engage magazine issue 006/\'08 - Page 20

20 OPINION Supplier Diversity But then it must be appreciated that what is being played out at local, regional, national and international levels is driven by the interconnectedness of the world’s economy, or as Manuel Castell’s would puts it, ‘the network society’. And markets do not necessarily act as rational actors - the boardroom of the blue chips may not automatically think of SD as a solution. Put differently, rationalising the supply chain may be seen as another means of reducing costs to help temper further negative impacts on companies and their balance sheets. For the SD agenda, then, the impact of the current crisis is unclear. Nonetheless, whilst recognising some of the benefits of working with global businesses, SMEs must appreciate some of the challenges that are associated with them – the amount of time it takes to win contracts; the hindrance of the ‘chain of command’ within large organisations on who actually makes the decision to award a contract; the need to make sacrifices to meet short-term goals of clients; and reduced profit margins through master-vendor contracts. As an aside, but an important one, the public sector may provide an opportunity to ensure that the SD agenda remains: the use of S106 agreements to promote local labour, the drive to encourage supply chain efficiencies, and the promotion of area-based regeneration (such as LEGI) will all help maximise public investment in local economic development and sustain employment and enterprise. Taken together, the fundamental lesson for SMEs looking to the SD agenda as part of a growth strategy is to appreciate the importance of place, space and geography in supply chains, and how global capital flows impact on everyday business decisions. Put another way, SMEs and diverse businesses need to continually consider their exposure to clients and customers (local, regional, national and international) and ensure their own ‘diversity of buyers’ is maintained. Dr Kemal Ahson is the Managing Consultant of Lifeworld Ltd. For further information about economic development, supplier diversity and procurement he can be contacted on 020 7937 0919 or kemal@lifeworld.info engage | uk ISSUE SIX 2008