This question has been on my mind for quite some time. Many studies have highlighted that women participation in business will enhance the GDP of a national economy. Corporations have been told to increase women participation in the Board for the same reason.
So, why not let women entrepreneurs thrive at a faster speed? Why not have a friendly policy towards women-led companies? Award them a contract if they meet all the criteria that you are looking for.
Let’s consider the current supply chain model in Corporations and the barriers that it poses to women-led companies, cited in the Power of Procurement: How to Source From Women Owned Business, UN’s Women Economic Empowerment Section:
- Strategic sourcing: For decades, Corporations have a highly integrated complex supply chain model that have proven to be difficult for women led companies and small businesses to penetrate. The past ten years, Corporates have also gone through many mergers and acquisitions, further consolidating their supply chain model to narrow down procuring from strategic suppliers for bulk purchases to enjoy the economies of scale for better pricing.
- Access to information and social networks: Procurement processes in Corporations tend to be rigid and regimented servicing many stakeholders. Decisions to procure typically involve multiple levels. It can be daunting for women-led companies and small businesses to build strategic relationship with many parties to position a compelling proposition on their products or solutions. This can be challenging to women led companies that are less developed in their ‘go-to-market’ strategic approaches.
- Registered vendor status: Corporations abide by the rules of having registered vendors as their suppliers. Detail information are required to fill in this application. In addition, some of the preliminary conditions automatically put the women led businesses out of contention.
- Bundling approach and size of contract: Understandably, Corporations want to have a simpler method of managing their suppliers. Less is more. Hence, Corporations have the tendency to enhance the contract size and bundle multiple requirements / products / solutions in the same contract. Doing this will preclude the opportunity for women-led companies and small businesses to participate to become a supplier.
- Price vs value as a key award criterion: The key decision criteria of many Corporations is price. Large suppliers will find this easy to do as they can offer huge corporate discounts based on their central procurement contract for bulk purchases. Women-led companies and small businesses do not have the economies of scale to offer the same thing. Their offerings are value driven and need to be considered from innovation and value for money standpoint.
- Feedback for continuous improvement: Lack of feedback to women-led and small medium businesses on why they lose certain tenders would not grant them the opportunity to improve themselves in the future.
- Delayed payment: Women-led and small businesses need prompt payment from their clients. Delayed payment will be disastrous for them as they have limited resources and cash in hand.
Based on the above scenarios, realistically Corporations need to remove the barriers that preclude women-led companies to participate in their supply chain. This will be a gradual process that needs to be supported with compelling programs of diversity and inclusion among suppliers. Unless this is done, the policy of procuring from women-led companies will not matter.
What would be the first step that Corporations should take to remove the barriers that preclude women-led companies to participate in their supply chain?