It is perhaps a coincidence that many of the companies cited as exemplars of good practice in SD are in the financial services sector. For instance, financial companies registered on the numerous corporate SD programmes in the UK (Business in the Community, European Supplier Diversity Programme and MSDUK, for instance) include Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley. And many of these companies are facing record losses because of the current problem - Citigroup made a $9.8 bn (£5bn) net loss for the last three months of 2007 and Merrill Lynch made a net loss of $7.8bn (£3.9bn) in 2007, for example. Moreover, many of these companies seeking to build a business case for diversity appear to be at a particular risk because of the exposure to global market conditions linked to capital flows.

Typically, some organisations deal with credit crises through making redundancies. Not surprisingly, many of the above mentioned companies have recently announced redundancies in either the UK or world-wide – Bank of America (3,000), Citigroup (1,000), Credit Suisse (500), Deutsche Bank (300), Lehman Brothers (1,200), and Morgan Stanley (6,000), to name a few. And then there are the SD advocates in the non-financial service sector – Cadbury Schweppes, Ford, and IBM all have made job cuts and/or shut factories in the UK last year, for instance.

Leaving aside the accuracy of these figures it is important to recognise that the current global economic and credit crises may not necessarily impact negatively on SD – the link between sacking a derivatives trader and not using a local BME food supplier is not clear. In fact, it could be argued that the flexible and innovative nature of a diverse supply chain may actually provide (or at least contribute to) a solution to the current economic crisis.

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.

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