December 2016

Transforming Australia’s economic landscape through supplier diversity

  • By Laura Berry, CEO, Supply Nation

Connecting Australia with Indigenous-owned businesses

Supply Nation’s vision is of a vibrant, prosperous and sustainable Indigenous business sector. Founded in 2009 by some of Australia’s leading Indigenous entrepreneurs with the support of government, Supply Nation champions the Indigenous business sector and supports the integration of Indigenous-owned businesses into the supply chains of Australian companies and government agencies.

Supply Nation aims to increase opportunities for Indigenous-owned businesses to supply their goods and services to large organisations. Supplier diversity puts underrepresented businesses on a level playing field with other qualified suppliers when it comes to competing for the supply of quality goods and services. The data clearly shows that supplier diversity drives significant and measurable long-term business benefits, aside from the goods and services, which can ultimately provide a unique experience to customers. The addition of Indigenous-owned businesses brings increased competitiveness, innovation and savings to the supply chain.

However, it is often not the business benefit that is the initial driver for supplier diversity. One of the major benefits of opening the door to additional markets and engaging in supplier diversity is that it facilitates the growth of Indigenous businesses, which results in increased economic activity and employment and channels greater social value back to Indigenous communities.

Mining operations typically occur in remote and rural areas of Australia. With approximately 43 per cent of Aboriginal and Torres Strait Islander people living in regional areas and 24 per cent living in remote areas, mining companies are in a unique position to support real change in the communities in which they operate.  It is well documented that a partnership approach with Indigenous-owned businesses is a way of instigating significant change while also improving the reputation of the mining and minerals industry. Taking advantage of this opportunity to engage drives positive benefits for both the corporations and the local Indigenous communities.

Supporting members and suppliers

Supply Nation has a membership base of more than 230 of Australia’s top corporate organisations and state and federal government agencies. Supply Nation’s members are central to a growing movement in Australian procurement: the development of sustainable, innovative, responsive and flexible supply chains. In addition to the competitive advantage of maintaining a diverse supply chain, engaging with Indigenous-owned businesses creates significant and measurable social impacts beyond the transactional outcome.

Supply Nation’s membership encompasses many of the largest privately owned companies across numerous industries, including mining, financial services and construction, and continues to grow at around 25 per cent year-on-year.

In 2015, Supply Nation opened its publicly available directory, Indigenous Business Direct, to Registered Indigenous Businesses. Registered Indigenous Businesses are businesses that are at least 50 per cent Indigenous-owned, while Certified Suppliers are businesses that are 51 per cent owned, managed and controlled by Indigenous people.

Supply Nation is the leading certification body for Indigenous business. Our rigorous registration and certification process for Indigenous-owned businesses is the most comprehensive of its kind and is based
on world best practice. The certification process includes site visits, interviews and official documentation of all claims. Our database of businesses, Indigenous Business Direct, features over 1000 Indigenous businesses spanning every state and territory and all industry sectors. Every business in the directory has had to undertake a verification process to ensure the bona fides of Indigenous ownership. This process ensures that members can be confident of Indigenous ownership in their supplier base.

Creating an environment where members and suppliers can connect, develop relationships and identify future procurement opportunities is integral to the work of Supply Nation. Supply Nation assists members with tools and strategies to embed supplier diversity within their supply chain through a tailored account management model. Supply Nation also provides support for:

  • business matching
  • opportunity briefings
  • supplier promotions
  • external training opportunities
  • the Connect conference and tradeshow
  • networking events – eg ‘Meet the Buyer/Supplier’.

With access to national and international research to inform best practice, Supply Nation is in a unique and privileged position as a supplier diversity body to facilitate partnerships with the ultimate objective of fostering commercial relationships between members and suppliers.

One of the key platforms supporting supplier diversity in its membership has been the launch of an innovative new tool – the Australian Supplier Diversity Index (ASDI). ASDI is a supplier diversity assessment tool that measures supplier diversity policy, practice and performance and produces tailored recommendations of actions that should be taken to improve supplier diversity in an organisation. As an outcome of ASDI, Supply Nation will be producing industry insights into the maturity of Australian supplier diversity for the first time within the next 12 months.

Supply Nation is a strategic partner of the federal government to support the Indigenous Procurement Policy (IPP). Launched in July 2015, the IPP has mandated targets for all government agencies to achieve with Indigenous-owned businesses, and specifically names Supply Nation’s directory, Indigenous Business Direct, as a first point of call for procurement teams searching for Indigenous-owned businesses to meet their targets.

Since the launch of Indigenous Business Direct, Supply Nation has seen a 250 per cent increase in the number of businesses listed. The IPP will increasingly drive more business to Indigenous Business Direct, and under this policy, organisations now contracting to the federal government are required to demonstrate Indigenous participation in the supply chain for all contracts valued over $7.5 million. Supply Nation is well-placed to assist businesses in sourcing and connecting with Indigenous businesses to meet their requirements. As a one-stop shop for any member of the public, procurement professional or buyer in any organisation to buy from Indigenous-owned business, it is a critical piece of the puzzle in providing visibility for Indigenous businesses to fulfil procurement opportunities.

Supply Nation’s flagship event, Connect, is an annual conference, Indigenous business tradeshow and gala awards dinner that has grown since its inception in 2010. In 2016, Connect attracted more than 1800 attendees. The Indigenous Business Tradeshow showcased 117 diverse, vibrant and innovative Indigenous-owned businesses, making it the largest tradeshow of its kind in Australia. Attended by Indigenous business owners and procurement leaders from all over Australia, this event is a unique opportunity for buyers to meet suppliers and engage with them face-to-face.

Benefits of supplier diversity

In September 2015, Supply Nation released its social return on investment report ‘The Sleeping Giant’, which articulates many positive benefits of supplier diversity and the widespread impact to Indigenous businesses and communities. For every dollar of revenue, Certified Suppliers create an average $4.41 of economic and social value. Indigenous-owned businesses employ more than 30 times the proportion of Indigenous people than other businesses. The Indigenous employment level in the supplier base of both Registered and Certified suppliers on Indigenous Business Direct is 48.5 per cent. Indigenous-owned businesses are
far more likely to employ people from their own communities, which in turn has a direct impact on improving Indigenous employment.

Certified Suppliers profiled in the report regarded their business as a vehicle to drive change for their family and the wider community. For many of these family-owned businesses, it provides a ‘safe place’ where they can remain connected to their culture and where the young can learn, pursue careers and become leaders.

A direct result of engagement with an Indigenous-owned supply enterprise is a series of related events with a cumulative effect:

  • increased employment in communities
  • increased leadership in Indigenous businesses and positive role models
  • the growth of a skilled local workforce
  • a move towards economic independence
  • development of intergenerational wealth
  • a more prosperous local economy.

Stories of business partnerships

Case study – Fortescue and Print Junction

Fortescue Metals Group Ltd (Fortescue) is a global leader in the iron ore industry. Since it was founded in 2003, Fortescue has discovered and developed major iron ore deposits and constructed some of the most significant mines in the world. Fortescue is committed to providing sustainable training, employment and business opportunities for Indigenous people and has proactively sought to establish and execute partnerships that support long-term benefits for the communities in which it operates. Fortescue’s ‘A Billion Opportunities’ program forms a critical element of the company’s approach to ending Indigenous disadvantage.

Print Junction is an Indigenous owned and operated graphic design and print business based in South Australia. The company was established almost 20 years ago, and the award-winning business has a broad range of clients across the nation.

Fortescue and Print Junction’s partnership began with a $293 print run four years ago. Fortescue first approached Print Junction at Supply Nation’s annual Connect tradeshow to discuss its capacity to produce printing for Fortescue in Western Australia. Print Junction had previous experience supplying printed items to Western Australia-based Ngarda Civil and Mining, which meant that it had the documentation and logistics in place to service the Adelaide to Perth route. The vision was to link the two businesses without exposing either party to unnecessary risks.

Despite the geographical distance, Print Junction seized the opportunities, demonstrated its capabilities and delivered on its commitments. Over time, the strong and supportive working relationship that has developed between the two businesses has enabled Print Junction to grow and invest in its business and employ local Indigenous people, demonstrating the positive outcomes of supplier diversity that flow right through to the broader community.

In 2015, Fortescue signed a three-year contract worth over $1 million with Print Junction. Earlier this year, Fortescue and Print Junction were recognised for their innovative partnership, winning the Supplier to Corporate Partnership of the Year award at the 2016 Connect Supplier Diversity Awards.

Case Study – Fortescue, Centurion and Red Dirt Transport Services

More recently, a partnership between Fortescue and Western Australian-owned and operated transport, freight and logistics company, Centurion, has created another significant opportunity for an Indigenous-owned and Supply Nation Certified Supplier in the Pilbara.

Centurion awarded a subcontract to Red Dirt Transport Services for fuel delivery to Fortescue’s Pilbara-based operational sites as part of Fortescue’s ‘A Billion Opportunities’ program. Guided by a shared vision and commitment to building sustainable opportunities for Indigenous people, Centurion included local, Indigenous-owned company Red Dirt Transport Services as part of its tender for Fortescue’s 36-month fuel delivery contract, paving the way for a mutually beneficial partnership that sets an outstanding example of building capacity through collaboration.

Conclusion

Indigenous economic development is a priority area for action in the Australian Government’s 2016 ‘Closing the Gap’ report. It recognises the reality and implications of economic participation, reinforced by cultural involvement, in ending the long-term disadvantage experienced by Indigenous Australians. The IPP and the introduction of similar state government policies illustrate the commitment to create an environment where Indigenous businesses can thrive.

Supply Nation is part of a broader ecosystem of organisations that support the growth of the Indigenous business sector and adopts a collaborative approach to working across the country with the various Indigenous Chambers of Commerce and the national peak body, First Australians Chamber of Commerce & Industry. It has strategic partnerships in place with the Business Council of Australia, Reconciliation Australia and Indigenous Business Australia.

Given its experience to date and demonstrated success in driving growth in the Indigenous enterprise sector and Indigenous economic development, Supply Nation will continue to embrace and play an integral role in shaping and transforming the supplier diversity landscape in Australia, with the ultimate objective of closing the substantial gap for Indigenous Australians.

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References

Australian Bureau of Statistics, 2010. Demographic, social and economic characteristics overview: Aboriginal and Torres Strait Islander People and where they live [online]. Available from: www.abs.gov.au/AUSSTATS/abs@.nsf/lookup/4704.0Chapter210Oct+2010

Burton R and Tomkinson E, 2015. The Sleeping Giant – a social return on investment report on Supply Nation Certified Suppliers [online], Supply Nation. Available from: www.supplynation.org.au/Library/PageContentVersionAttachment/2dae0758-6db4-4e5e-9b42-e5925e200cbc/the_sleeping_giant_web.pdf

Creative Spirits, 2016. Aboriginal population in Australia [online]. Available from: www.creativespirits.info/aboriginalculture/people/aboriginal-population-in-australia

Department of the Prime Minister and Cabinet, 2016. Closing the gap – Prime Minister’s report 2016 [online], Australian Government, Canberra. Available from: closingthegap.dpmc.gov.au/assets/pdfs/closing_the_gap_report_2016.pdf

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