When it comes to the global economy, women-owned businesses are becoming increasingly critical to the supply chain. Despite the challenges they face, including limited access to finance, lack of networking opportunities, and gender-based discrimination, women-owned businesses have proven to be highly innovative and competitive. In fact, according to a research by McKinsey & Company found that if women were to participate in the economy identically to men, they could add as much as $28 trillion or 26 percent to annual global GDP in 2025. This highlights the significant economic benefits of promoting women’s participation in the workforce and supporting women-owned businesses.
With these impressive statistics, it’s no wonder that more and more organizations are seeking ways to incorporate women-owned businesses into their supply chains. In this article, we’ll explore the challenges faced by women-owned businesses in the global supply chain, the benefits of procuring from them, and practical steps you can take to start sourcing from these businesses.
Challenges faced by women-owned businesses in the global supply chain
Women-owned businesses in the global supply chain face several challenges, including limited access to finance, lack of access to markets, and gender discrimination. IFC has estimated that worldwide, a $300 billion gap in financing exists for formal, women-owned small businesses, and more than 70 percent of women-owned small and medium enterprises have inadequate or no access to financial services. They also face challenges in accessing markets due to their limited networking opportunities, language barriers, and cultural biases.
Gender discrimination is another significant challenge faced by women-owned businesses in the supply chain. This includes discriminatory procurement practices, such as bidding requirements that favor large and established firms over smaller and newer ones, which disproportionately affects women-owned businesses.
Benefits of sourcing & procuring from women-owned businesses
Procuring from women-owned businesses can benefit your organization in several ways, with real numbers to support these benefits:
- Improved quality: a WeConnect research has shown that women-owned businesses often outperform their male-owned peers in areas such as product quality and customer service. A study of small and medium-sized enterprises (SMEs) in the United States found that businesses owned by women scored higher than those owned by men on measures of product quality, customer satisfaction, and overall performance.
- Innovation: a report by McKinsey & Company found that companies that procure from women-owned businesses are more likely to be innovative and to introduce new products and services. Specifically, the report found that supplier diversity can lead to more innovation and improved financial performance.
- Job creation: According to a report by EY Global Job Creation Survey of 2,673 global entrepreneurs, women are outpacing men in job creation with an average expected growth rate of 10.9 percent compared with 8.3 percent among male entrepreneurs.
In addition to these benefits, procuring from women-owned businesses can help your organization meet its diversity and inclusion goals, build its reputation as a socially responsible company, and contribute to a more equitable and sustainable supply chain.
How can you start procuring from women-owned businesses?
To start procuring from women-owned businesses, you can take the following steps:
- Identify women-owned businesses in your supply chain: You can start by identifying women-owned businesses in your supply chain. This can be done by looking at supplier databases, directories, and business networks.
- Evaluate women-owned businesses: Once you have identified women-owned businesses, you can evaluate them based on their products or services, quality, cost, and delivery time.
- Establish relationships with women-owned businesses: You can establish relationships with women-owned businesses by attending networking events, conferences, and trade shows. This can help you build trust and gain a better understanding of their capabilities.
- Incorporate gender considerations into procurement policies: You can incorporate gender considerations into your procurement policies by including language that encourages the inclusion of women-owned businesses in bidding processes and evaluating proposals based on their gender impact.
Procuring from women-owned businesses can benefit organizations in several ways, and by taking the steps outlined in this article, organizations can start procuring from women-owned businesses and contribute to a more inclusive and equitable supply chain. While there are challenges to overcome, organizations that prioritize diversity and inclusion can help to create a more sustainable and prosperous future for all.