Economic Inclusion in the Supply Chain: What It Is and Why We Need It Now

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Our SCLA Executive Think Tank group often hears fantastic presentations from talented teachers and researchers working to solve some of the biggest issues in the supply chain and drive sustainability despite intense external pressures and challenges (many of which have been widely publicized lately).

Recently, we were introduced to Professor Andrea Sordi, who is the Academic Director Exec MBA Global Supply Chain Management Clinical Professor at Haslam College of Business at the University of Tennessee and a passionate advocate for socially sustainable supply chain management, particularly in the procurement space.

Professor Sordi shared his take on expanding simple supplier diversity goals into full economic inclusion, which is a level of innovation in procurement that many organizations are not currently thinking about.

In fact, it is likely that some organizations have yet even to be introduced to the idea!

And this is why I wanted to take some time to explain the concept and show how its “win-win” nature is sorely needed now.

Economic Inclusion in the Supply Chain Explained

So, what is the concept of economic inclusion in the supply chain? The broad definition offered by Professor Sordi cites an end-to-end generation of social and business benefits.

Economic inclusion incorporates the idea of supplier diversity (a hot topic right now as a way of mitigating risk in the supply chain) but expands it. The concept calls for the creation of an entire diverse ecosystem inclusive of small and medium enterprises around the globe, especially in economically disadvantaged regions.

What that ends up looking like can perhaps best be described with a sports metaphor. If we think of the supply chain as a sports team—particularly as a soccer or football team—we can imagine how adding diverse talent (and also having backups) in every single player position will help us all win.

Why Do We Need Economic Inclusion?

The short answer to this question is sustainability through the supply chain. Of course, from an economic standpoint, we’re also trying to make sure that our individual organizations are sustainably competitive and can gain competitive advantage. As the market is becoming more volatile and competitive overall, there are more issues that we need to face from a supply chain POV.

This calls for creating networks of suppliers to enable all to be more successful, which sets up a win-win scenario that makes organizations stronger, the supply chain healthier/more sustainable, and ultimately, betters society.

Professor Sordi noted, “Small businesses may not have the resources, but in the network, there might be a supplier with those resources who can supplement the one supplier that doesn’t. Creating the network amongst your diverse businesses may enable all of them to be successful at the same time. You don’t have to stick with one for all solutions or to have all resources but join them up in a network to make sure they’re all successful.”

Essentially, the biggest reason we need economic inclusion in the supply chain is that supporting the success of our suppliers and customers will make our own organizations’ success sustainable.

At this point, you may be thinking, “economic inclusion sounds great! But it also sounds challenging to implement…”

The good news is that your organization is likely already well on the way to becoming more economically inclusive—especially if you’ve already set supplier diversity goals that you’re working toward.

Professor Sordi shared seven “pillars” that organizations can follow and develop to make economic inclusion easier to achieve—and the best organizations are generally already doing many of these things, including focusing on improving communication and creating excellent company culture.

The 7 Pillars for Economic Inclusion Success and Continuous Evolution

By now, most of us in procurement and supply chain know that developing and supporting our people is key to our organizations’ success. Of course, this often means incorporating flexibility in our approach—and Professor Sordi also presented the following focus areas to cultivate:

1. Culture

Create a culture where your teams feel the benefit of bringing in or changing a supplier.

2. Competence

Empower your team to improve operations without consequences or red tape.

3. Strategy

Include in your sourcing strategy the opportunity for diverse businesses to come and “play.” Going back to the sports metaphor—if you invite someone to join the team but don’t put them in the field, it will be disappointing. So, don’t just connect with diverse suppliers, but get them in the game!

4. Ecosystem

I’ve already touched on the idea of creating networks of suppliers, and the word “ecosystem” is probably the best descriptor. Professor Sordi suggests working to create this ecosystem where partnership is well set internally and externally.

5. Governance

Organizations will need to be better partners with government agencies and social leadership in many places in order to be successful.

6. Plan & Measure

Stunningly powerful data modeling tools are becoming more and more available to our organizations, which can help us discover new global resources for almost any component or manufactured good. (See this previous article for more on the digital transformation of the supply chain.) Let’s use these tools and data to bring in more economically diverse partners.

7. Communication

Professor Sordi noted that we’ve seen a lot of failure in economic inclusion because there is little, no, or wrong communication within and between organizations. Transparently communicate what you’re committing to—otherwise, it affects your credibility.

What’s Your Experience?

Has your organization been working to incorporate more supplier diversity into your procurement operations recently? Or are you thinking even farther into the future and actively taking steps toward enhanced economic inclusion for better sustainability in the supply chain?

I would love to hear about your experiences! Please feel free to connect with SCLA to share your perspectives and join the conversation—or This email address is being protected from spambots. You need JavaScript enabled to view it..

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Monday, 22 July 2024

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