Some of the biggest opportunities to reduce a company’s carbon footprint are lurking in its supply chain – a fact that’s spawned a new generation of innovative greentech start-ups.
It is an increasing trend that firms with a diverse portfolio of customers are looking to mirror this level of diversity in their supply chain although it’s not as simple as it sounds.
There are a number of benefits that increasing supplier diversity can bring. The article by Avetta in Raconteur delves into these benefits with a roundtable of leading procurement professionals. Angela Qu, Lufthansa Group’s CPO, states that the inclusion of diverse suppliers in their portfolio increases the resilience and agility of their supply chain.
This statement is reinforced through research from the banking trade body of UK finance which in March 2021 released a report which outlined the benefits of diverse organisations within the supply chain. It was found that firms with founders from minority ethnic groups were very ambitious and often reported higher growth rates and levels of innovation than companies with founders from non-minority ethnic groups. This can help an organisation develop the value that their supply chain brings and lead to an improved competitive advantage.
When making these buying decisions, it is important to consider the relevant data behind the decisions to ensure the fit will be right.
“Data is essential but needs to be seen in context. It is so much more than just numbers on a page; it is making the change that is right for the business”. Claire Costello, Chief Procurement Officer, Co-Op.
Although these diverse firms can help bring new ideas and innovation to the table, for larger companies they often lack the scale to be a tier 1 supplier. Although this does not by any means mean large companies should overlook these diverse suppliers. It is important for large companies to engage in ‘coaching’ of these smaller supplier to help them improve and grow into tier 1 suppliers. Organisations such as MSDUK help large companies procure from the diverse suppliers as well as helping the smaller suppliers get opportunities to network with buyers from larger organisations removing that as a barrier.
The higher levels of innovation and resilience of the diverse firms can help accelerate the sustainability agenda.
The business desire and plan for improving their sustainability must involve suppliers otherwise the effort will have little macro impact. There are a number of new greentech start-ups looking to address the need for sustainable suppliers. These start-ups are building platforms that can help organisations big or small and in a variety of industries find suppliers with sustainable credentials that best meet their needs.
Companies such as the Greentech Alliance provide this service. The Greentech Alliance brings together green technology businesses, that fight climate change with their products and services in the most responsible and respectful to our planet manner, to support them with advice about funding, impact, visibility, and strategy with the help of top VCs, journalists, advisors, and entrepreneurs.