The Impact of Diversity and Inclusion in Supply Chains

In this conversation, I spoke to Mayank Shah of MSDUK. The company supports ethnically diverse business owners to create amazing impacts in their communities through diversifying supply chains.
Photo of Mayank Shah

Speaker 1: Welcome to the Inclusive Growth Show with Toby Mildon, future-proofing your business by creating a diverse workplace.

Toby Mildon: Hey there, thank you ever so much for tuning into this episode of the Inclusive Growth Show. I’m Toby Mildon, and today I’m joined by Mayank Shah and Mayank is one of the founders, and he is the chief executive of MSDUK. Now, MSDUK focuses on looking at equality and diversity within procurement and supply chains, and I first came across MSDUK when I was working at the BBC, and I was talking with our procurement department to look at ways of the corporation engaging with a diverse range of potential suppliers and how we could improve the procurement process so that we could get more diverse suppliers into our supply chain and organisations that we partner with, so that’s how I first came across MSDUK. So I’m really chuffed to be able to sit down with Mayank and just explore what MSD does and why he established the organisation, so Mayank it’s great to see you, thank you for joining me.

Mayank Shah: Thank you so much Toby it’s my pleasure to be on this podcast, and when social entrepreneurs like me are focusing and I’m passionate about something, this is a great medium to share our passion. Share and inspire others to do the same. So thanks for having me on the show.

Toby Mildon: You’re very welcome, and I think let’s begin by exploring exactly what MSD does, ’cause I know that you’ve got three hubs really. You’ve got like the Innovation Hub, the Knowledge Hub, and the Procurement Hub, and people can join your organisation, so can you just explain to me a bit more about what you do.

Mayank Shah: Absolutely. If I go back nearly 20 years and move to 2002, I came from India, born and brought up in Delhi and came as a student over here. Before that in India, I had nearly 15 years of experience of running my own small business. When I came to this country as an immigrant, as a student, gradually I moved through doing my PhD on this whole area of supplier diversity that we are talking about, and I could see the challenges that immigrant entrepreneurs or all minority businesses face when it comes to getting into the mainstream economy. My PhD was on this area, and it took me to America where supplier diversity is mandated for the last 50 years.

Mayank Shah: I studied that whole history of American history of supply diversity, and while doing PhD, there was a growing interest in American corporations to extend their programme outside of America and UK was their first choice of sort of interest. They asked me while I was there on my research there, to say, “Can you can help us in connecting with ethnic minority businesses, as part of our supplier diversity program in the UK, can you set up an organisation that represents minority businesses, identify those businesses and connect them with our procurement teams?” And that’s how MSDUK was born in 2006, we set it up as a not-for-profit organisation. It was initially purely a membership network, where big companies who wanted to diversify their supply chain, be more inclusive of under-represented businesses in their supply chain.

Mayank Shah: They wanted a network or an organisation that can identify those businesses from all across the UK and connect them with their procurement team, so it started as almost like a match-maker where we matched buyers and supply… Demand with supply, but gradually it has moved on, we have over the last 16 years worked with more than 200 corporations, both public and private sector, helping them in their diversity journey in supply chain, and also represented over 3000 ethnic minority businesses from all across UK from Scotland to Albertine to South East, and over the last 20 years, more than a billion pound worth of contracts have been generated for minority businesses. So that’s what we are.

Toby Mildon: That’s such a huge impact. I’d like to go back to the point that you were making around supplier diversity being mandated in the US versus the UK, so what are they doing in the US that we’re not doing in the UK?

Mayank Shah: If you look at the history of supplier diversity in the US, it all started after the racial riots in the ’60s, during the time of Martin Luther King. And the racial riots that happened impacted the Black community over there in such a way that… And the biggest sort of… You know what? Take an example, Detroit was the hardest hit city because it had a majority population of Black community, and they were… Lives were really bad and that’s where… But also that was home to the four automakers; Ford, Chrysler, General Motors and Toyota.

Toby Mildon: Yeah.

Mayank Shah: And I think it all started there where the leadership of those four automakers came together to say, “What can we do to stop this never happens again?” And they thought that the best way of doing this is to encourage entrepreneurship in those communities so that it increases the disposable income, it has a big impact, jobs are created, and that leads to better health access, so that was the model that it all started in 1960s. Late ’60s, and then in 1972, President Nixon came up with a public law that mandated that any private sector organisation contracting with federal government anywhere in the US, had to apportion 8% of their contract spent with minority businesses. Gradually over the years that has expanded into also, including what they call women-owned businesses, disabled-owned businesses, so mostly the undersold, under-represented business communities.

Mayank Shah: It had a big impact, I have seen major minority businesses turning over billions of dollars, they started their journey 50 years back, and they started with… From a garage and now they have become multi-billion dollar businesses, and the impact they have on the local community by creating jobs, creating wealth, is immense.

Toby Mildon: Yeah.

Mayank Shah: Unfortunately, not only in UK, but all across Europe, we don’t have mandate, we talk about equal opportunities.

Toby Mildon: Yeah.

Mayank Shah: But I certainly think that there are advantages of having mandate, but also it has disadvantage, because sometimes it leads to some bad procurement practices. What we want is a much more fairer opportunity and I always think supplier diversity is about opening doors and creating a level playing field. You allow under-represented businesses to compete with others and let the best one win the business.

Toby Mildon: Yeah. Which is similar to how organisations approach their recruitment. When they’re hiring people, it’s open the doors, create those opportunities, create a level playing field, so that everyone is competing with equal chances really.

Mayank Shah: Absolutely.

Toby Mildon: So, I know this… You’ve spent the last couple of decades working on this, so this might feel like an over-simplified question for you, given your experience. But why should businesses be thinking about diversity within their supply chain and the organisations that they partner with?

Mayank Shah: I think there’re both social reasons and economic reason. When you talk about social, last two years of pandemic, we have seen… We have all seen about the social injustice and economic injustice, racial injustice happening, but also growing inequality in our societies. Where riches… Rich are becoming richer and poor are becoming more poor. So, as a corporate organisation, when you look at how can you make an impact on that? By encouraging entrepreneurship and encouraging entrepreneurs to try win those disadvantaged communities. You are tackling a big social issue and you’re going to make a big impact, and as a responsible corporate citizens, everyone has that responsibility. But at the same time, it has got its commercial economic benefit. We again, pandemic has shown how supply chains were disrupted all around the world, just in case of PPE. What Amnesty UK did at that time was created a marketplace where we had so many suppliers, minority businesses who were offering PPE products. And that basically became lifeline for so many of purchasing organisations, because they could source locally. What supply does, it does is it gives you an alternate supply chain option.

Toby Mildon: Yeah.

Mayank Shah: Also, being an immigrant entrepreneurs, they are more hungry to become more successful. So, you get better service, more competitive rates. But also different ideas, different thought process that these people from different backgrounds bring, how they run their businesses is totally different. And I think those are the real benefits driving innovation, driving competitiveness is the economic advantage of supplier diversity.

Toby Mildon: Yeah. I love what you’re saying, because it reminds me of what I say to my clients in trying to link diversity and inclusion back to something bigger than their organisation, an impact that they can make in their community or in the world. And I get my clients to think about the United Nation’s sustainability goals. And one of those goals, which is actually why I set up my business, which was about decent work and economic growth, which is exactly what you’re talking about, as well as what you seeing in inequality is that’s a… That’s a separate goal.

Toby Mildon: But yeah, I think it’s quite useful for businesses to think about how they are impacting kind of society at large. And in another podcast interview, I interviewed a guy called Mark Lomas, who was the head of Diversity and Inclusion for HS2, and he was talking about the role that HS2 was playing in really reducing inequalities within the rail construction industry, because HS2 itself is a fairly multi-sized organisation. But actually, they’ve got a huge footprint in terms of the organisations and the suppliers that they are working with to actually deliver the HS2 project.

Mayank Shah: Absolutely. And you know, a good example, and I’ve worked with Mark very closely, HS2… The critical thing about HS2 is that the whole new line connects south and north, goes through some of the most deprived communities and areas in this country. And by working with those communities, giving them opportunities to become part of the supply chain, from a local catering to corporate wear to some simple things, even those can be done to engage local communities throughout that railway line, the new HS2 line; that’s going to have a major impact on communities, social impact, economic impact.

Toby Mildon: Yeah. ‘Cause actually the vast majority of people in the UK work for smaller medium-sized companies, isn’t it?

Mayank Shah: Yes.

Toby Mildon: It’s… Actually, one of my… Again, one of my former podcast interviews, I interviewed the Chief Executive of the CIPD, Chartered Institute of Personnel and Development, and he was making the point that quite often, diversity and inclusion is talked about by big, huge organisations, the Deloitte’s and the KPMG’s of the world. But actually, we can make a profound impact through engaging small and medium sized businesses as well.

Mayank Shah: That’s a very good point, because last year we did a massive, one of the largest ever research anyone has conducted in this country to analyse how many ethnic minority-owned businesses are there in this country, what they had sort of contribution to the UK economy and the results that came, and we use artificial intelligence, because data capturing is very… We are very bad in data capturing, there’s a lack of data, and government doesn’t monitor the ownership of the business in this country, so we used artificial intelligence and data scientists, a team of data scientists to basically look into the six million businesses that are registered on Company House. And you won’t believe but one million businesses out of six million registered on Company House are ethnic-minority owned. And…

Toby Mildon: Wow.

Mayank Shah: They employ three million people, which is 10% of UK’s workforce, contributing 78 billion. So exactly, these are all small and medium-sized businesses who are creating jobs in our local economies. And I always say that what diversity brings… You talked about recruitment. We at MSDUK now have a team of 23. We’ve grown from 6 to 23 in two years’ time. And I’m so proud to say that we have… 80% of that staff is women.

Toby Mildon: Yeah.

Mayank Shah: And we have… Out of 23 people that we have in our team, they represent 14 different nationalities. Now that diversity of thought, diversity of background, brings so much innovation into MSDUK.

Toby Mildon: Yeah.

Mayank Shah: And so, I always say, when people ask about the business case for diversity, I really get angry sometimes to say, “There’s no need for us to discuss about business case.” There is a business case that is there. The different ideas, different thoughts, people of different backgrounds bring so much to the table.

Toby Mildon: Yeah, absolutely. I agree with you that people asking for the business case sometimes gets my go as well. [chuckle] And I was speaking to a Diversity and Inclusion Consultant recently, who said, often her response, when she gets asked for the business case is, “Show me the business case for not having diversity in your organisation, and then we can talk.” Because Stephen Frost, who is a Diversity and Inclusion Consultant…

Mayank Shah: Yes, I know him very… He was one of the… For six… For a year, he was a Chair of our board of directors when he was at KPMG.

Toby Mildon: Exactly. I mean, he’s a great guy. And one of his sayings is that, “Diversity is a given, but inclusion is a choice.”

Mayank Shah: Absolutely.

Toby Mildon: So based on the research that you’ve done, we’ve got that diversity. Well, so one in… So one in six businesses…

Mayank Shah: One in six businesses.

Toby Mildon: Yeah. Owned by somebody of a minority background. So that’s a given that’s there in businesses should be engaging with those suppliers. So if the person listening to us right now gets this, it’s a no-brainer for them, and they want to influence their procurement person or procurement department, on getting more diversity into the supply chain, trying to level the playing field, what should they do?

Mayank Shah: The easiest way is to go on our website. There are a number of resources. We have done some white papers for CIPS. We have done… We have supplier diversity toolkits, a number of podcast, etcetera. And it’s all there on our website, which is www.msduk.org.uk. You have a contact form over there. If they want to have further discussion about what we can do to help them set up a roadmap for supply diversity, we have a Centre of Excellence in supplier diversity that helps them, organisations, create a roadmap for supplier diversity. But also, we give them access to some of the most amazing innovative young talent also. Because you mentioned in the beginning about the innovation hub. That’s a hub where we connect with the young entrepreneurs from colleges, universities across the country, with brilliant ideas, and innovative ideas, and we give them a platform to present those ideas to the industry. Plus, we have got more than 3000 high-growth businesses that we have access to. So we can help a organisation not only put together a roadmap, get access to best practice, but also we provide them access to some of the amazing entrepreneurs. So the best way to contact is go on our website, and on www.msduk.org.uk.

Toby Mildon: That’s fantastic. Yes, so definitely, the person listening to us, go in your website and… I mean, there’s tons of information and resources on there. So it’s definitely worth logging on. And before we go, I think we’ve already kind of answered this question, but it’s something that I ask all of my guests. But I want to hear it from you in your own words, that what does inclusive growth mean for you?

Mayank Shah: You know, I go back to a famous quote from Reverend Jesse Jackson, which says, “When everyone is included, everyone wins.” And I think, for me, inclusive growth is about including everyone, so that everyone has a fair share in the economy, fair share in the wealth. And supplier diversity does exactly the same, creating a fairer economy, fairer society, where everyone is included, so that everyone can prosper.

Toby Mildon: Brilliant. Well, Mayank, thank you ever so much for joining me on this episode of the Inclusive Growth Show. And thank you for tuning into this episode. I hope that you’ve enjoyed my conversation with Mayank today. And if you do want to learn more about the work of MSDUK, then please do go to their website, which is, msduk.org.uk. Thanks ever so much for tuning in, and I look forward to seeing you on the next episode, which will be coming up very soon.

Speaker 1: Thank you for listening to the Inclusive Growth Show. For further information and resources from Toby and his team, head on over to our website at mildon.co.uk.

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