more comprehensive decision-making.
- Enhances creativity and innovation within procurement processes.
- Improves understanding and access to diverse markets.
- Encourages a more inclusive corporate culture, which is attractive to a broader talent pool.
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Diversity in Australia
Internal Diversity Initiatives
Top Australian companies are setting the standard for internal diversity. For example, Accenture Australia is committed to achieving a gender balance of 50-50 by 2025.
They're also great examples of LGBTI inclusion, disability support, and indigenous partnerships, which shows their thorough approach to diversity.
Supplier Diversity Efforts
Beyond internal efforts, there's also a significant shift towards diversifying suppliers. Australian companies are increasingly partnering with indigenous and local suppliers and are moving away from traditional trading partners.
A prime example is Compass Group Australia, a leader in promoting meaningful engagement with over 40 Aboriginal and Torres Strait Islander business suppliers through Supply Nation, Australia’s leading supplier diversity organization. Since 2017, Compass Group has invested more than $8 million in Aboriginal and Torres Strait Islander businesses. CGA has witnessed a 180% average annual growth in spending with Supply Nation Indigenous-owned businesses since their membership began.
This not only supports local communities but it also brings unique insights and innovation into the procurement process.
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Diversity in Asia
Internal Diversity
Efforts Asian companies too are increasingly recognizing the value of diversity, equity, and inclusion (DEI) within their procurement processes. There's a significant push to enhance female leadership roles and guarantee diverse representation at all levels.
For instance, Singapore has a high rate of DEI support among companies, with DBS Group Holdings scoring an impressive 84% on the inclusivity index. This focus on including minority ethnic groups, gender diversity, and accommodating different age groups is significantly influencing procurement practices. By prioritizing DEI, Singaporean companies are building a more inclusive corporate environment and also enhancing their supply chain resilience and performance.
Supplier Diversity
In terms of supplier diversity, there's a rigorous effort across Asia to develop more sustainable and inclusive supply chains. This involves actively supporting smaller companies and using procurement as a tool for broader societal impact.
Companies in countries like Singapore and Malaysia are working towards diversifying their suppliers. Many are expanding their networks beyond local borders and are choosing to partner with suppliers from neighboring countries. This regional cooperation offers diverse benefits like enhancing economic ties and supply chain reliability. By tapping into the strengths of neighboring markets, businesses gain access to a broader spectrum of products, technological advancements, and unique capabilities.
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