By Mayank Shah, Founder & CEO – MSDUK
“The recent publication of the Minority Businesses Matter report commissioned by MSDUK shows that despite the challenges minority entrepreneurs face, the contribution of ethnic minority owned businesses to the UK economy is £74 billion pounds per year and these create 3 million jobs”.
Mayank Shah, Founder and CEO at MSDUK, talks to The Business Influencer about supply chains of the future and how diverse supply chains are part of the solution to level up the play field for minority owned business.
Our society is more diverse and globalised than ever and the Black Lives Matter movement has shone light in the inequalities that exists in today’s society and the need to address them.
The recent publication of the Minority Businesses Matter report commissioned by MSDUK shows that there are over 1million ethnic minority businesses in the UK contributing £74 billion pounds per year and that these create 3 million jobs, however, minority owned entrepreneurs and leaders face more challenges, one of them being the lack of networks to enable them to effectively built and grow a business.
1. Are ethnic minority owned businesses ready to work with corporates?
I think they are more ready than ever; we can see that third-generation immigrants and recent economic immigrants are more into mainstream economy, driving competitiveness and brining fresh new products and solutions to the market and that’s a very positive shift among minority businesses.
However, entrepreneurs from African Caribbean backgrounds are still far behind and that’s where organisations such as MSDUK are doing its best to support these businesses so they can become competitive and build capacity.
We need to make sure that we do not make the mistakes of the past, where communities work in silos. We need minority communities to come together, to learn and exchange best practices and growth together. I strongly believe that together we are stronger.
2. Is there a breakdown in understanding between corporates and SMEs in general?
I do think that there has been a breakdown because of lack of transparency but after the financial breakdown, the world economy went into recession and the procurement teams were focused on cost-savings. So instead of buying from many suppliers, companies were focusing on consolidation, working with one supplier to make savings through economies of scale and that’s one of the main reasons why the communication channels were broken between corporates and small organisations.
However, in the past few years, I have seen a change and the focus of procurement teams is on supplier relationship, driving innovation and getting the best value even if it is not the immediate cost benefit. In addition, there is a bigger focus on the social value that procurement can bring to society and that’s refreshing to see happening.
Finally, the biggest change I’ve seen is how buying decisions are made by procurement teams, there is more use of technology, especially with smaller spends, low spend and/or low risk contracts. These are now managed in tech platforms and procurement becomes more transparent and it opens opportunities for all SMEs and businesses owned by minority founders.
3. Are corporates risk averse?
I still think, that risk aversiveness is never going to go away, in fact, I would say that there is increased focus about sustainability, ethical sourcing and those are new issues procurement has to deal with.
If you are a SME, you need to make sure that your house is in order, in other words, you need to make sure that you are sourcing from ethical sources, so do your homework to make sure your own supply chain is fair and sustainable, it is about building trust and relationships.
If you are an SME diverse or not, we need to make sure that ethical practices are in place for businesses to succeed.
4. Do corporates prefer business with scale or growth potential?
We have seen at MSDUK that the spend by corporate members on ethnic minority owned businesses (EMBs) has increased year on year and large firms are interested in seeing diverse businesses grow and scale up.
There is also a concern not to overwhelm a small business; to flip this around, any small businesses should not just rely on one single large client and spread the risk by working with multiple clients to ensure long term sustainability and health of their business.
We have also seen that corporates are looking for diversity and inclusion and on the back of the Black Lives Matter movement, corporates have realised that they have to address the growing inequality in society and some of the corporates are committed to targets to support SMEs and EMBs in the current environment.
5. What countries are promoting supply diversity? Why are they successful?
America led the way in 1960s in the times of Martin Luther King Jr and in 1971, President Nixon issued E.O. 11625, directing federal agencies to develop comprehensive plans and specific program goals for a national Minority Business Enterprise (MBE) contracting program. Then, in 1983, President Ronald Reagan issued E.O. 12432, which directed each federal agency with substantial procurement or grant making authority to develop a Minority Business Enterprise (MBE) development plan.
Although America has been successful because it is in the law; I think supply diversity is at the top of the corporate agenda and at MSDUK we have partners in Australia, Canada, South Africa and China. We are also planning to expand in Europe, so organisations like ours coming together allow EMBs to access global markets to expand their business.
6. Is the public sector also procuring diverse supply chains?
They are not, it is known that the public sector spent over £30bn in this country on procuring goods and services and a few years back there were targets to make 30% of that spend for SMEs but the procurement guidelines does not require pushing this spend with under-represented businesses including ethnic minorities.
The social value act clearly asks public procurement decisions to be made considering social value it adds and new, more clearly defined guidelines need to be added to public procurement policies to ensure a more inclusive approach.
We at MSDUK have been pushing this agenda for the government to commit and become more transparent in the way procurement is handle and make diversity and inclusion at the heart of public procurement. Especially in the current pandemic, our Minority Businesses Matter report demonstrates how minority owned businesses have been instrumental to combat Covid-19, however tendering by the public sector does not include them.
7. Why EMBs think they are worse off? Why do they need assistance?
The biggest challenge for EMBs is the access to the mainstream networks, it happens with everyone that goes to a new country, it takes time to fully understand the culture, the way that businesses work and that’s what MSDUK does, we support our members to grow, connect and understand the procurement process in the UK. We are currently working with over 70 global and British companies, all committed to a more diverse supply chain and will continue to offer ethnic minority businesses a platform to access these opportunities.
Visit www.msduk.org.uk to know more about us.