whatwouldyouliketogrow.com.au
Department of Education,
Employment and
Workplace Relations
Final Report
October 2011
How can the
AIMSC model be
strengthened to
ensure future
success and
sustainability?
Post-implementation
review of the
Australian
Indigenous Minority
Supplier Council
Disclaimer
This report has been prepared by PricewaterhouseCoopers Australia (PwC) at the request of the Department of Education,
Employment and Workplace Relations (DEEWR) in our capacity as advisors in accordance with the Terms of Reference and the
Terms and Conditions contained in the Work Order dated 24 May 2011 issued under the DEEWR Research and Evaluation Panel.
This document is not intended to be utilised or relied upon by any other persons other than DEEWR, nor to be used for any
purpose other than that articulated above. Accordingly, PwC accepts no responsibility in any way whatsoever for the use of this
report by any other persons or for any other purpose.
The information, statements, statistics and commentary (together the “Information”) contained in this report have been prepared
by PwC from publicly available material and from material provided by DEEWR and the Australian Indigenous Minority Supplier
Council (AIMSC). PwC has not sought any independent confirmation of the reliability, accuracy or completeness of this
information. It should not be construed that PwC has carried out any form of audit of the information that has been relied upon.
Accordingly, whilst the statements made in this report are given in good faith, PwC accepts no responsibility for any errors in the
information provided by DEEWR or AIMSC or other parties nor the effect of any such error on our analysis, suggestions or report.
Please note – throughout this report we have used the term ‘Indigenous’ to mean ‘Aboriginal and Torres Strait Islanders’ for
consistency with the terminology used by DEEWR and AIMSC in relation to this program.
PwC recognises Aboriginal and Torres Strait Islander peoples as the original custodians of Australia.
We are committed to achieving equality between Aboriginal and Torres Strait Islanders and other
Australians, helping create positive and lasting change in our communities.
Liability is limited by a scheme approved under Professional Standards legislation
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Contents
Disclaimer
1
Abbreviations
1
Executive summary
2
1
Introduction
6
2
About AIMSC
8
3
AIMSC achievements
16
4
Defining success
26
5
Financial sustainability
35
6
Recommendations
44
Appendix A
References
50
Appendix B
Consultation list
51
Appendix C
Summary of consultation themes
52
Appendix D
AIMSC Board members
58
Appendix E
AIMSC expenses
59
Appendix F
Member and suppliers by industry
60
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Abbreviations
Abbreviation
Description
AIMSC
Australian Indigenous Minority Supplier Council
CAMSC
Canadian Aboriginal and Minority Supplier Council
CEO
Chief Executive Officer
CPG
Commonwealth Procurement Guidelines
DEEWR
Department of Education, Employment and Workplace Relations
FTE
Full Time Equivalent
IB
Indigenous Businesses
IBA
Indigenous Business Australia
IBCA
Indigenous Business Council of Australia
ICN
Industry Capability Network
IEP
Indigenous Employment Program
IINSW
Industry and Investment New South Wales
IOP
Indigenous Opportunities Policy
KPIs
Key Performance Indicators
MSDUK
Minority Supplier Development United Kingdom
MSDC
Minority Supplier Development China
NMSDC
National Minority Supplier Development Council
SASDC
South Africa Supplier Diversity Council
SDC
Supplier Development Council
SME
Small and Medium Enterprises
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Executive summary
AIMSC is a not-for-profit organisation set up to connect corporate Australia and government agencies with Indigenous
businesses. In doing so, AIMSC seeks to contribute to the creation of a sustainable, vibrant and prosperous Indigenous enterprise
sector in Australia by providing a direct business-to-business procurement link and facilitating financial and business
development opportunities.
There is significant goodwill towards the AIMSC pilot project expressed in consultations conducted for this report with
government agencies, corporate Australia and the broader community. There is also significant momentum, evidenced by the
achievements AIMSC has been able to record in less than two years of operation. These achievements are notable and suggest that
the AIMSC approach to facilitating Indigenous businesses into the supply chains of government and corporate Australia has merit
as part of a broader approach to addressing Indigenous economic and employment disadvantage.
AIMSC was set up in September 2009 as a three-year pilot project based in Sydney through a funding agreement with
Department of Education, Employment and Workplace Relations (DEEWR). However, as detailed in this report, AIMSC has
already exceeded many of the performance indicators set out in the funding agreement before the end of year two.
In preparation for the conclusion of the pilot project, this review focuses on the achievements AIMSC has recorded to date, a
framework for considering future success, and an analysis of options for AIMSC to become financially independent from
government funding.
In conducting this analysis we have drawn upon information and data provided by DEEWR and AIMSC, reviewed key literature in
relation to minority supplier development models and consulted with key stakeholders (including organisations currently
participating in the pilot). Through the consultation process we have also identified a range of recommendations that AIMSC may
wish to consider in the final year of the pilot or in the development of a post-pilot AIMSC.
Key findings
AIMSC is recognised as a well-governed organisation with strong leadership and dedicated staff. Despite only being in operation
for two years, AIMSC has achieved some significant successes. These include recruiting more than 100 corporate and government
members, certifying more than 80 Indigenous businesses, and facilitating $6.4 million in transactions between AIMSC members
and certified suppliers. AIMSC has also delivered several successful networking and facilitation events, including a large trade fair
in 2010 for members and suppliers. A summary of AIMSC’s key achievements is shown in Table 1 against their existing targets.
Table 1 Summary of AIMSC achievements
Current performance
Large members
Small members
Indigenous businesses certified with AIMSC
Total value of transactions
Indigenous employment (FTE) in suppliers
Performance to date
(as at June qtr 2011)
51
57
83
$6.4 million
305
Current year target
(year 2)
30
3
80
$10 million
111
Overall target
59
6
120
$20 million
221
Source: AIMSC Quarterly Report Ending 30 June 2011 & DEEWR/AIMSC Funding Agreement
In the last 12 months in particular, interest in – and demand for – access to the AIMSC model has increased significantly. This is
likely to reflect in part the rollout of the Indigenous Opportunities Policy and changes to the Commonwealth Procurement
Guidelines creating incentives for Australian companies to engage Indigenous Australians in training and employment as well as
making it easier for Australian Government departments to procure from small and medium sized Indigenous businesses.
This increased demand has created pressures on and challenges for AIMSC in delivering against the targets set and has resulted in
some areas for future focus and improvement if AIMSC is to meet these targets. These include:

increasing the value of facilitated transactions

increasing the overall number of suppliers as well as achieving a better balance between members and suppliers by
industry and geographic location, and

improving the distribution of transactions across a broader range of suppliers.
Meeting these challenges, and therefore achieving outcomes across all of the key performance indicators (KPIs) within the
funding agreement, will require effort and the deployment of resources. While these challenges highlight the potential for
improvement in the AIMSC business model, it should be acknowledged that some of these ‘challenges of success’ are a result of
the faster than expected growth of AIMSC.
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A future success framework for AIMSC
While there are still many elements of the existing KPI framework to be met over the final year of the pilot project, AIMSC’s rapid
growth has required the development of a framework for consideration of the success of AIMSC beyond the pilot project (see
Figure 1). The framework developed seeks to align the intended outcomes sought by AIMSC and key stakeholders (ie suppliers,
members, Indigenous Australians and the Australian Government). It also recognises that some of the objectives pursued by
AIMSC are more likely to be achieved over the longer term and that, in some cases, the outputs and outcomes delivered by AIMSC
are only one component of desired broader community impacts.
The success framework is also supplemented by a matrix of KPIs that sit within each of the five elements of the AIMSC process
logic (recruitment, opportunity, transaction, flow-on impact, financial sustainability) in order to track the extent to which the
overall outcomes are being achieved.
Figure 1 Overarching success framework
Achieving the ‘success’ described in this framework is a significant task. Despite the commendable achievements by AIMSC to
date, achieving success in this context is a long term task. In our view, AIMSC is currently in the ‘recruitment’ to ‘opportunity’
stage, with the financial sustainability of AIMSC and the broader Indigenous business sector some years away.
It is also important to recognise, that achieving the long-term success set out in the framework described above is not a task
AIMSC can achieve on its own. A vibrant, sustainable and prosperous Indigenous business sector depends on a range of factors,
such as government policy, community aspirations, the availability of seed funding, access to capital and the extent of
entrepreneurship across Indigenous Australia.
In addition, a critical element in achieving success is ‘capability building’ which can support suppliers to move from the
opportunity stage to the actual transaction stage. AIMSC is however, only one organisation that is operating in this space, with
organisations such as small business training providers and Indigenous chambers of commerce also offering a range of services to
support Indigenous businesses. Accordingly, AIMSC should seek to complement and leverage existing services.
Achieving financial independence and sustainability
Achieving financial independence (from government funding) and sustainability is a goal of both DEEWR and AIMSC. As such,
this report also considers some options for AIMSC in embarking on the path to financial viability. The options identified include
the introduction of a fee model, alternate government funding, growing sponsorship revenue, introducing new services, and
reducing costs.
In our view, the introduction of a fee model (for both members and suppliers) represents the most prospective and stable option
for generating revenue under a model of financial independence, and so has been explored in more detail in this report, including
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Introduction
consideration of different fee structures (flat versus tiered for members and cost recovery versus nominal for suppliers) and
different fee levels (based on ‘willingness to pay’ by members and suppliers identified through consultations).
The options analysis illustrates that under some fee structures, financial independence is a viable option for AIMSC on the basis
of the existing member and supplier base. However, the level at which fees are set, and the timing of their introduction is critical.
Consultations showed that while some larger members would consider paying membership fees, many members reported that
they did not yet see benefits from the AIMSC model to justify significant fees. Suppliers on the other hand were generally more
willing to pay a fee for certification, citing fees in the range of $200 - $1,000.
In our view, while there is the potential to introduce member and suppliers fees this would need to be implemented with caution
and should ensure that any fees for suppliers are modest and fees for members are scaled to value such that they do not deter
membership during the growth phase, recognising that some organisations are not yet willing to pay significant fees. This is
critical as the central proposition of the AIMSC model requires a large number of procurement-willing members and
procurement-ready Indigenous suppliers. Accordingly, AIMSC is likely to require some additional funding support from
government for its operations in the short to medium term post-completion of the pilot project, if AIMSC’s future growth and
development nationally is to be expedited.
Recommendations on the AIMSC operating model
During the review, particularly in consultations with key stakeholders (including AIMSC), a number of areas for potential
improvement to the AIMSC model were identified. These are presented across four areas of AIMSC’s operations – strategy,
people, systems, and processes.
The ‘strategy’ recommendations recognise that at the core of the model AIMSC’s central value proposition is its ability to connect
corporate and government members with Indigenous suppliers in order to secure business transactions. Accordingly, these
recommendations suggest ways in which AIMSC can improve the size, variety and business readiness of certified suppliers as well
as how they can leverage this growth to support AIMSC’s moves towards increased financial independence.

Central to the successful execution of the AIMSC model is offering access to a wide range of business-ready suppliers to
corporate and government entities who want to enter into transactions with Indigenous businesses. For this model to work,
the supplier base must adequately reflect the industry base and geographic location of the member organisations. AIMSC has
not yet achieved this balance. Accordingly, we recommend AIMSC implement strategies that target growth in the supplier
base by industry, size and location.

In the context of seeking to develop a vibrant and sustainable Indigenous businesses sector, AIMSC (and/or DEEWR) should
investigate the number of Indigenous businesses which fall in the 50 to 51 per cent Indigenous owned category to understand
the type of Indigenous organisations that are currently ineligible for AIMSC services and their capacity to move to a 51 per
cent business structure. An appropriate time to do so would be at the conclusion of pilot but prior to implementing eligibility
criteria of a post-pilot AIMSC.

As a key goal of both DEEWR and AIMSC is to achieve financial sustainability in the model and reduce the reliance on
government funding, we would suggest that a cautious introduction of membership and certification fees is possible,
providing that these fees are set at levels that do not discourage growth.

A more comprehensive and targeted communications strategy, including the publication of ‘success stories’ can assist
members to identify opportunities within their own organisation as well as help suppliers proactively pursue new
opportunities. It can also serve to articulate to members and suppliers the benefits and value of their association with AIMSC,
which will become more important if a fee model is introduced.

Early evidence from consultations suggests that the procurement-readiness and competitiveness of some suppliers is mixed.
As there are a range of established organisations that provide business support, training and mentoring services (for all
businesses and in some cases specifically for Indigenous businesses) we recommend that AIMSC develop strategic
partnerships that will ensure more suppliers can access capability building assistance.

During consultations, many members identified that they were seeking ‘low risk’ transactions with AIMSC suppliers
reflecting concerns about their capacity to deliver the quality and/or quantity of goods or services required. To achieve a
vibrant and prosperous Indigenous business sector through embedding them in the supply chains of large organisations in a
sustainable way, AIMSC will need to identify ways to support suppliers ‘move up the procurement value chain’. One way to
do this may be through assisting suppliers to identify partnerships to secure more complex contracts.
The ‘people’ recommendations seek to capitalise on the faster than expected growth of the model to create more opportunities for
Indigenous business owners – both within the AIMSC organisation as well as through a greater reach of the external network.

AIMSC has almost outgrown the proposed reach of the pilot project with members and suppliers across many jurisdictions.
This faster than expected growth should be capitalised on by establishing a presence in other States by partnering with an
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established local organisation. A partnership approach can lower the cost to AIMSC of expansion. However, this would need
to be structured in a way that ensures AIMSC maintains its independence.

As part of a broader commitment to developing Indigenous Australians with senior executive experience through the project,
AIMSC should consider making the supplier positions on the AIMSC Board available, on a rotating basis, to Indigenous
owners of certified suppliers. This will provide more Indigenous business owners with experience participating in corporate
structures at the highest level.
The ‘processes’ recommendations focus on considerations related to the service components of the AIMSC model, in particular
processes around networking events and supplier support.

While AIMSC’s core business is to facilitate introductions between members and suppliers, consultations identified several
barriers to a greater number of transactions taking place, including organisation specific procurement practices and supplier
capacity to maximise networking opportunities. AIMSC should consider expanding support programs to members and
suppliers to address these challenges and maximise transactions arising out of the introductions, while remaining within
their core role of ‘facilitation’.

In developing and preparing for networking events, AIMSC resources should focus on ensuring the best possible match
between members and suppliers which consultations have highlighted is a priority for participating organisations.
The ‘systems’ recommendations focus on simple improvements identified during consultations that may assist members and
suppliers to proactively identify procurement opportunities as well as putting in place systems to reduce the administrative
burden for members, suppliers and AIMSC staff.

To allow more members and suppliers the ability to proactively seek out new opportunities, AIMSC should improve the
functionality of its website to enable members and suppliers to search by industry and location. Further improved website
functionality could also streamline processes for members, suppliers and AIMSC staff through the online lodgement of
quarterly reports and registration for AIMSC events.

As the success of the AIMSC model depends fundamentally on the ability to recruit and retain members and suppliers,
AIMSC should consider formalising a feedback system, such as an annual survey, to understand ‘customer satisfaction’. This
can also provide a mechanism for members to provide feedback, via AIMSC, on how suppliers can improve their engagement
and services.
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Introduction
1
Introduction
PwC was engaged by the Department of Education, Employment and Workplace Relations (DEEWR) to undertake a postimplementation review of the Australian Indigenous Minority Supplier Council (AIMSC) pilot program.
AIMSC was established in 2009 with support from DEEWR to commence the pilot program. DEEWR committed $3.7 million
under a three-year funding agreement from the Indigenous Employment Program (IEP) to assist the AIMSC pilot. This
investment is part of the Australian Government’s commitment to close the gap on Indigenous employment. The postimplementation review commenced at approximately the mid-way point of the three-year pilot program.
AIMSC is an organisation created to connect corporate enterprises and government organisations with Indigenous businesses
across Australia. AIMSC’s mission is to contribute to the creation of a sustainable, vibrant and prosperous Indigenous enterprise
sector in Australia.1 AIMSC provides a direct business-to-business procurement link between corporate and government members
and certified Indigenous businesses, facilitating financial and business development opportunities. AIMSC is based on the
minority supplier development council model initiated in the United States in the early 1970’s, adopting many of the same
guidelines, criteria and processes.
The scope of the post-implementation review undertaken by PwC was to:

identify the success factors of the current AIMSC pilot project

consult with key AIMSC stakeholders (internal and external)

recommend ways in which the AIMSC model can be strengthened, and

assess the feasibility of, and options for, AIMSC becoming independent of government funding.
This report reflects our response to the project requirements.
1.1
Our approach
Our approach to undertaking the post-implementation review of AIMSC has involved:

Desktop review of key documents and information – we reviewed a range of documents and information to
undertake this review. This included government policy documents, AIMSC business plans, IEP guidelines, DEEWR and
AIMSC contractual agreements and AIMSC quarterly and annual reports. A full reference list is included at Appendix A.

Data analysis – we analysed key AIMSC data sources, such as quarterly reports, annual reports, business plans and
strategy documents and other financial information, to identify early achievements and support our consideration of
financial sustainability. This included data on total member and supplier numbers, events held, transaction data and
other information made available to us in relation to revenue and expenses.

Stakeholder consultations – consultations (face-to-face and via telephone) occurred with key AIMSC stakeholders in
the course of the review. This included consultations with: seven Australian companies and government agencies that are
members of AIMSC (hereafter referred to as members); six Indigenous businesses that have been certified and admitted
into the AIMSC program (hereafter referred to as suppliers); four indigenous business organisations; four with members
of the AIMSC Board; two with AIMSC staff, and one with the DEEWR contract management team. A full list of
stakeholders consulted and a summary of the key themes arising out of the consultations is contained in Appendix B.

International review – we also undertook a desktop review of other countries operating a minority supplier council,
such as the United States of America (USA), Canada and the United Kingdom (UK). This desktop review was
supplemented with three international teleconferences with staff of the Unites States National Minority Supplier
Development Council (NMSDC), including the Global Link division, as well as a former NMSDC corporate board
member.
1 www.aimsc.org.au, accessed 20 August 2011
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1.2
Limitations
The analysis and results presented in this report should be cognisant of the methodological limitations detailed below.

Stakeholder participation – stakeholder participation in this review was voluntary and drawn from a list provided by
AIMSC. These members and suppliers indicated they would, or may, be interested in participating in this review through a
feedback form at an AIMSC networking event. While we did seek to broaden this list by targeting certain members from the
publicly available AIMSC member list, we were unable to do this with AIMSC suppliers as this list is commercial-inconfidence and not available to the review team. We are conscious that this method of selection resulted in a limited list of
stakeholders whose select views have partly informed this report. In particular, we note that the suppliers we interviewed
were largely small businesses, which is likely to have influenced the perspective offered in the consultations. It should also be
noted that consultations with member organisations occurred primarily through the procurement related staff in the
organisation rather than the Chief Executive Officer (CEO). We acknowledge that they may have offered views that do not
align with the view of the CEO in relation to AIMSC.

Financial sustainability – while the review includes an analysis of options for AIMSC to embark on the path to financial
sustainability (a goal of AIMSC and DEEWR) it should be noted that the analysis is based on a high level review of
information provided by AIMSC and DEEWR. In conducting this analysis, the revenue and expenditure information to which
the review team had access was the Annual Report 2009-10 and other more recent financial information (although not
audited financial reports). In some instances it was difficult to reconcile the financial and other performance information
provided to us. This is because we drew upon existing information (eg quarterly progress reports) and custom disaggregated
data requested specifically for this project. The information from these different data sources often related to different time
periods and varied in its level of disaggregation; this makes comparison across different data sources difficult. Accordingly,
our analysis should be interpreted as a high level analysis, rather than a detailed assessment and investigation into AIMSC’s
financial operating position. Any decisions in relation to future funding (both government and other sources) should be
subject to detailed investigation on the basis of the 2010-11 audited financial reports.

Currency of data – in conducting the analysis on AIMSC’s achievements to date, we have relied primarily on data provided
by AIMSC, namely the latest quarterly report (June quarter 2011). However, in some cases we have been provided with more
detailed data which is current as at the end of the March quarter 2011. We acknowledge that these data limitations impact the
currency of our assessment of AIMSC achievements with some elements, such as member and supplier numbers changing
monthly.
1.3
Structure of this report
The structure of this report is as follows:

Section 2 – explains the background to AIMSC, its objectives, the key features of the AIMSC model and the policy and
operating environment.

Section 3 – analyses AIMSC’s key achievements to date.

Section 4 – considers a future success framework for AIMSC and potential key performance indicators to support this
framework.

Section 5 – provides comment on AIMSC’s future financial sustainability and considers a range of potential revenue
options.
There is also a set of appendices to support the body of the report.
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About AIMSC
2
About AIMSC
This section describes the background to the establishment of AIMSC, the core elements of its operating model, the policy context
and operating environment and the minority supplier development model applied internationally. This provides important
contextual information against which AIMSC’s achievements and successes can be understood and measured.
2.1
Background to the establishment of AIMSC
AIMSC was established as a three-year pilot program following significant interest and activity from corporate Australia,
Australian governments and the NMSDC. This followed an inquiry by a House of Representatives Standing Committee into
developing Indigenous enterprises in Australia, the development of a business plan for an Australian Supplier Development
Council (SDC) sponsored by the Message Stick Group and discussions between key proponents of an Australian SDC and the
NMSDC.
In October 2008 a House of Representatives Standing Committee (the Committee) tabled the report, Open for Business Developing Indigenous enterprises in Australia. 2 This report was the outcome of the Committee’s inquiry into Indigenous
businesses in Australia, including a review of the support available for Indigenous businesses and the ways in which Indigenous
Australians could be encouraged to open or grow a business. As part of this inquiry the Committee considered minority supplier
development councils around the world, including the NMSDC, the Minority Supplier Development Council in the United
Kingdom and the Canadian Aboriginal and Minority Supplier Council (CAMSC).
The Committee made a number of recommendations in relation to the establishment of a pilot SDC in Australia, including that
the Australian Government should:

pilot an Indigenous SDC in Australia with seed funding to network and market the benefits of the pilot to Indigenous
suppliers and corporate buyers

commit to a core of Australian Government agencies and authorities with significant procurement budgets becoming
members of the pilot, with a target of 100 per cent membership by a specified date, and

trial an Indigenous business ready mentoring and accreditation program to increase the range and capacity of
Indigenous businesses able to supply to the pilot Council.
During 2008 the Australian proponents of a local SDC developed a series of business plan and funding submissions to key
Australian Government agencies. The submissions provided the following reasons for why a local SDC was needed and why it
would work:

Indigenous Australians seek to reduce dependency upon welfare and are prepared to work towards attaining economic
independence from government

there is a high level of goodwill among corporate Australia, senior government officials and politicians to support
Indigenous economic independence and end welfare dependency

corporate Australia is prepared to procure from quality Indigenous businesses

the model is based on ‘a hand up – not a hand out’

the model would be based on, and build upon, successful models in the USA, UK and Canada.
The funding submissions and business plans were supplemented by support from the NMSDC who brought a senior delegation to
Australia in late 2008 to discuss the establishment of an Australian SDC with government and sponsors from corporate Australia.
In September 2009, AIMSC was established as a not-for-profit organisation with seed funding from the Australian Government
(DEEWR) and in partnership with Industry and Investment NSW (IINSW). AIMSC has now been operational for two years.
2 House of Representatives Standing Committee on Aboriginal and Torres Strait Islander Affairs. October 2008
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2.2
Objectives of the AIMSC pilot
The AIMSC pilot project seeks to integrate majority owned Indigenous businesses into the supply chains of large Australian
corporate entities and government agencies by facilitating connections between Indigenous businesses and AIMSC members
seeking to purchase particular goods and/or services.
AIMSC’s vision is to contribute to the creation of a sustainable, vibrant and prosperous Indigenous enterprise sector in Australia,
stating it will achieve this vision by:

facilitating the integration of Indigenous businesses into the supply chain of private sector corporations and government
agencies

advocating on behalf of the Indigenous business community to foster business-to-business transactions and commercial
partnerships between corporate Australia, government agencies and Indigenous business, and

exchanging information, conducting research and leading the integration of Indigenous business into the Australian
economy.
During the three-year pilot project, AIMSC is required to:3

source, certify and register Indigenous businesses to participate in AIMSC

support and mentor suppliers, including their employees and executives, to participate in AIMSC

recruit and assist members to participate in AIMSC

facilitate partnerships and information exchange between stakeholders to AIMSC

align AIMSC with best practice comparable supplier development models in Australia and overseas

monitor the activities and transactions facilitated through AIMSC, and

develop and implement a strategy to connect AIMSC members and suppliers and increase the number of transactions.
These objectives are synthesised into a set of core key performance indicators (KPIs) for AIMSC to measure their success and
growth over each year of the pilot project.
A key goal of the pilot project is to position AIMSC to operate as a self-funding organisation, funded through contributions from
members and suppliers at the end of the pilot.
2.3
The AIMSC operating model
AIMSC is a private-sector led and member-orientated organisation established as a not-for-profit public company. AIMSC is
governed by a board comprising nine people and supported by an organisation of six staff. To achieve their objectives AIMSC
provides a number of services as a part of the pilot project which can be grouped into four main categories: recruiting members;
certifying Indigenous businesses; creating procurement opportunities between members and suppliers; and supporting members
and suppliers.
AIMSC membership and certification are the core elements of the AIMSC model to bring corporate Australia, government
agencies and Indigenous businesses together. It is important to note that AIMSC does not guarantee that the supplier will work
with an AIMSC member. Similarly, AIMSC does not quality assure the goods or services offered by a certified supplier.
3 Funding Agreement between the Commonwealth of Australia as represented by the Department of Education, Employment and Workplace Relations and Australian
Indigenous Minority Supplier Office Limited regarding funding for the Australian Indigenous Minority Supplier Council Pilot Project (the AIMSC Pilot Program)
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About AIMSC
Recruiting members
AIMSC membership is the first pillar of AIMSC’s operations. Membership to AIMSC provides Australian companies and
government agencies with the choice to purchase goods and services from Indigenous businesses that are ‘certified’ and registered
by AIMSC. This provides members with an assurance that they are dealing with a ‘genuine’ Indigenous business (in the AIMSC
context this means the business that is 51 per cent owned, controlled and managed by an Indigenous Australian). Eligibility for
AIMSC membership is open to “any corporation, firm, agency, including national, regional, or local government agencies, or any
other organisation interested in and supportive of the aims and purpose of AIMSC”.4 AIMSC members are required to:

apply to AIMSC with the endorsement of the CEO of the organisation

commit to AIMSC’s mission and objectives (on a best endeavours basis)

aim to achieve procurement in the range of $25,000 to $500,000 from suppliers in the first year of membership (on a best
endeavours basis)

provide AIMSC with information on transactions and activities with suppliers

embed supplier diversity within their organisation, and

participate in and support AIMSC networking activities.
Members receive a range of benefits from their membership with AIMSC, including: access to the AIMSC database of suppliers;
opportunities to source innovative and entrepreneurial minority businesses for specific contracts; and business, government and
community recognition of their participation in an element of the Australian Government’s ‘Closing the Gap’ policy objectives.
Membership is free for the three years of the pilot project, with members able to assess their willingness to continue with
membership beyond this period.
Members are recruited through a variety of ways – either through direct marketing within the existing AIMSC network or through
engagement and awareness of AIMSC through government connections. As a comparison, the strategy for member recruitment in
the NMSDC includes these direct marketing measures, but also draws on an element of ‘peer group pressure’ within industries or
supply chains.
Certifying Indigenous businesses
Certification of Indigenous businesses is the second key pillar of the AIMSC operating model. It provides Indigenous business
access to opportunities to build real business relationships with corporate and government members. The purpose of certification
is to assure members that the suppliers they seek to contract with are majority owned by Indigenous Australians. The certification
process is available to Indigenous businesses who meet the following criteria:

Indigenous ownership - at least 51 per cent ownership of the company is by an Indigenous Australian(s).

Indigenous management – the company is led/managed by a ‘principal executive officer’ who is an Indigenous Australian.

Indigenous control – the company’s key decisions are made by an Indigenous Australian(s).

Other – company is ‘for profit’, trading as a business and located in Australia.
The certification process contains three key steps. Firstly, the business completes the application form along with the
documentary evidence required. Secondly, an AIMSC staff member conducts a site visit to understand the business and confirm
the accuracy of the information provided. Lastly, the AIMSC certification team provides a report for the AIMSC board to approve
or reject the application.
Like members, certified suppliers are required to report to AIMSC on transactions with members. Certification is also an annual
process with re-certification required after 12 months.
Suppliers are recruited in a number of ways, including direct marketing by AIMSC and/or DEEWR and targeting of certain
industries (currently AIMSC’s target industries include the resources sector, defence, building and construction and government).
4 Members Guide. A Guide to AIMSC Membership. April 2011
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Facilitating connections
The third pillar of the AIMSC model is the creation of an environment for members and suppliers to meet and identify future
procurement opportunities with each other. This is done through three main avenues:

Access to AIMSC’s member/supplier database – members and suppliers can independently access the AIMSC online
database to proactively identify procurement opportunities. The database provides basic details on each company along with
contact details.

Attending AIMSC hosted networking events – members and suppliers attending AIMSC hosted networking events such as
‘meet the buyer’ and the larger business opportunity fair. These events have so far been hosted in Melbourne and Sydney with
members and suppliers travelling to these events at their own travel and time expense. Meet the buyer events have been
described as ‘speed dating’ where suppliers and members are provided with ten minutes per match (organised by AIMSC).

Other promotions – this includes events such as international trade missions, press releases and media, occasional
newsletters and use of the AIMSC logo.
Supporting members and suppliers
The final pillar of the AIMSC operating model is providing support to members and suppliers to achieve a transaction outcome.
While the AIMSC model does not extend to providing suppliers with business development training, they do provide limited
training to suppliers in understanding how to deal with large corporate and government procurement processes. AIMSC also
provides some assistance to members in strategies to embed supplier diversity in their supply chain. AIMSC does however have
the capacity to refer suppliers onto other available training and business support programs (such as IEP).
AIMSC structure and operations
The AIMSC operating model is supported by and delivered through the AIMSC Board and the AIMSC office. AIMSC’s board
members and staff play a significant role in raising awareness and understanding of the AIMSC approach and objectives.
The Board comprises nine members (grown from six on inception) who are made up of staff from AIMSC member organisations
and supplier organisations. A full list of current board members is at Appendix C. The Board currently plays a hands-on role in
the approval of the outcomes of certification processes for Indigenous businesses. The AIMSC office currently comprises six staff
(grown from three on inception) including a CEO, a certification specialist, a marketing manager and administration and support
staff. With the exception of one staff member based in Townsville, all AIMSC staff are based in the Sydney office.
2.4
Operating environment
There are key external factors that can have a significant impact on the operating environment of AIMSC and are important to
understand, particularly as they relate to, and can impact on, the success of the AIMSC pilot project. These elements are: the
government policy environment; and the broader operating environment (ie other organisations that deliver services that may
intersect with AIMSC activities). While these elements incorporate a range of different approaches to delivering outcomes for
Indigenous people, their objectives in Australia are broadly aligned – to achieve Indigenous economic independence.
Government policy
The Australian Government policy environment is not only a direct facilitator by primarily funding the AIMSC pilot project, it also
has an influence on the broader public attitude and approach to investing in Indigenous economic development. 5 Similarly, as a
large procurer of goods and services itself (around $24 billion per year6) the Australian Government can ‘lead by example’
through encouraging Indigenous supplier diversity (and other ‘public good’ outcomes) within its own national supply chain.
Government policy can influence the corporate sector (and individual government departments) willingness to engage with the
AIMSC pilot project and therefore contribute to its future success. In this respect, the commitment by all Australian governments
5 In its initial funding submission the Message Stick Group identified the Australian Government’s apology to the stolen generation as a driver of broader corporate
goodwill and desire to act
6 Australian Government Procurement Statement. July 2009
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About AIMSC
to ‘Closing the Gap’ is a significant influence. ‘Closing the Gap’ includes targets, building blocks and agreements that align with
the activities of AIMSC, including: halving the gap in employment outcomes between Indigenous and non-Indigenous Australians
within a decade; and commitment towards improving economic participation.7
In support of this commitment to ‘Closing the Gap’, the Australian Government introduced the Indigenous Opportunities Policy
(IOP). The Policy aims to increase the number of Indigenous Australians trained and employed as a result of Commonwealth
procurement activities. Under the IOP, all Australian Government projects above a threshold expenditure amount and that are
located in regions with a significant Indigenous population, requires tenders to include plans for providing Indigenous training
and employment opportunities, and the use of Indigenous suppliers. The incentive for government departments and agencies to
contract with Indigenous suppliers was strengthened in May 2011 when the Department of Finance and Administration
announced an exemption to the Commonwealth Procurement Guidelines (CPG), allowing Government agencies to contract
directly with Indigenous small and medium sized enterprises (SMEs) without the need to conduct a full tender process (where it
represents value for money). This exemption applies to the procurement of property or services from a SME8 with at least 50 per
cent Indigenous ownership.9
AIMSC’s objectives and functions cut across a number of elements of Indigenous economic participation and development,
including support for Indigenous businesses, procurement policy in the private and public sectors, and improving Indigenous
employment outcomes. A number of programs and policy initiatives target these issues. These include policy measures
implemented by all Australian governments, as well as community and corporate sector initiatives. They also include both
Indigenous-specific and non-Indigenous-specific initiatives.
AIMSC’s success, and its ongoing public value to the Australian Government, therefore partly depends on where and how it
operates relative to these other initiatives. In particular, it should leverage the work of programs and policies and fill existing
gaps; rather than creating duplication, overlap or additional complexity.
Australian operating environment
In addition to a broad range of Indigenous economic development policies that seek to foster greater employment outcomes for
Indigenous Australians, there are also a number of organisations that operate to support Indigenous (and Australian businesses
more broadly) at different stages of the business lifecycle. It is important to understand where these organisations are operating
across the business lifecycle and how this relates to the AIMSC operating model. These organisations range from Government
agencies specifically targeting Indigenous businesses, to Indigenous chambers of commerce, to broader business support
agencies. With different approaches taken in each jurisdiction there is a wide variety of organisations that operate in this space.
For the purposes of this report we have highlighted a couple of key organisations that AIMSC may interact with, or in the future
should seek to form strategic relationships with, in the aim of supporting a vibrant and prosperous Indigenous business sector:

Indigenous Business Australia (IBA): IBA supports opportunities for Indigenous Australians to create wealth and achieve
their financial aspirations. A key program is the Business Development and Assistance Program which assists Indigenous
SMEs through business support services and business finance.10 IBA also supports wealth creating joint venture partnerships.

Indigenous Business Council of Australia (IBCA): IBCA is in the early stages of operation, with objectives to advocate for the
interests of Indigenous business owners and to promote economic independence for Indigenous Australians. IBCA will
advocate the interests of Indigenous business through public policy development, engagement strategies and research.

Regionally-based Indigenous Chambers of Commerce: These chambers of commerce, such as Kinaway, operate by
geographic location and offer a range of services such as networking and promotions, access to corporate and government
entities and access to training, coaching and other development activities to support a vibrant Indigenous business sector. 11

Industry Capability Network (ICN): The ICN introduces Australian and New Zealand companies to the supply chains of
major projects with procurement managers to help them identify local suppliers. The ICN has a supplier register of more than
7 http://www.fahcsia.gov.au/sa/indigenous/progserv/ctg/Pages/default.aspx Accessed on 20 September 2011
8 Defined as an Australian or New Zealand business with fewer than 200 full time equivalent employees
9 Department of Finance and Administration Circular 2011/02
10 To be eligible to participate in the Business Development and Assistance Program, IBA requires at least 50 per cent of the ownership of the business must be by a
person(s) of Aboriginal and/or Torres Strait Islander descent
11 http://kinaway.com.au, accessed 21 September 2011
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45,000 companies. In some jurisdictions (such as NT and NSW) the ICN also maintains a publicly available Indigenous
business register.12 In NSW, the ICN’s register includes 160 Indigenous businesses (defined by as 50 per cent ownership).

State-based small business support services: These services are usually government funded (and based) business support
services, available to all businesses (not just Indigenous) located in that jurisdiction. Small Business NSW for example,
operates the Business Advisory Services and offers a range of services, including microenterprise loans, mentoring training
program for business owners and a specialised business masterclass. They also offer specific assistance for Aboriginal
businesses including maintaining a register of Aboriginal businesses in NSW to provide them with exposure to potential new
opportunities. As at September 2011, this register included details of 135 Aboriginal businesses in NSW alone.13
While the organisations listed largely operate across the broad spectrum of the business lifecycle, it is important to understand
that AIMSC’s role is primarily focussed on supporting businesses at certain stages (see Figure 2). Accordingly, partnerships with
other organisations supporting Indigenous businesses can ensure that AIMSC’s service offering is complementary and/or
provides direct referrals to business mentoring and assistance that can help them win contracts.
Figure 2 Stylised business lifecycle with AIMSC areas of influence
Source: Adapted from www.smallbusiness.wa.gov.au/biz-life-cycle
2.5
Minority supplier development model
Minority supplier development councils, like AIMSC, operate internationally across a number of countries and contexts.
Typically, these councils are not-for-profit organisations that aim to facilitate the entry of targeted SMEs into the supply chains of
large corporations. The major benefits and services provided by councils are:

reducing the risks of using minority suppliers, by vetting suppliers for minority status and business readiness

providing opportunities for suppliers to build relationships with corporations and ‘showcase’ their products or services

administering searchable databases of suppliers
12 www.icn.org.au, accessed 21 September 2011
13 http://www.smallbiz.nsw.gov.au/initiatives/aboriginal/directory/pages/search.aspx accessed 21 September 2011
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About AIMSC

providing training to enable suppliers to better negotiate with prospective buyers

referring corporations to minority suppliers.
History of the minority supplier council model
The minority supplier council model has its origins in the USA, where a number of city and state-based organisations began
conducting activities aimed at building links between minority-owned businesses and large firms in the 1960s. The pre-cursor of
the NMSDC was formed in 1972, as a national organisation aimed at coordinating and supporting the activity of sub-national
minority supplier development organisations. Throughout the 1970s, the activities of the NMSDC were supported by Federal
Government programs aimed at increasing large corporations’ procurement from minority suppliers. By 2009, the NMSDC was
made up of a national office and 37 regional offices, working with more than 16,000 minority-owned businesses.14
Through its international program, ‘Global Link’, the NMSDC has also been active in developing and establishing affiliated
councils adopting similar models in other countries, including:

Canada (CAMSC)

United Kingdom (Minority Supplier Development United Kingdom, MSDUK)

China (Minority Supplier Development China, MSDC), and

South Africa (South African Supplier Diversity Council, SASDC).
AIMSC is an affiliate15 of the Global Link program, which provides it access to the knowledge base and experience of other
affiliates (including through formal training) and potential exposure for Australian suppliers to an international membership
base. To be an affiliate of the Global Link program councils are required to adopt the core operating model and eligibility
requirements of the program (particularly the certification model and the 51 per cent eligibility criteria). However, there are some
significant differences between AIMSC and its affiliated international counterparts. These are discussed below.
Target group
AIMSC differs from other international supplier development councils in working only with Indigenous businesses. In contrast,
international councils deal with businesses owned by people of a wider range minority ethnicities. For example, the NMSDC
works with ‘minority-owned’ businesses; that is those owned by “Asian, Black, Hispanic and Native American” individuals.16 The
MSDUK defines an “Ethnic Minority Business” as one that is “owned, operated and controlled by an ethnic minority group”,
where a “minority” ethnicity is defined as “Asian”, “Black”, “Mixed” and “Chinese”. 17 CAMSC certifies business “owned and
controlled by visible minorities or Aboriginal peoples”, where ‘visible minority’ is defined as “persons other than Aboriginal
peoples, who are non-Caucasian in race or non-white in colour”; and ‘Aboriginal peoples’ is defined as “persons who are First
Nation Inuit or Metis.”18
AIMSC’s exclusive focus on Indigenous Australians creates a material difference between AIMSC and its international
counterparts in the size and nature of the potential pool of business-ready, ‘minority’ owned businesses. This may have
substantive implications for its strategic and operating environment. For example, some submissions to the House of
Representatives Inquiry questioned whether the Australian Indigenous business sector was sufficiently developed to support a
supplier development council. Another submission noted that an Australian Indigenous supplier development model would need
to be “based in systems which respect and protect Indigenous protocols, ethics and knowledge systems.”19
14 National Minority Supplier Development Council, Inc. website < http://www.nmsdc.org/nmsdc/>, accessed 30 August 2011
15 The affiliate arrangement while formal is not based on any written agreement or contract
16 National Minority Supplier Development Council, Inc. website < http://www.nmsdc.org/nmsdc/>, accessed 30 August 2011
17 Minority Supplier Development UK website <http://www.msduk.org.uk/SupplierCertification1.aspx>, accessed 30 August 2011
18 Canadian Aboriginal and Minority Supplier Council website <https://www.camsc.ca/supplier_certification>, accessed 30 August 2011
19 Standing Committee on Aboriginal and Torres Strait Islander Affairs (2008), ‘Open for Business – Developing Indigenous enterprises in Australia’. Final Report of
the Inquiry into Developing Indigenous Enterprises, Parliament of the Commonwealth of Australia, 105
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Membership
AIMSC’s membership requirements also differ from other minority supplier councils. In particular the NMSDC membership
criteria exclude government as members of the program. The NMSDC is focused only on corporate organisations; whereas AIMSC
membership is significantly reliant on government departments.
Financing
AIMSC is predominantly funded by DEEWR through the IEP (with a smaller funding source from IINSW) although the initial
AIMSC proposal20 indicated that no public funding would be required beyond the life of the pilot. In contrast, the US, UK, Canada
and China councils are privately funded and independent of government – although the MSDUK receives a small proportion of its
revenue through government grants. International councils’ revenue is sourced either predominantly from membership dues
(UK), or from a combination of membership dues and proceeds from conferences and events (Canada, China). Membership fees
reportedly comprise 40 to 90 per cent of supplier council revenue, while certification fees make up between one to five per cent of
supplier council revenue.21
The NMSDC also generates other income through providing working capital loans and access to specialised financing to certified
minority businesses which have relationships with members.
20 As outlined in the Message Stick Group submission to the House of Representatives Inquiry into Developing Indigenous Enterprises
21 AIMSC, “Business Plan 2011 and beyond”, 25 November 2010
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AIMSC achievements
3
AIMSC achievements
The contractual funding agreement between AIMSC and DEEWR sets out the objectives of the pilot project as well as KPIs to
assist in measuring success. While there are some areas for improvement, in many cases AIMSC has not only achieved – it has
exceeded – initial expectations of growth within the pilot. This chapter sets out the key achievements of AIMSC since its
establishment based on the KPIs set out in the funding agreement and analyses key achievements and potential areas for future
focus based on AIMSC quarterly reports to DEEWR.
3.1
Members and suppliers
At the core of the AIMSC model is the attraction and recruitment of members and of suppliers. The agreement between AIMSC
and DEEWR sets modest targets to achieve growth in the member and supplier base through the pilot project. At the end of the
three-year pilot the KPIs set require AIMSC to achieve 65 members (59 large and six small) and 120 suppliers.
As shown in Chart 1, AIMSC has achieved a total of 108 members and 83 suppliers.22 This indicates that AIMSC:

has exceeded its KPI for total members over the life of the project (108 members to date, compared to a total target of 65)

has been more successful at recruiting small members than anticipated, already exceeding the KPI for small members over
the life of the project (57 small members to date, compared to a target of six)

is on track to achieve its KPI for large members (51 large members to date, against a target of 30 large members by 30
October 2011 and 59 at the end of the pilot project), and

is on track to achieve its KPI for suppliers (83 suppliers, against a target of 80 by 30 October 2011 and 120 at the end of the
pilot project). 23
22 The calculation of the number of members and suppliers has been based on information provided from each of the quarterly reports. We note there is an issue
reconciling the total number of members, 108, against the number recorded for each quarter
23 We acknowledge that these figures change frequently, with the AIMSC website currently stating 114 members and 93 suppliers (as at 21 September 2011)
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Chart 1 Cumulative number of members and suppliers
Chart 1 also shows that between December 2009 and March 2011 AIMSC membership grew at a relatively steady rate, with the
number of small suppliers almost doubling beyond this point. AIMSC advises that this rapid increase can be attributed to the
change in the Australian Government procurement policies.
While growth in membership and certification is an important indicator of success, it is also important to understand the
distribution – both geographically and by industry – of members and suppliers. For some members, the ability to support local
suppliers is a significant component in defining the value of their membership (for example State Government departments).
Similarly, for suppliers in certain industries (such as fresh food catering) proximity to members is critical in securing work.
The geographic distribution of members and suppliers is shown in Chart 2. This shows that the significant majority of members
and suppliers are located in New South Wales. While this may reflect the head office locations of some suppliers, it is also likely to
reflect the initial start up location of AIMSC and the only staffed office. Chart 2 also shows:

the high number of members in the Australian Capital Territory, reflecting the success in recruiting government departments

an imbalance in the ratio of members to suppliers in most jurisdictions, and

most jurisdictions are far from achieving a ‘critical mass’ of members and suppliers which becomes important to support
future growth in members and IBs as well as in increased transactions.24
24 In consultations with the NMSDC, reaching a ‘critical mass’ of suppliers and members is a key success factor in the early years growth of a minority SDC
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AIMSC achievements
Chart 2 Geographic distribution of members and suppliers
Source: AIMSC data
Industry compatibility is also an important element in building a connected member and supplier network and growing the base.
While some members are likely to opt for ‘low risk’ procurement, others may actively seek out suppliers within their specific
industry. Consultations with the NMSDC confirmed that in some industries existing members can play a significant role in
identifying and recruiting other members and suppliers.
The industry mix of AIMSC members and suppliers is shown in Error! Reference source not found. and Error! Reference
source not found..25 A full list of industries is included at Appendix F.
25 The industry definitions are based on AIMSC categorisation
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Source: AIMSC data
Error! Reference source not found. shows that the industries that the majority of members are drawn from are government
(contributing more than 25 per cent of total membership), building and construction and maintenance services, information
technology broadcasting and telecommunications, and management and business professionals and administrative services.
Comparatively, suppliers operate across three main industries – management consulting services, building and construction,
media, design and marketing, and recruitment services – which include more than 50 per cent of all suppliers. Going forward,
there may be benefit from consistently defining and recording member and supplier industry categories to monitor industry
concentration and inter-industry transactions (we understand AIMSC is currently exploring this improvement).
A final key measure to consider in relation to member and suppliers achievements is the translation of member and Indigenous
businesses (IB) enquiries into membership and certification. Chart 3 details the number of enquiries about AIMSC and shows that
at the start of the pilot there were more IB enquiries; this reflects the higher number of suppliers recruited in the first year.
However in the second year member enquiries grew, particularly in the last quarter. AIMSC reports that this is reflective of
organisations responding to the change in the Australian Government’s procurement policies.
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AIMSC achievements
Chart 3 Potential members and supplier enquiries
Source: AIMSC quarterly reports
The translation rate from enquiries is also shown at Table 2. This shows that the conversion rate for suppliers is relatively low and
suggests an area for improvement (potentially without the need to do any additional marketing).
Table 2 Enquiry and conversion rate of members and suppliers
Enquiry
type
Members
No.
Suppliers
No.
converted
Conversion rate
140
94
67%
193
84
44%
Reasons for non-conversion
Awaiting internal approval/buy in, too small for minimum
spend, awaiting greater breadth of suppliers.
Do not meet criteria, too busy, not ready.
Source: AIMSC data
3.2
Facilitated transactions
A key measure of the success of the AIMSC pilot project is the volume and value of facilitated transactions26 between AIMSC
members and suppliers. While many stakeholders reported that the value of AIMSC is much broader than purely transactions,
this remains a key ‘tangible’ outcome for many stakeholders against which the value of the pilot can be measured.
26 For the purposes of this report we have focused on actual transactions rather than contracts in the pipeline
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The agreement between AIMSC and DEEWR sets out three KPIs for transactions: total value of transactions; average value of
transactions per member; and average value of transactions per supplier. Table 3 details these KPIs and the outcomes achieved to
date.
Table 3 Transaction-based KPIs and outcomes
KPI
Year 1
Actual
(YTD)
$1 million
$2.1 million
$59,000
$26,000
$91,000
$67,000
Year 2
KPI
Total value of transactions
Average value of transactions per member
Average value of transactions per supplier
KPI
$10 million
$303,000
$125,000
Actual
(YTD)
$6.4 million
$37,882
$74,307
Year 3
KPI
$20 million
$357,000
$167,000
Source: AIMSC quarterly reports up to 30 June 2011 and DEEWR/AIMSC funding agreement
Table 3 shows that in the first year of the pilot, AIMSC exceeded – by more than double – the target value of transactions. In the
second year, however, AIMSC is tracking below the required level of volume and/or value of transactions to achieve the target of
$10 million (see Error! Reference source not found.) and would need to achieve $4.5 million in transactions in the last quarter
of year two.27
Across both years, the average transactions per member and supplier is below the required KPIs, suggesting that the volumes of
transactions are less than expected and/or the values on average are smaller than expected. This is illustrated in Error!
Reference source not found., with the most significant gap being between the member transaction averages expected by
member. The average transaction value per member is less than that for the suppliers in the first year, while in the second year the
average transaction value per member is expected to be more than double that of the suppliers – in line with the initial
expectations of member and supplier numbers. Accordingly, it is likely that part of the difference between the average transaction
values and the KPIs set is attributable to a much higher membership base than originally anticipated as well as due to a much
higher proportion of smaller members who may be less likely to conduct high volumes of transactions of high values.
27 The last quarter of year 2 is September 2011
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AIMSC achievements
Looking specifically at transaction values, it appears that suppliers in two industries are benefitting the most from the AIMSC
pilot. Chart 4 shows that of the total value of the transactions to date, 42 per cent are occurring in the telecommunications
industry supplier industry and 36 per cent are based in the Indigenous consulting supplier industry.28
Chart 4 Total and average value of transactions by supplier industry
Source: AIMSC transaction data
In addition to monitoring the total and average values of transactions, it is also important to monitor the volume of transactions
as even a low value contract can be important in opening a door to future work and/or exposing suppliers to dealing with large
corporate entities and government departments. Error! Reference source not found. shows the number of members and
suppliers that have entered into contracts over the time that AIMSC has been in operation. In December 2009, March 2010, June
2010 and June 2011 quarters, there were more members participating in contracts than suppliers. Further, as shown in Error!
Reference source not found., the distribution of contracts amongst suppliers is highly concentrated with over $4 million in
transactions occurring within just two suppliers and less that 25 suppliers recording at least one transaction. These charts show
that while transaction activity is occurring between members and suppliers, the transaction volume and value for the majority of
suppliers is relatively small. That is, the bulk of transaction value is skewed to a small number of certified Indigenous businesses.
In the future, AIMSC may wish to consider how transaction activity and value may be more evenly distributed across all suppliers,
particularly as this would better support broader government Indigenous economic participation objectives.
28 This is based on a data set provided by AIMSC and it has not been possible to reconcile these industries with the reported categories
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Of the 281 transactions that have occurred as at September 2011, 69 per cent have occurred with corporate members and 31 per
cent have occurred with government members, above their 25 per cent share of the membership (see Chart 5).29
Chart 5 Total value of transactions by sector
Source: AIMSC data
Further, the majority of transactions have been low in value; with only two transactions valued at more than $750,000 (see Table
4). This is an area for AIMSC to focus on in the future.
29 This data is provided was provided to PwC outside of the quarterly reports and does not exactly reconcile with the total transactions reported to DEEWR
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AIMSC achievements
Table 4 Total values of transactions by members
No. of members
<$250K
34
$250k-$500K
2
$500k-$750K
0
>$750K
2
Source: AIMSC data (as at March 2011)
3.3
Indigenous employment
Increasing Indigenous employment is a key objective of the Australian Government in supporting the establishment and
operation of the AIMSC pilot project (illustrated by the funding source, IEP). One of the key KPIs in the agreement includes the
measure of increased Indigenous employment within suppliers (see Table 5).
Table 5 Indigenous employment KPI (target and actual)
KPI
Total number of Indigenous staff employed by
AIMSC suppliers (FTE)
Year 1
Year 2
KPI
Actual
KPI
12
136
111
Actual
(YTD)
305
Year 3
KPI
221
Source: AIMSC quarterly reports
As shown by Table 5, AIMSC is currently exceeding the targets set within the Indigenous employment KPI. Like other measures,
this will need to be continually monitored to ensure that as suppliers seek re-certification these numbers are maintained. These
figures show that approximately 44 per cent of employees within certified suppliers are Indigenous. 30 In considering future
targets for Indigenous employment, it is important to understand the current make up of the suppliers registered with AIMSC.
The majority of suppliers are small businesses – with approximately 70 per cent of all suppliers having five or less employees (see
Chart 6). Comparatively, only four per cent of certified suppliers have more than 20 employees.
Chart 6 Proportion of suppliers based on employee numbers
Source: AIMSC data
30 44 per cent employment is calculated from the AIMSC quarterly report June 2011. It takes the year to date figure of Indigenous FTEs and non-Indigenous FTEs.
Alternatively, using the cumulative total of FTEs, it would show that 47 per cent of FTEs are Indigenous
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3.4
Facilitation and support
Following the recruitment of members and certification of suppliers, hosting networking events and facilitating promotion and
awareness of procurement opportunities is the next pillar in the AIMSC operating model. AIMSC has hosted a number of events
since its establishment, including:

two ‘meet the buyer’ events

three members luncheons

three supplier networking and introduction events, and

one trade fair (Connect 2010).31
These facilitation and networking events are important introductory platforms for members to understand the breadth of supplier
capacity and for suppliers to advertise their product and services to AIMSC members. Equally, some suppliers have advised that
these events have been important in creating an environment for suppliers to network with each other. In fact, one of the more
established suppliers advised that an introduction at one of these events resulted in them procuring from another Indigenous
supplier.
These events can also be an important way for suppliers to identify and access alternate sources of assistance, such as to other IEP
programs and services and through business-to-business support (although we are not aware of this occurring in the Australian
context yet in the way it does in the USA). This is reflected in Chart 7 which shows that referrals are not yet occurring in any
significant numbers. Based on our consultations with the NMSDC, we understand that significant business-to-business support
activity occurs between members and certified suppliers. It is worth noting that there have been no reported referrals to IEP in
the last six months which may be surprising given the promotional activity occurring in relation to the IOP.
Chart 7 AIMSC facilitated referrals of suppliers
Source: AIMSC quarterly report
31 www.aimsc.org.au accessed 20 September 2011
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Defining success
4
Defining success
This chapter canvasses current measures of success, considerations for success from the perspective of different stakeholders and
presents a suggested framework for monitoring AIMSC’s success and achievements into the future. In developing the framework,
we reviewed and considered the appropriateness of AIMSC’s current KPIs, KPIs used by the NMSDC and feedback from
consultation. We also drew upon best practice literature for monitoring and measuring performance.
For the purposes of this review, success is defined as the achievement of specific targets for the outputs, outcomes and impacts
resulting from AIMSC activities. In relation to AIMSC:

outputs mean the activities or services delivered by AIMSC to ultimately deliver transactions between members and suppliers
– for example the number of ‘meet the buyer’ events or the number of introductory procurement sessions held

outcomes mean the direct results of AIMSC activities (outputs), such as the number of facilitated transactions between
members and suppliers

impacts mean the flow on effects of the AIMSC model, such as increased Indigenous employment in certified suppliers or
more sustainable and prosperous Indigenous businesses.
4.1
AIMSC’s current success measures
As stated in its Guide to AIMSC Certification, AIMSC currently measures success as ‘the value of transactions generated between
buyers and suppliers’.
It also monitors its performance through the following measures:

number of certified suppliers/members

number of member/supplier events held.
AIMSC success is also currently measured by a number of KPIs as part of its funding agreement with DEEWR, including:

number and value of transactions/contracts between suppliers and members, including transaction type (ie goods and
services traded), location and industry

average transaction size per member

average transaction size per supplier

number of large/small members participating in transactions/contracts

number of suppliers participating in transactions/contracts

number of indigenous and non-indigenous staff (FTE and actual) employed by suppliers

number of indigenous business/corporate enquiries

number of indigenous business referrals to business development assistance, government programs or other providers.
While these measures are largely output focussed, they are essential to understanding the progress AIMSC is achieving. They
provide an indication of how AIMSC is tracking in terms of its activities and the size of the network, but not of the impact AIMSC
is making in the Indigenous business sector and how AIMSC is helping members and suppliers (the measures related to
transaction value do however provide insight into this). Going forward, we see value in monitoring the outcomes and impacts of
AIMSC.
4.2
Considerations for defining success
In defining the success of AIMSC, it is important to understand the relationship of AIMSC activities and the influence of external
forces to the achievement of outcomes. That is, there are certain activities, outcomes and impacts within AIMSC’s direct control
and others to which AIMSC contributes.
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AIMSC’s core business is about facilitating relationships between Indigenous businesses and large (private or public sector)
organisations. It is about providing Indigenous businesses with access to opportunities with large organisations, and conversely
encouraging large organisations to open up opportunities in their supply chain to indigenous businesses. Through these
opportunities, it is hoped that business transactions occur (that is, large organisations procure goods and services from
Indigenous businesses) and that it leads to:

more Indigenous businesses being integrated into large organisations’ supply chains

a more sustainable, vibrant and prosperous Indigenous enterprise sector.
Transactions may be facilitated by building capability within Indigenous businesses to work with large organisations. This logic is
described in Figure 3.
Figure 3 Logic for understanding AIMSC success
Short term
Recruitment of
members / suppliers
Long term
Opportunity
Transaction
Flow-on impact
Capability
building
Direct support
provided by AIMSC to
suppliers/members
Support provided by government,
indigenous business networks
and other business providers
In considering the logic for AIMSC success, it is important to recognise that AIMSC can only directly control ‘recruitment of
members and suppliers’ and ‘opportunities’. While AIMSC may contribute to ‘transactions’ or ‘flow-on impacts’, these are largely
dependent upon suppliers and members (ie member willingness to procure goods and services from Indigenous businesses and
supplier capability to transact with members, etc). Establishing causality between AIMSC activities/outputs and transactions or
flow-on impacts can be difficult (especially in cases where there are long lead times between AIMSC support and resultant
effects). While these create challenges in measurement, it does not mean that these areas should not be monitored and assessed.
4.2.1 Success considerations from a member perspective
In essence, the value that members seek from their association with AIMSC is the ability to tap into a diverse supplier base (in
terms of services, geography, size) with the ultimate aim of supporting Australian Indigenous businesses. That said, while
members recognise the importance of providing Indigenous businesses with opportunities they nonetheless expect suppliers to
compete for procurement contracts alongside other providers. The following issues raised in consultations with members,
indicate current or potential challenges for AIMSC in achieving success.

Members want some assurance that suppliers have the capability to deal with procurement orders and appropriate
experience working with large organisations. Suppliers are typically small businesses and given the size of many AIMSC
members, there may be limited capacity for suppliers to meet their needs (for example, it was reported by more than one
member that some suppliers did not have the capacity to process credit card transactions which restricted a transaction from
occurring). It is for this reason that members who have transacted with suppliers so far have tended to focus on small scale
and ‘low risk’ procurement transactions. Some members suggested that suppliers could be provided with more support to
enhance their capabilities and knowledge, such as practical advice on the procurement processes within large organisations
as well as more basic business management training and development. Another suggestion (and a practice which occurs
internationally) is enhancing supplier capacity via joint venture or partnership arrangements.
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Defining success

Members felt that there is a lack of diversity (in terms of location, service/industry offering and size) in the current list of
suppliers. This is evidenced by the majority of suppliers being based in NSW. While this is not surprising given that NSW was
the original focus of the AIMSC pilot, this does present a future risk to success if members based in other jurisdictions
measure value of their AIMSC membership on the ability to transact with suppliers from their own State or Territory. This
may be a particular issue for State Government agencies whose preference is to support Indigenous businesses within their
jurisdiction. This may also be the case for private sector organisations with offices across Australia. For example, if a member
would like the services of an Indigenous catering business, that business would need to be based in the same State as the
buyer within the member organisation. Thus a greater spread of suppliers across service offerings, location and size would
better enable members to provide opportunities to suppliers. Alternatively, Indigenous business partnerships – facilitated by
AIMSC – could provide a solution to this issue.

Members would like information about suppliers in a user friendly format and which provides sufficient detail to help
members understand supplier capabilities (eg goods and services provided, location, etc).32 During consultations, many
members thought that the search functionality and the quality (consistency and accuracy) and granularity of information on
the AIMSC website was poor. This impacts the member’s ability to appropriately target procurement opportunities to
Indigenous businesses. This is an area where AIMSC can make changes to add value to members and maximise success.

Members commented on the difficulties in raising awareness of supplier diversity in large organisations with partially
decentralised procurement arrangements. Given that AIMSC’s current certified suppliers are mostly small businesses, it is
likely that a large portion of transactions will be too small to involve procurement teams in member organisations (ie
procurement teams tend to deal with large transactions). This also poses another issue for members on how to track actual
whole-of-organisation transactions. In addition, not only do messages about supplier diversity need to be communicated
throughout the member organisation, but it needs to be done in a sustained manner so that the issue is kept fresh in peoples’
minds. AIMSC success and the value for members are dependent on dedication from members themselves. However, there
may be benefit in AIMSC considering the development of a template approach that larger members can follow as they
transition to an engagement with AIMSC and suppliers that suits their specific needs.

Some members consider embedding Indigenous businesses in their supply chain to be more than just direct transactions with
suppliers. For example, members may not directly contract goods or services with an AIMSC Indigenous supplier but instead
encourage its suppliers to do so. This does not affect the overall achievement of outcomes, but raises questions about what
can be attributed to AIMSC.
4.2.2 Success considerations from a supplier perspective
Our consultations with suppliers suggest that they are seeking opportunities and a ‘way in’ to large organisations. They tend to be
realistic about the fact that securing work is dependent upon providing the right services at the right price. Thus in the short term,
suppliers see the value in their association with AIMSC as the introductions to members (or opportunity). In the longer term,
however, suppliers see the value in their association with AIMSC as those opportunities converting into transactions with large
organisations.
Many suppliers recognise that they sometimes lack the skills and experience to make the most of those opportunities. That is,
suppliers do not feel they have the confidence or experience to work with or market their capabilities to large organisations (ie
being prepared to market themselves at networking events, understanding the procurement process of large organisations, etc).
Without adequate support or capability, suppliers may not be able to take full advantage of opportunities with large organisations
which therefore means they are not gaining benefit from business transactions; this may inhibit AIMSC’s success in the future.
The ability for suppliers to pursue opportunities with large organisations is also dependent upon being appropriately matched to
members and dealing with the right person within the organisation. Feedback from suppliers suggests that they have sometimes
faced barriers when they have been proactive exploring business development opportunities with members, including:

existing panel arrangements or in-house capabilities exclude or limit the opportunity for suppliers from being able to transact
with members (and some members finding it difficult to identify opportunities in this environment)

buyers within member organisations having limited awareness of AIMSC and what it seeks to achieve. This is likely due to
senior management agreeing to become an AIMSC member while day-to-day responsibility for relationships and
procurement with suppliers is delegated
32 This was an issue for suppliers also as they proactively sought out opportunities with members through accessing the AIMSC database
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
‘meet the buyer’ events where meetings are pre-arranged have not always been successful due to unsuitable matching
between members and suppliers.
While two of these barriers are largely outside of AIMSC’s control, they may nevertheless impinge upon AIMSC success in the
future. AIMSC may wish to consider its role in helping to address these barriers so that transactions between suppliers and
members may occur. In particular, as the AIMSC membership and supplier base grows there may be an opportunity for better
‘matching’ at networking events to ensure member and supplier time maximises the potential opportunities.
4.2.3 Success considerations from a government perspective
The Australian Government has specific policy objectives that it seeks to achieve in its funding and association with AIMSC, thus
the key measure of success is how well AIMSC contributes to these policy objectives. These objectives relate to Indigenous
economic development outcomes with measures of success including increased employment, sustainable business growth and
greater economic independence.
The Australian Government recognises that Indigenous businesses may need some tailored and/or extra support in order to be
sustainable and prosperous. Thus, the value of AIMSC to the Australian Government derives from being able to offer Indigenous
businesses with another form of support (amongst the broader suite of business support programs) through direct business-tobusiness engagement. In addition, the Government sees AIMSC playing a role in changing the cultural mindset of large
organisations engaging Indigenous businesses. Ultimately, success would include seeing outcomes or a return on the investment
in Indigenous businesses support programs. These outcomes may be tangible in nature (such as increased employment of
Indigenous Australians and business growth), as well as intangible (such as change in attitudes).
Furthermore, the ability of AIMSC to contribute to incrementally increasing Indigenous economic independence is a significant
opportunity that will flow on to a broader range of government social policy programs and initiatives, such as health and
education, and will be part of the overall push to ‘Closing the Gap’. Most significantly, success of AIMSC will contribute to
opportunities to improve the wellbeing, self-sufficiency and sustainability within Indigenous communities.
4.2.4 Success considerations from an AIMSC perspective
From our consultations with key AIMSC staff and the Board, it was identified that the ultimate measure of success will be
AIMSC’s irrelevancy - that is, AIMSC is no longer required because Indigenous businesses are embedded in large organisations’
supply chains and there is a vibrant and sustainable Indigenous Business sector. Success could also be based on moves towards
financial independence (from government funding) and sustainability.
Achieving supplier ‘embeddeness’ will require changing the perception and mindset of large corporate and government entities.
This has been described as the ‘art of the impossible’. There is a progression of outcomes AIMSC seeks to achieve to ensure
suppliers are able to capitalise on the introductory opportunity provided – to deliver a transaction outcome and then transform
the transaction outcome in terms of volume and value (repeat business), risk/complexity (the riskier or more complex a
procurement opportunity is, the more critical it is likely to be to the member) and then eventually achieve supplier ‘embeddness’
(see Figure 4).
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Defining success
Figure 4 Path to embedding supplier diversity
Embedded
Risk / Complexity
Volume & Value
We consider there are three key considerations for AIMSC in assisting them to achieve success.
Access to AIMSC services
Given that the ability to access a diverse supplier base is a critically important factor for members (and to the overall AIMSC
operating model), the requirements to become a certified supplier must not inhibit the ability to do so. One criterion for AIMSC
certification is that the business is at least 51 per cent owned by an Indigenous person. Some stakeholders expressed concern that
this criterion would exclude businesses with 50 per cent indigenous ownership (which in their view qualified as an Indigenous
business); a common situation where a married couple owns a business and one person is Indigenous and the other is nonIndigenous. Stakeholders noted that there are different views about the definition of an Indigenous business – for example, some
government departments define an Indigenous business as being 50 per cent Indigenous owned. 33 This definitional issue may
impact upon AIMSC’s ability to grow its supplier base, thus impacting upon its ability to meet member needs (and potential to
secure the necessary revenue stream).
Marketing and awareness
Another factor which may influence AIMSC’s future success is awareness; without awareness it will be challenging for AIMSC to
grow its member and supplier base. So far, it appears AIMSC has largely relied upon referrals, Board member networks, and
member affiliations through the global network to recruit members and suppliers. It has also raised its profile by attending or
speaking engagements at key events. There is a limit to which AIMSC can rely upon referrals and personal networks to attract new
members and suppliers. These approaches are effective but are somewhat limited in maximising the awareness of the AIMSC to a
wide audience. Addressing awareness through a formal (tailored) marketing strategy will be important to AIMSC’s future success.
Supplier capacity
Achieving financial sustainability and making the ‘impossible’ possible may depend on AIMSC making changes or introducing
new services to address barriers to members and suppliers transacting with each other. For example, members have reservations
about the ability of suppliers to meet large scale procurement orders. This could be addressed by suppliers with complementary
services partnering in joint venture arrangements or by establishing second tier models (whereby, suppliers subcontract to other
suppliers to deliver goods/services).
33 Some indigenous organisations have an even more flexible definition of indigenous business. They judge each business on a by case nature
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4.3
A success framework for AIMSC
A success framework needs to align to the intended outcomes sought by AIMSC and key stakeholders (ie suppliers, members,
Indigenous Australians and the Australian Government). On the basis of existing strategy documents and feedback from
stakeholder consultation, these outcomes can be summarised as:

more corporate and government entities have Indigenous businesses embedded as part of their supply chain*

there is a diverse range of certified suppliers*

Indigenous businesses are more sustainable and prosperous

AIMSC is financially sustainable.*
* denotes that the outcome is consistent with areas identified in the FY09/10-FY11/12 AIMSC strategy on a page.
The framework seeks to link AIMSC activities with its aims and objectives (and by definition, the outcomes it seeks to achieve). It
also seeks to acknowledge that some of the objectives pursued by AIMSC are more likely to be achieved over the longer term and
that in some cases, the outputs and outcomes delivered by AIMSC are only one component of the desired broader community
impacts. In this sense, the framework has been developed on the assumption that AIMSC will continue to operate in a similar way
beyond the three-year pilot project. The proposed framework is represented in Figure 5.
Outcome
Figure 5 Overarching success framework
There is a diverse
range of certified
indigenous
suppliers
More indigenous businesses are embedded in the
supply chains of large organisations
Indigenous
businesses are
more sustainable
AIMSC is
financially
sustainable
Process
Short term
Recruitment of
suppliers/
members
Long term
Transaction
Opportunity
Financial
sustainability
Flow-on impact
Capability
building
Direct support
provided by AIMSC to
suppliers/members
Support provided by government,
indigenous business networks
and other business providers
In order to track the extent to which the outcomes are being achieved, we have proposed a number of KPIs to sit within this
success framework.
In developing these KPIs, we have considered the current approach to performance measurement taken by the Australian
Government, the Outcomes and Programs Framework, which focuses on effectiveness KPIs rather than efficiency. 34 We have also
34 Development and Implementation of Key Performance Indicators to Support the Outcomes and Program Framework. ANAO 2011
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Defining success
endeavoured to incorporate elements of the SMART (specific, measurable, achievable, relevant, and timed) principles in
developing these KPIs.35 A key consideration in the assessment against these KPIs – particularly as they relate to the longer term
measures – is causality, acknowledging that in some instances the activities of AIMSC are only a contributing factor to the
realisation of those impacts. We have also been mindful of the ability and ease with which AIMSC can collect and report against
these KPIs. The proposed KPIs are detailed in Table 6. As AIMSC already tracks its performance and collects data for some of
these KPIs; they continue existing measures, however others are new. The majority of the new KPIs take a longer term view of
AIMSC impacts.
The proposed KPIs align to each element of the success logic framework.
Recruitment
The ‘recruitment’ KPIs relate to AIMSC members and suppliers (in terms of number, growth in number and renewals) and the
extent to which large corporate and government entities and Indigenous business are becoming and/or staying involved in
AIMSC. These KPIs provide insight into whether the members and suppliers perceive value in the AIMSC model and network, but
also into the results of AIMSC effort to recruit members and suppliers and whether AIMSC is achieving diversity in its supplier
base.
Growth in the number of members and suppliers is particularly important as a lead indicator for understanding whether AIMSC
may achieve and maintain financial sustainability.
35 Application of the Outcomes and Outputs Framework. ANAO 2006-07
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Table 6
Suggested performance indicators to monitor success
Recruitment of
suppliers/members
Opportunity
Capability building
Transaction
Flow-on impact
Financial
sustainability
 Number and growth of
members (including
industry/sector,
location)
 Number of member
referrals to suppliers
 Number of supplier
joint ventures/
business partnerships
 Number and value of
transactions between
members and suppliers
 Value and growth of
supplier business
turnover
 Decreased AIMSC
reliance on government
funding
 Number and
proportion of member
renewals
 Number of networking
events between
members and suppliers
 Number of suppliers
involved in joint
ventures
 Number of
members/suppliers
involved in the
transactions
 Number and growth in
supplier’s employees
(including indigenous
and non-indigenous)
 Growth in revenue
streams from
membership fees,
service offerings and
other sources
 Number and growth of
certified suppliers
(industry/sector,
location, service type)
 Number of participants
(by members and
suppliers) at
networking events
 Number of second
tiering arrangements
involving suppliers
formed
 Number and
proportion of
transactions where
members and suppliers
have worked together
previously
 Number and
proportion of supplier
re-certifications
 Feedback from
members on the
appropriateness of
referrals/introductions
to suppliers
 Measures of
satisfaction from
suppliers on the
quality/usefulness of
AIMSC advice/
information/training to
assist suppliers
working with large
organisations
 Member satisfaction
with supplier’s goods
and services
 Number of referrals to
external business
support programs
 Average transaction
value by FTE
 Total (cumulative)
transaction value by
supplier
Existing KPI
New KPI
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Opportunity
The ‘opportunity’ KPIs relate to the activities (or outputs) undertaken by AIMSC (in terms of number and who is accessing these
activities) to facilitate opportunities for transactions between members and suppliers. They provide insight into the demand for
and appropriateness of AIMSC services.
Capability building
The ‘capability building’ KPIs relate to the activities undertaken by AIMSC to enhance suppliers’ chances of securing contracts
with members. The KPIs provide insights into the results of AIMSC effort (eg joint ventures established) and the beneficiaries of
these efforts. The KPIs also provide insight into appropriateness of AIMSC capability building activities.
Transaction
The ‘transaction’ KPIs relate to the results of opportunities – ie transactions – and the beneficiaries of these transactions. These
KPIs provide a direct measure of the value derived by suppliers from AIMSC and the efforts made by members to embed
indigenous businesses in their supply chains. It is also important to understand the level of ‘embeddedness’ (ie one-off versus
repeat transactions) and whether member needs were addressed as part of the transaction.
Flow on impact
The ‘flow on impact’ KPIs relate to business turnover and employment. They provide insight into the growth (and sustainability)
of Indigenous businesses. While many factors may influence business growth, it is difficult to isolate AIMSC’s role in this growth.
However, these KPIs provide some insight into AIMSC’s impact.
Financial sustainability
The ‘financial sustainability’ KPIs relate to AIMSC’s revenue streams. They provide insight into the income sources which AIMSC
is reliant for staying in operation.
4.4
Conclusion
There are many ways to monitor and measure AIMSC success. Understanding AIMSC’s impact on members and suppliers is
crucial; measures to capture this are often difficult and take time to realise. Output measures are much easier to monitor but only
tell part of the story – ie they do not necessarily tell us the value that members and suppliers derive from being involved in
AIMSC. The suggested KPIs seek to balance these two tensions. So while AIMSC success will ultimately be measured against its
contribution to longer term impacts, other measures provide insight into the path to achieving this.
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5
Financial sustainability
This chapter includes options and scenarios in relation to the financial sustainability of AIMSC and in doing presents a number of
scenarios for illustrative purposes. These scenarios are based on the assumptions outlined in the following sections and in
Appendix E ; as such the results will differ if alternate assumptions are applied.
5.1
Current arrangements
The AIMSC pilot project is funded through three key sources - DEEWR, IINSW and other (event) revenue.36
The most significant source of funding is that provided by DEEWR. In July 2009, DEEWR committed $3.0 million over three
years towards the establishment and operation of the AIMSC pilot. In 2010, AIMSC applied for an increase in funding from
DEEWR due to the unexpected growth and success of the AIMSC model (for example, enquiries from potential members and
suppliers and the subsequent membership processing and supplier certification exceeded the level at which AIMSC was funded).
DEEWR subsequently agreed to increase the funding level by $605,915 (along with $69,750 in funding for additional IOP
communications) bringing the total commitment to $3.7 million.
IINSW, as a pilot co-funder, committed $99,000 to AIMSC over three years and accordingly has acquitted $66,000 to AIMSC.
In 2010-11 AIMSC generated an additional revenue stream through the trade fair, Connect 2010. AIMSC also receives in-kind
support from other sources, such as members and suppliers. This support includes printing services, entertainment (ie hosting
luncheons) and the provision of art work. AIMSC does not currently record the value of this in-kind support and may wish to
track this in the future.
Table 7 outlines the revenue received in 2009-1037 as well as the expenses incurred. It shows that the primary source of revenue is
government grants, with the majority of expenses related to staffing costs and administration.
Table 7 AIMSC revenue and expenses for 2009-10
Revenue
2009-10
Government grants
$916,026
Other income
$3,592
Total
$919,618
Expenses
Personnel
$257,754
Equipment
$32,605
Event management
$6,490
Marketing
$56,088
Travel
$64,059
Administration
$190,862
Total
$607,858
Source: AIMSC Annual Report 2009-10
5.2
Considerations for financial sustainability
A key objective for AIMSC is to become a financially independent and sustainable organisation. Based on reviews of the pilot,
financial models adopted in international SDCs, other Indigenous business organisations in Australia and consultations with key
stakeholders, we consider there are five key factors that could support the goal of financial independence and sustainability. These
36 There is also a small amount of revenue generated from interest payments
37 At the time of completing this report, AIMSC’s 2010-11 Annual Report was not published
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Financial sustainability
are: the introduction of a fee model; other government grant assistance; focusing on growing sponsorship revenue; reducing
costs; and/or implementing new services (see Figure 6). These are discussed in the sections below with an emphasis on the
introduction of a fee model, which appears to be the most prospective revenue stream from consultations conducted for this
report.
Figure 6 Summary of financial viability considerations
5.2.1 Introduce fee model
The first option we have considered is the introduction of a fee model – based on charging both members and suppliers fees.
There are a number of ways that AIMSC can generate fees from each of these sources to provide a stable revenue stream. The
below section analyses the different approaches to introducing member and supplier fees.
Membership fees
There are a variety of different ways to structure membership fees, with the most common structures adopted by similar
organisations being a flat fee levied to all members equally, or a tiered fee. Considerations in choosing a fee structure should
include administrative simplicity (to administer and for users to understand), equity (fee reflects ability to pay), efficiency (fee
reflects individual value placed on membership).
Under a flat fee, all members are charged the same fee regardless of the size of the member or the amount of services the member
accessed. Under a tiered membership fee, members pay different fees, based on categories of membership that are designed to
justify the fee that is charged. Table 8 outlines the key strengths and weaknesses of each approach with each option discussed in
further detail below.
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Table 8 Strengths and weaknesses of different membership fee models
Flat fee
Tiered fee
Strength
Weakness
Simplistic
Lacks flexibility
Inexpensive to implement
Potential to deter smaller members
Flexible
Complicated
Less impact on potential members
Expensive to implement
Flat fee
The benefit of a flat fee is that it is relatively easy to administer with the same fee being applied to all members. It is a simple
membership structure, with members knowing exactly how much they have to pay up-front38 and what the fee entitles them to.
There are drawbacks with this approach, however, such as members being unable to choose which level of membership/service
that suits them (assuming members do not all use exactly the same number and type of AIMSC services) and therefore may not
reflect the real benefit received from the membership. For example, a large organisation may use their membership extensively
whereas a small organisation may only use it a couple of times a year, yet under this approach both organisations would pay an
equal amount. In addition, this approach is not likely to reflect the total amount a member may be willing to pay. A large
organisation that may have more resources to spend on membership may be willing to pay more than smaller organisations that
have fewer resources to engage in memberships. As a result, a flat fee needs to find the balance between those willing to pay very
little and those who may be willing to pay more which may result in less than optimal revenue outcomes.
Tiered fee
A tiered fee structure would allow AIMSC to categorise members into different groups based on a revenue maximising model.
There are a number of different options for AIMSC in how to structure a tiered membership fee. These options include:
1.
Charging membership fees based on the size of the organisation. Defining the size of the organisation can be based on:
a. revenue or profit generated per year39
b. the number of employees
c. public company versus private company.
Using one of the above definitions, it may be possible to categorise the member organisation as small, medium or large 40 and
charge a flat fee across these categories. The disadvantage of this approach is that it does not reflect the amount of access that a
member may actually use. Therefore it may discourage some larger organisations as they will have to pay a greater amount
without the assurance that they would use the services much. The advantage of this fee structure is that it may more closely
capture capacity to pay.
2.
‘Fee-for-service’ membership fee structure is another tiered approach that is commonly used. This is where membership
categories are created by defining the level of service a member can access, for example:
a. unlimited services membership
b. medium restricted membership (ie access suppliers in a certain location only41)
c. pay per use.
The benefit of this tiered membership approach is that it allows members flexibility to determine how much of the service they
may use and therefore only pay for that amount. However, a disadvantage of this approach is that it can be complex to administer
and design, and can be hard for members to understand what they are and are not entitled to.
38 This was raised as being important to members during consultations
39 This is the model adopted by the NMSDC
40 ie small business less than five employees, medium business less than 20 employees, large business more than 200 employees
41 This reflects the approach adopted in the NMSDC regional model where it is possible for a member to join the regional council only, offering them a lower
membership fee but restricting access to the list of suppliers in that region only
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Financial sustainability
An additional complexity for AIMSC in adopting this approach is that their core offering is the database that contains the contact
details and information of certified suppliers. If members choose a pay-per-use membership AIMSC would need to develop a
system that does not give members access to the entire supplier base and therefore erode their intellectual property. Developing
these systems may be complex and costly. In our view, while a tiered membership fee structure has potential (particularly as they
grow their member base in jurisdictions other than NSW) it is not likely to be the best approach in the short term.
Fee level
Once a fee structure is chosen, AIMSC will need to decide at what level they will set the fee/s. In doing so, considerations will need
to be made around tipping points, ie at what point will fees deter members and suppliers.
While membership fees may not have an immediate impact on decisions to join AIMSC due to the significant ‘goodwill’
demonstrated by corporate Australia and government entities, during consultations it became clear that over time members
would demand to see evidence of the ‘value for money’ of their membership – particularly if a membership/certification fee is
imposed.
To identify the most appropriate fee, an analysis of the willingness to pay should be conducted. During consultations, member
opinions on fee levels varied greatly. However, all members expected to see clear value for money in order to justify paying a
membership fee. Specifically, members indicated that value for money for them would be drawn from:
1.
a supplier database that is accurate, easy to access and use
2.
access to a broad range of ‘transaction-ready’ high quality suppliers
3.
an increased number of certified suppliers able to service their industry or in their geographic location
4.
the number of transactions facilitated through AIMSC, and
5.
growth in suppliers’ business (particularly in the number of Indigenous people employed).
The willingness to pay cited by members in consultations ranged from $0 to approximately $15,000. The most commonly quoted
amount that a member would be willing to pay was in the range of $500-$1,000 per year.42 Many members identified that they
may be interested in an option of providing capability training and/or mentoring for certified suppliers as a substitute to paying a
fee or in return for receiving a discounted fee.
To provide a comparison, the Canadian approach (CAMSC) is a flat fee based on the total revenue of the member:

if the member’s revenue is greater than $1 billion, then the annual fee is $10,000

if the revenue is less than $1 billion but greater than $10 million, then the annual fee is $5,000

if the revenue is less than $10 million, then annual fee is $2,500.43
Certification fees
AIMSC also has the option of levying a fee on the suppliers that they certify and re-certify as an additional stream of revenue.
There are two main ways AIMSC could charge suppliers for certification:
1.
cost recovery, or
2.
nominal fee.
Under a cost recovery fee, AIMSC would charge suppliers the actual cost incurred through the three stages of the certification
(and re-certification) process. This would include staff time, travel costs (likely to be quite significant for suppliers operating in
Western Australia, for example as AIMSC only has a Sydney office), overheads etc. An alternative approach is to calculate the
average cost of total annual certification and re-certification and charge the average cost to all suppliers. Under this scenario,
suppliers that are less costly to certify would subsidise the suppliers that are more costly to certify. The major drawback of this
42 It should be noted that the member’s response to this question often depended on the role of the person who was representing the member organisation. More
senior management had a higher willingness to pay and were prepared to pay a higher amount.
43 Canadian Aboriginal Minority Supplier Council www.camsc.ca, “Corporate membership application” accessed on 23rd September 2011
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approach is that with current certification costs being quite high, particularly for those interstate suppliers, a cost recovery fee is
likely to reduce the number of suppliers willing to become certified (or re-certified). This creates a significant challenge for AIMSC
in achieving its objectives.
Alternatively, AIMSC could charge a flat nominal fee to all suppliers for certification and re-certification (annually). A variation of
this is to charge a nominal fee to suppliers based on their ability to pay. This is the approach adopted by NMSDC; they charge an
initial certification ranging between USD$300-$800 and re-certification a fee of USD$150-$350.
During consultations, willingness to pay was highest among suppliers, with the majority of suppliers indicating they would be
prepared to pay a certification fee, with willingness to pay inherently linked to the value and volume of transactions they could
secure through AIMSC. While some suppliers did see the broader value of AIMSC in creating the opportunity to transact, it was
evident that over time this would need to convert into a transaction to create real value. The amount that suppliers suggested they
were willing to pay ranged from $200-$1,000 yearly.
In considering a certification fee, it is important to recall that the purpose behind AIMSC is to improve Indigenous economic
outcomes through Indigenous businesses participating in contracts. Accordingly, fees should not be set at levels that deter
Indigenous businesses from participating, acknowledging a desire to achieve these broader goals and social outcomes.
Revenue dependency
The amount of revenue that AIMSC can generate through fees will depend on the total number of members and suppliers
recruited and retained. As discussed in the previous chapter there are a variety of factors that influence this, including:

‘Success breeds success’ – growth in members and suppliers is likely to lead to further growth as the AIMSC network
grows and success stories are shared. This was a key factor in some of the early years growth in the NSMDC. In particular
they found this was a factor in industries that relied heavily on SMEs in their supply chain.

Stronger and more targeted marketing – AIMSC has achieved impressive results in recruiting members and suppliers to
date through existing networks and indirect marketing. However, if AIMSC is to become financially independent, at least
in part from membership and certification fees, it would be prudent to develop a stronger and more tailored approach to
marketing as a key recruitment tool.

The level of fees – AIMSC will need to be mindful of the level at which fees are set and implemented. The impact will
obviously vary depending on the fee structure and level chosen. If AIMSC does introduce fees, the annual growth rate in
members and suppliers as well as renewals and re-certification should be monitored.

Other barriers to join – as mentioned previously AIMSC services are limited to members and suppliers who meet certain
criteria. Feedback from consultation suggests that the current criterion, particularly in relation to 51 per cent ownership,
is limiting supplier growth. This, along with other constraints (such as membership transaction targets), may want to be
reviewed in light of the overall potential for growth and in meeting the broader objectives of increasing opportunities for
the growth of a sustainable, vibrant and prosperous Indigenous business sector.
5.2.2 Other government grants
It may also be possible for AIMSC to identify alternative sources of government assistance to support their operations in the early
years post the conclusion of the pilot. In particular, there may be potential in exploring State Government assistance to assist
AIMSC in establishing a local presence in that jurisdiction in the form of a one-off grant to cover initial accommodation outlays or
costs to cover a staff member starting up the office.
5.2.3 Grow sponsorship revenue
During the review process, specifically in consultations with organisations and the NSMDC, it emerged that there are significant
opportunities in the future for AIMSC to grow a sponsorship based revenue stream. This includes through charging sponsorship
fees for larger networking events such as the business opportunity trade fair as well as smaller quarterly events. This could be
done through a marketing drive to identify new sponsors and partners, which may also serve to identify potential future members
at the same time, and provide them with a low cost introduction to the goals and objectives of AIMSC.
5.2.4 Implementing new services
AIMSC has a very clearly defined service offering – that is, to introduce corporate and government entities to Indigenous
suppliers. In fulfilling this objective there is a range of limited facilitation and networking services AIMSC currently provides.
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Financial sustainability
Consultations highlighted that there may be options to improve these services and increase the service offering to grow future
revenue, such as:

Expansion into new locations such as Victoria, Queensland, South Australia and Western Australia. Increasing AIMSC’s
presence in other States will increase the potential to recruit more suppliers and members and run more ‘sponsored’
networking events and accordingly grow potential revenue sources. Entering into new locations will of course place
pressure on AIMSC’s expenses, however we consider there are strategic ways to keep this cost down (see section 5.2.4).

Provide or facilitate supplier capability training courses – this would not only increase the chances that suppliers will be
able to enter into transactions with members, but could also be another source of revenue.

Provide working capital loans and access to specialised financing to suppliers – this is an approach adopted in the US
which has the potential to generate additional revenue from interest payments as well as by supporting a wider network
of potential suppliers.
5.2.5 Reduce costs
As AIMSC expands to accommodate the demand on its services, naturally its expenses will also increase. While it is expected that
there will be some key pressures on expenses that are induced by growth, they may also present opportunities to reduce current or
future operating expenses. These include:

Interstate offices – in a number of consultations it was raised that a local presence for AIMSC would be desirable. Local
offices may present an opportunity to reduce the current high costs associated with travel in site visits through the
certification process. However, for these cost efficiencies to be realised the cost of establishing local offices will need to
be controlled. There is potential for AIMSC to do so through initially establishing a one person office within existing
Indigenous business organisations or local chambers of commerce which would reduce the overhead costs of an office
and would also assist in the development of local networks and strategic partners.

Website functionality – during consultations with AIMSC staff, it became apparent that some of the internal processes to
support AIMSC operations are not running as efficiently as possible. Primarily this relates to inefficient use of the
website and record keeping systems that require multiple entries and recording of member and supplier information.
While there would be an initial outlay in redeveloping the website to build this functionality (for example enabling
members and suppliers to register for events via the website) this may in the future enable staff resources to be diverted
from duplicative administrative processes towards more commercial operations.
5.3
Scenario analysis
This section presents our analysis on the likelihood (and potential timeframe) for AIMSC to become independent from
government funding. In conducting this analysis we have made the following assumptions:

AIMSC introduces membership fees (with options presented for how this could be implemented and the corresponding
impact)

AIMSC membership grows to 300 by 2015 and certified suppliers grow to 600 by 2015 (see Table 9) – these numbers are
cumulative, so includes annual membership renewals and recertification

AIMSC expenses are consistent with the forecast presented in Table 10 (see Appendix E for further details).
Table 9 Projected total member and supplier numbers
Members
October 2012
115
October 2013
200
October 2014
250
October 2015
300
Suppliers
240
340
480
600
Source: Business Plan for 2011 and beyond
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Table 10 Forecast expenses (see Appendix E for assumptions)
2011-12
People Costs
Administration Costs
2012-13
$1,829,872
$1,884,768
$138,050
$142,192
$146,457
$150,851
$112,182
$115,547
$119,014
$122,584
Communication and Reporting
$47,978
$49,417
$50,900
$52,427
$111,595
$114,943
$118,392
$164,911
$169,858
$174,954
$180,203
$377,808
$389,142
$400,817
$412,841
$89,421
$92,104
$94,867
$97,713
$4,418
$4,551
$4,687
$4,828
$2,206,060
$2,904,278
$2,991,407
$3,081,149
Marketing/PR/Media
Other
Total
$1,941,311
$108,345
Travel Expenses
Events Management
2014-15
$1,162,947
Office Expenses
Professional Fees
2013-14
The following sections outline the impact of implementing different fee schedules and then summarises the impact this may have
on AIMSC’s ability to become financially independent.
5.3.1 Option 1: Membership fees
We have considered two different membership structures that AIMSC could adopt: a flat fee or a tiered fee. Analysis has not been
undertaken for membership fees based on revenue as it was evident from consultation that this option would not be acceptable to
members. Additionally the membership fees are assumed to include access to all AIMSC services (unless stated otherwise).
However, this analysis does not factor in any impact that fees could have on the projected number of members and suppliers.
Option 1a. Flat fee membership
If AIMSC was to introduce a flat fee membership structure, a potential fee could be:

low fee - $500

medium - $7,50044

high fee - $15,000.
The high and low scenarios are based on what some members reported in consultation they would be willing to pay and represent
the upper and lower bounds of those estimates. Clearly, there is a range of different fee options within these bounds. These
figures have also been compared to fees charged by similar organisations and are considered to be a reasonable range of potential
fees. Table 11 shows the revenue that AIMSC would generate under the low, medium and high scenario based on the number of
forecasted members being achieved and the difference between the forecasted expense and the amount of revenue AIMSC would
generate under each option.
Table 11 Revenue generated for a flat fee structure
2011-12
Low fee
Profit/loss
2012-13
2013-14
2014-15
$57,500
$100,000
$125,000
$150,000
-$ 2,148,560
-$ 2,804,278
-$2,866,407
-$2,931,149
Medium fee
$862,500
$1,500,000
$1,875,000
$2,250,000
Profit/loss
-$1,343,560
-$1,404,278
-$1,116,407
-$831,149
$1,725,00
$3,000,000
$3,740,000
$4,500,000
-$481,060
$95,722
$758,593
$1,418,851
High fee
Profit/loss
44 The membership fee chosen for the medium scenario is the mid-point between the high and low scenario fee
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Financial sustainability
As shown in Table 10, under the low fee scenario AIMSC would not be able to meet their projected expenses, and hence other
revenues are required to cover the difference. Under the medium scenario, AIMSC would also be unable to meet their expenses
over the next four years. Comparatively, under the high fee scenario, AIMSC would be able to meet its expected expenses, except
in the first year.
Option 1b. Tiered membership fee – based on member size
This option estimates the total revenue generated by charging a fee to members based on categorising members into small,
medium and large (on the basis of the number of employees).45 For the purposes of this analysis we have assumed the mix of
members by employees would be:
Membership category
Small
Medium
Large
Criteria
less than 5 employees
between 5 and 20 employees
more than 20 employees
Fee
$500
$5,000
$15,000
% of members
2%
8%
90%
The estimated fee for each group is calculated from stakeholder consultation and market prices of membership fees. The
percentage of members that would be classified as small, medium and large has been approximated on the basis of the current
membership list and the size of members targeted by AIMSC (along with a provision for the likelihood of some smaller members
joining AIMSC over time).
Table 12 Revenue generated from a tiered membership fee
Large
Medium
Small
Profit/loss
20011-12
$1,552,500
2012-13
$2,700,000
2013-14
$3,375,000
2014-15
$4,050,000
$46,000
$80,000
$100,000
$120,000
$1,150
$2,000
$2,500
$3,000
-$606,410
-$133,309
$460,156
$1,050,049
Based on this option AIMSC would not able to meet its forecast expenses until 2013-14. If this option was adopted, then funding
to cover the expected unmet liabilities (expenses) would need to be provided from an alternative source.
5.3.2 Option 2: supplier fees
Option 2 calculates a flat certification and re-certification fee. The estimated certification amounts have been generated from
consultation with suppliers and benchmarked against the fees charged by the NSMDC. It has also been assumed that a
certification fee does not impact on the projected number of suppliers. The fee under this option is:

Certification – $500

Re-certification – $250
Table 13 Revenue generated from certification and recertification
2011-12
2012-13
2013-14
2014-15
Certification
$60,000
$50,000
$70,000
$60,000
Re-certification
$30,000
$60,000
$85,000
$120,000
-$2,146,060
-$2,865,309
-$2,947,344
-$3,062,951
Profit/Loss
Based on the certification and re-certification fees AIMSC would not be able to meet its forecast expenses. However, we expect
that if supplier fees were introduced this would be done in conjunction with introducing membership fees rather than in isolation,
so they would supplement AIMSC’s incoming revenue.
45 The classification has been based on ABS classification of a large, medium and small organisation
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5.3.3 Option 3: member and supplier fees
Option 3 calculates the total revenue generated from both member and supplier fees. The option uses options 1b and 2 to model
the impact of the introduction of member and supplier fees at the same time (the same assumptions described above apply). The
outcome of this analysis is shown in Table 14.
Table 14 Revenue generated from both members and supplier fees
2011-12
High
Medium
Low
2012-13
2013-14
2014-15
$1,552,500
$2,700,000
$3,375,000
$4,050,000
$46,000
$80,000
$100,000
$120,000
$1,150
$2,000
$2,500
$3,000
Certification
$60,000
$50,000
$70,000
$60,000
Renewal certification
$30,000
$60,000
$85,000
$120,000
-$516,410
-$23,309
$615,156
$1,230,049
Profit/loss
Under this option AIMSC would not able to meet its expenses for the first two years. However, in 2013-14 AIMSC could begin to
make a profit. If this model of fee revenue was adopted and the estimated expenses closely match actual expenses, AIMSC will
need to find an alternative source of funding in the short term.
5.4
Conclusion
Based on stakeholder consultations and our analysis, we consider the introduction of a fee model for members and suppliers a
potential mechanism to put AIMSC on the path to financial independence. However, we would caution against implementing fees
at too high a level, too quickly and recommend that fees for suppliers should be modest and fees for members should be scaled to
value while AIMSC is still in the ‘building phase’ – so that the focus remains on growing their member and supplier base through
recruitment as well as creating opportunities for transactions to occur.
In relation to members, we consider that for some of the larger corporate members, the introduction of a fee model is likely to be
acceptable over the longer term as they are able to realise ‘value’ from their membership. We would recommend that member fees
are tiered on some basis of member size.
In relation to government members, we would recommend the consideration of two specific issues in relation to the introduction
of fees:

Some members that represent State and Territory government departments will only see value in transacting with
suppliers in their jurisdiction. To the extent that it is not possible to charge a fee based on access, it would seem
appropriate to consider a more modest fee for government members in this category.

Australian Government departments, while having collectively large procurement budgets, procure independently with
specific government and department practices. A ‘whole of government’ approach to fees for government entities may
have merit as this would be administratively simple, could rapidly increase the member base, and may have some
potential for replacing government grants that might otherwise be necessary in the ‘building phase’ of AIMSC.
Suppliers generally seemed willing to pay certification fees which reflected their acknowledgement of AIMSC’s potential value.
However, in reflecting on the general principal behind the drivers for setting up AIMSC, we think the most prudent approach
would be to ensure supplier fees are modest to ensure they do not deter any potentially eligible suppliers to maximise the number
of suppliers participating in the project.
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Recommendations
6
Recommendations
This final section brings together our analysis and views expressed in the consultations together into a series of recommendations
for DEEWR and AIMSC to consider in the final year of the pilot project implementation and potentially into the future (some of
the recommendations are more appropriate to a post-pilot AIMSC). In framing our recommendations, we have considered them
against four key elements: strategy, people, processes and systems. Success and sustainability are underpinned by these elements;
each impacting upon one another. Our recommendations are explained below and are summarised in Figure 7.
Figure 7 Summary of recommendations
Strategy
Targe t growth in the supplie r base by
industry, size and location.
Inve stigate the numbe r of IBs who fall in
the 50 to 51 pe r ce nt
Targe te d communications strate gy
Strate gic partne rships
Move up the procure ment chain
People
Process
Establish a presence in other States by
partnering with a local organisation
Consider making the supplier positions on
the AIMSC Board available, on a rotating
basis, to Indigenous owners of certified
suppliers
Consider expanding support programs to
member s and suppliers to maximise
transactions
Ensure the best possible match between
members and suppliers
Systems
Improve the functionality of the we bsite –
for me mbers, supplie rs and AIMSC
AIMSC should conside r formalising a
fe e dback syste m
6.1
Strategy
AIMSC should implement strategies that target growth in the supplier base by industry, size and location
A critical success factor for AIMSC is the size and variety of its supplier base. Members wish to understand what capabilities exist
within Indigenous businesses and then assess whether there are appropriate opportunities within their supply chain for these
businesses. While this is likely to become a more sophisticated process over time, in the early years the size and breadth of the
supplier base is likely to be a critical element in ensuring the maximum number of opportunities are identified.
Feedback from members indicates that they are seeking greater breadth in the AIMSC certified supplier network. Currently,
suppliers tend to be based in NSW (reflecting the initial pilot location). AIMSC effort should focus on identifying Indigenous
businesses outside of NSW and ensuring that within each jurisdiction certified suppliers provide a diverse range of goods/services
that aligns with member needs.
AIMSC should also consider targeting Indigenous businesses that are mature enough to work with large organisations. For
example, an Indigenous business in the early years of operation may not yet have the appropriate experience, or systems and
processes in place to adequately meet procurement orders.
In considering how best to target its resource effort, AIMSC may wish to first conduct an analysis of the procurement
opportunities that exist against current members and/or suppliers. While AIMSC does have four target industry sectors which
appear to be based on the size of the procurement opportunities, some of these sectors are highly specialised. Although there may
be opportunities for ‘low risk’ transactions within these industries, the opportunity to become embedded in the supply chain of
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the Department of Defence for example, is likely to be more limited in the short to medium term. Comparatively, the NMSDC
experience suggests that in the early years AIMSC should target those sectors that are naturally reliant on SME businesses within
their supply chain.
AIMSC should investigate the number of Indigenous businesses who fall in the 50 to 51 per cent category in the
context of seeking to develop a vibrant and sustainable Indigenous business sector
As AIMSC certification is contingent upon majority ownership and control by an Indigenous person, it places restrictions on the
number of Indigenous businesses that may be included in AIMSC’s supplier network. This criterion may be counterproductive to
the objective of increasing the size and variety of Indigenous businesses in the AIMSC network, which is the ultimate value
members derive from AIMSC membership.
Definitions of an Indigenous business vary across government policies and other programs (eg 50 per cent owned and controlled
versus 51 per cent) and members do not necessarily place greater value on the degree of Indigenous ownership between 50 and 51
per cent.
In this respect, and in context of the overall objective to develop a vibrant and sustainable Indigenous businesses sector, AIMSC
(and/or DEEWR) should investigate the number of Indigenous businesses who fall in the 50 to 51 per cent Indigenous owned
category to understand the type of Indigenous organisations who are currently ineligible for AIMSC services and their capacity to
move to a 51 per cent business structure. An appropriate time to do so would be at the conclusion of pilot but prior to
implementing eligibility criteria of a post-pilot AIMSC.
In making this recommendation, we recognise that the 51 per cent ownership criterion is the standard used in supplier diversity
models internationally and is a requirement of AIMSC’s affiliation with Global Link. We can appreciate that in the early years of
AIMSC, affiliation to the Global Link brand offers benefits such as training and operational support and the credibility of a tried
and tested approach. However, there are material differences between the AIMSC model and those adopted overseas, in particular
that overseas approaches tend to draw on a broader pool of suppliers by including other ‘minority’ groups, which would make the
conclusion of the pilot an appropriate time to consider the impact of this approach in the Australian context.
A cautious introduction of membership and certification fees is possible, providing that these fees to do not
discourage growth
As financial independence and sustainability is a key goal for both AIMSC and DEEWR, developing a steady non-government
revenue stream to meet expenses and enable delivery of services will be an important element of a post-pilot AIMSC.
Introducing membership and certification fees appears to be a possible approach for AIMSC in embarking on the path of financial
independence as: there appears to be a willingness to pay (although not at any fee level); it will ensure AIMSC is focussed on
delivering real value for members and suppliers; and it will focus members and suppliers on achieving real outcomes from their
membership fees.
However, the introduction of a fee model is not without its risks. As AIMSC does not currently charge for membership or
certification, current members and suppliers may revise whether they continue their association with AIMSC if fees are
introduced (and/or are too high). Fees may also pose a barrier to recruiting potential new members and suppliers. Setting fees
needs to balance the trade off between generating revenue and recruiting/maintaining members and suppliers as part of the
network.
While there is a high level of goodwill towards the AIMSC model currently, over time members and suppliers will want to see a
return on their investment (through membership or certification fees). In that respect, while it would be possible to cover costs by
setting very high fees to a limited set of members this may not be sustainable as some members may drop off and suppliers need a
diverse range of members and supply chains to embed themselves into (and vice versa). In particular, given the wider economic
and social goals around the AIMSC program, we consider that supplier fees should be very modest to ensure that no supplier is
being restricted from the opportunities presented by AIMSC.
Accordingly, if fees are introduced this should be done with caution and set at levels that do not discourage growth.
A targeted communications strategy can assist members and suppliers proactively identify opportunities
Feedback from consultation suggests members are seeking to understand when transactions have successfully occurred. Suppliers
also want to know when new members join, so that they may proactively pursue opportunities with the members.
Accordingly, we consider that a more comprehensive and targeted communications strategy, including the publication of ‘success
stories’ can assist members identify opportunities within their own organisation and as well as help suppliers proactively pursue
new opportunities. It can also serve to articulate to members and suppliers the benefits and value of their association with AIMSC
which will become more important if a fee model is introduced.
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Recommendations
Develop strategic partnerships to ensure more suppliers can access capability building support
Early evidence from consultations suggests that the procurement-readiness and competitiveness of some suppliers is mixed. As
AIMSC operates in only a small part of the business lifecycle, achieving its objectives means that Indigenous businesses will need
to rely upon broader support (eg government business support programs, Indigenous business associations, etc). Building
strategic relationships will assist in referring suppliers to business support services. It can also be a source of increased referrals of
potential suppliers to AIMSC.
Developing strategic relationships with other key players in the sector is critically important as there are many other organisations
that also hold registers of Indigenous suppliers. While AIMSC is the only Australian organisation that offers the certification
service, there are a number of other organisations that can assist in matching corporate and government entities to Indigenous
suppliers. Accordingly, AIMSC should identify how they can work together across the Indigenous business landscape.
Support suppliers move up the ‘procurement value chain’
During consultations, many members identified that they were seeking ‘low risk’ transactions with AIMSC suppliers reflecting
concerns about their capacity to deliver the quality and/or quantity of goods or services required. To achieve a vibrant and
prosperous Indigenous business sector by embedding them in the supply chains of large organisations in a sustainable way, we
recommend AIMSC identify options to support suppliers to ‘move up the procurement value chain’.
For Indigenous businesses to be truly embedded in supply chains, procurement activity should span the spectrum of high and low
value add contracts. To do this, it depends on AIMSC being able to certify suppliers providing high value (high quality) goods and
services, but also changing the mindset of members to give more Indigenous businesses opportunities to access the more complex
and risky contracts.
One way to do this may be through AIMSC identifying one or two members and suppliers who could take part in a pilot project to
identify and engage members and suppliers with ‘riskier’ or more complex contracts. The outcomes of this, ideally high value-add
transactions, can form part of the communication of ‘success stories’.
An alternative way is to facilitate supplier partnerships to secure more complex contracts. This can be supported through
facilitating greater supplier networking. Feedback from suppliers suggests that they find the ‘meet the buyer’ events useful
networking opportunities with other suppliers. One supplier reported that as a result of this introduction they had procured the
services of another AIMSC supplier. Dedicated supplier networking could include practical advice on how to work in partnerships
or joint venture arrangements, case study examples of where partnerships have worked well, and different approaches to consider
(ie where suppliers are subcontractors to a head contractor who may or may not be another supplier in procurement proposals).
6.2
People
Capitalise on growth opportunities by establishing a local presence in other jurisdictions
AIMSC has almost outgrown the proposed reach of the pilot project with members and suppliers across many jurisdictions. This
growth should be capitalised on by establishing a presence in other States by partnering with a local organisation. Feedback from
members and suppliers suggests they are seeking and would welcome local support.
We understand AIMSC is considering opening offices in other locations as part of its growth strategy. This approach should be
supported as it would not only meet member and supplier needs, but also strengthen AIMSC’s sustainability prospects through
the development of a broader member and supplier network.
While this expansion would involve increased costs for AIMSC, costs could be lowered through a partnership approach (this
would need to be structured to ensure that AIMSC maintains its independence). In addition, other costs, such as certification,
could be reduced through lower travel costs in conducting site inspections. Other establishment costs could also be minimised by
strategic partnerships with organisations, for example through in-kind support in relation to accommodation.
Consider making the supplier positions on the AIMSC Board available, on a rotating basis, to Indigenous
owners of certified suppliers
Given the breadth and depth of business experience within the AIMSC Board, it could also play a role in building senior
experience and capability among Indigenous Australian business owners. As part of the broader commitment to developing
Indigenous Australians with senior business experience through the pilot, AIMSC should consider making the supplier positions
on the AIMSC Board available, on a rotating basis, to Indigenous owners of certified suppliers to provide more Indigenous
suppliers with experience participating in corporate structures at the highest level.
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We suggest limiting the suppliers tenure on the Board to 18-24 months, so that the opportunity may be provided to others (while
ensuring that the supplier has been given time to develop and grow on the board before transition) and limit any perceived
conflict of interest. Importantly, this can provide the AIMSC Board with contemporary insights and a range of perspectives on the
impact of AIMSC within Indigenous businesses.
6.3
Processes
AIMSC should consider expanding its service offerings to meet the needs of members and suppliers
While AIMSC’s core business is to facilitate introductions between members and suppliers, many stakeholders view success as
opportunities converting to transactions. AIMSC should consider how its services best support this objective, while avoiding
duplication of services provided by government and other organisations.
Based on feedback in consultations, any potential expansion in service offerings could focus on:

assisting members to raise awareness of AIMSC and supplier diversity throughout the member organisation – this could
be through the development of a template procurement policy and procedures that would assist large members with
decentralised procurement practices in the early stages of their engagement with AIMSC, and

assisting suppliers to better position them to secure procurement contracts – eg preparing for networking events.
As the supplier and membership base grows, AIMSC should seek to better match suppliers and members at
networking events
Many stakeholders found AIMSC networking events very valuable as a first introduction. However, some suggested they could be
improved if there was greater alignment between member needs and supplier capabilities. That is, networking events should
involve suppliers that could provide goods and services procured by members, and conversely involve members that are in a
position to procure goods and services from suppliers (ie free from restrictions such as panel arrangements).
In order to improve matching of event attendees in the future, AIMSC may want to undertake some detailed analysis on the most
prospective opportunities in relation to members’ likely procurement needs and suppliers’ capabilities in particular industries.
6.4
Systems
AIMSC should improve the functionality of its website
To allow more members and suppliers the ability to proactively seek out new opportunities, AIMSC should improve the
functionality of its website to enable members and suppliers to search by industry and location. This was a common theme in
consultations with members.
In particular, members thought the search functionality and information provided on each supplier could be more detailed, which
would enable them to proactively identify opportunities with Indigenous businesses. Access to more detailed information may
also assist in defining the value of their membership. Improvements to the website could be undertaken in stages. As a first step,
this would involve improving the search functionality and including more information about suppliers. At a later stage, the
website could be updated to allow for the capacity to lodge quarterly reports and register/monitor member and supplier bookings
at networking events.
AIMSC should consider introducing a feedback mechanism
The success of the AIMSC model depends upon recruiting and retaining members and suppliers. Thus, understanding member
and supplier satisfaction with AIMSC services is important for not only retaining their support, but also AIMSC’s future
sustainability. A way to collect such information is through an annual survey of members and suppliers.
The survey may serve multiple purposes. Firstly, the survey may help AIMSC understand the services which members and
suppliers find valuable or not so valuable. Using this information, AIMSC can make informed decisions about its service offerings.
The survey could also be used to gain qualitative insights about the impact AIMSC is having on members and suppliers. Secondly,
it could provide a feedback mechanism on member interactions with suppliers, and vice-versa. For example, the survey could
capture information on the opportunities members afford to suppliers (say, through a tender process) and the response rate to
these opportunities.
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Appendices
Appendix A
References
50
Appendix B
Consultation list
51
Appendix C
Summary of consultation themes
52
Appendix D
AIMSC Board members
58
Appendix E
AIMSC expenses
59
Appendix F
Member and suppliers by industry
60
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Appendix A
References
AIMSC Annual Report 2009-10
AIMSC data, including:

Membership and certification enquiries and conversion rates

Survey data from “meet the buyer” events

Transaction information
AIMSC quarterly reports, including:

Quarterly report ending September 2009

Quarterly report ending December 2009

Quarterly report ending March 2010

Quarterly report ending June 2010

Quarterly report ending September 2010

Quarterly report ending December 2010

Quarterly report ending March 2011

Quarterly report ending June 2011
AIMSC, “Actual Invoices raised by AIMSC certified suppliers for AIMSC members” up to March 2011
AIMSC, “AIMSC Strategy on a Page FY09/10-FY11/12”
AIMSC, “Business Plan for 2011 and beyond”, 25th November 2010
AIMSC “Consolidated Budget 2011-12”
AIMSC, “Doing business as an AIMSC Certified Supplier: A guide to AIMSC certification” 4th April 2011
AIMSC, “Members Guide. A Guide to AIMSC Membership” April 2011
AIMSC, Application for AIMSC certification.
Australian Government Procurement Statement. July 2009
Australian National Audit Office, Development and Implementation of Key Performance Indicators to Support the Outcomes and
Program Framework. 2011.
Department of Finance and Administration Circular 2011/02
DEEWR, “Funding Agreement between the Commonwealth of Australia as represented by the Department of Education,
Employment and Workplace Relations and Australian Indigenous Minority Supplier Office Limited regarding funding for the
Australian Indigenous Minority Supplier Council Pilot Project” 30 May 2011
House of Representatives Standing Committee on Aboriginal and Torres Strait Islander Affairs , ‘Open for Business – Developing
Indigenous enterprises in Australia’. Final Report of the Inquiry into Developing Indigenous Enterprises, Parliament of the
Commonwealth of Australia, 105, (2008)
Message Stick Group, “Proposal to FaHCSIA: Submission to fund the establishment of the Australian Indigenous Minority
Supplier Council” July 2008
National Partnership Agreement on Indigenous Economic Participation. 2008
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Consultation list
Appendix B
Consultation list
A central component in undertaking this review was to ascertain stakeholder views regarding their experience with the AIMSC
program. The stakeholders consulted fell into a number of main groups:

seven members

six suppliers

AIMSC – Board members, CEO and staff

three indigenous associations

three international teleconferences in relation to the NMSDC, and

DEEWR contract team.
A full list of stakeholders that were consulted is outlined below.
Organisation name
AIMSC – Board and staff
Indigenous Business Australia
Kinaway
Indigenous Business Council of Australia
Industry Capability Network (NSW)
Suppliers
Print Junction
Marcus Lee Design
iSustainable
Terri Janke and Company
GJC/vibe
Outsource Personnel
Members
Department of Employment, Economic Development
and Innovation
NMSDC
Global Link
PwC
DEEWR – procurement staff
DEEWR – contract management staff
Department of Defence
Wesfarmers
Exxon Mobil
NAB
Location
Sydney
Sydney/Canberra
Melbourne
Canberra/Brisbane
Sydney
Organisation type
Not for profit
Government
Peak body
Peak body
Not for profit
South Australia
Melbourne
New South Wales
New South Wales
New South Wales
Queensland
Printing
Design
Food and water security company
Lawyers and consultants
Communication and event management
Recruitment
Brisbane
Government
United States
United States
Melbourne
Canberra
Canberra
Canberra
Melbourne
Melbourne
Melbourne
Not for profit
Not for profit
Professional services
Government
Government
Government
Retail
Mining
Financial services
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Summary of consultation themes
Appendix C
Summary of consultation themes
This chapter discusses the key themes by stakeholder group that emerged during consultations. It is important to note that the
themes reflect only the opinions of the stakeholders consulted and therefore may not reflect the views and experiences of all
stakeholders who have engaged with the AIMSC pilot project.
Members
Overall, members consulted identified as having a positive experience with AIMSC to date. Many members commented on the
dedication and enthusiasm with which AIMSC staff (particularly the CEO) had engaged with, and supported them. Most members
had attended AIMSC hosted events, engaged in transactions with suppliers or had commenced discussions about potential
transactions.
The key themes that emerged during member consultations are listed below and discussed briefly below:

supplier diversity, quantity and capacity

willingness to pay

AIMSC targets

website functionality

networking events, and

member support.
Supplier diversity, quantity and capacity
Many members noted that the overall size of the supplier list was small and some members specifically noted that it was
insufficient for them based on geographic location and/or industry. Some members were also concerned that AIMSC transactions
would be concentrated in a limited number of suppliers, further impacting that supplier’s ability to manage member requests.
Members also advised that they were looking for ‘low risk’ procurement opportunities with suppliers – such as office support
(including catering) and generally excluded goods and services that are core to the member’s business. This reflected a general
concern about supplier’s capability to meet the specific needs or quantity required by some of the large members and is driven by
many suppliers being small in size and/or relatively new. For example, a few members noted that some suppliers were unable to
process credit card transactions which made it difficult to transact with them. This is a particular issue for large firms where
procurement of goods and services below certain thresholds is decentralised to staff through the use of corporate credit cards.
A couple of members also suggested that they would like to see suppliers better briefed to help them understand large firms
procurement processes, such as responding to tenders and invoicing processes. While this is a service AIMSC currently offers it
appears that not all suppliers have benefited from this support (or the support might need to be more intensive). This suggestion
was raised in context of some suppliers not responding to multiple requests for tender from members. As a result, some members
thought there would be benefit in having a feedback loop to AIMSC and/or suppliers.
These concerns generally result in member cautiousness around the types of goods and services they are prepared to consider as
procurement opportunities with AIMSC suppliers – and accordingly may limit the higher value-add procurement opportunities
available.
Willingness to pay
All members consulted with were asked the hypothetical question about their willingness to pay a membership fee. Opinions
regarding membership fees varied significantly. However, almost all members responded that they would want to see a clear value
for money statement from the AIMSC program to justify the membership fee. Members described value for money for them as
being two-fold: firstly, an increase in transactions with suppliers and secondly the growth of suppliers businesses (in particular
the number of Indigenous people employed).
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Summary of consultation themes
In relation to the actual fee members would be willing to pay, predominantly a range of between $500 to $1,000 in annual fees
was quoted, with one stating a much higher amount in the order of $15,000.46 Some members suggested that they would be
willing to provide business-to-business training/mentoring as a substitute to paying an annual membership fee. No members
were willing to pay a fee based on a percentage of their sales revenue (similar to the NMSDC model).
Some members thought that the service should be free and should continue to be funded by government in order for the program
to remain free and that the list should be publicly available.
AIMSC targets
Members were asked about the requirement to agree to a range of procurement with AIMSC suppliers in their first year. Many
members were not comfortable with this requirement (and some had negotiated this provision out) as upon joining they had very
little information about the list of suppliers, with the only information available (presumably due to the list being AIMSC
intellectual property) being a broad description of the suppliers and the industries they operated in. Members did not know the
location of suppliers, or the types of goods and services that were being offered which made agreeing to a target very difficult.
Some members took a longer term view of their involvement with AIMSC and therefore wanted to spend more time identifying
and developing suppliers, so that they could be embedded into their supply chain. Therefore, they did not want to hasten their
engagement with suppliers to meet a minimum spend.
Despite reservations in signing up to a target, most members agreed that there needs to be a minimum spend agreed upon on a
‘best endeavours’ basis.
Website functionality
Members raised a number of issues in relation to the functionality and ease of use of AIMSC’s website, including:

the inability to download an entire list of the AIMSC suppliers

lack of a search function for suppliers based on location and industry

uncertainty regarding the definition of the industries that suppliers are categorised into

inaccurate information about suppliers (such as contact details and ABN numbers)

limited information or inconsistent detail of information on what suppliers offer, and

difficulties with accessing multiple log in details for large organisations.
Some members also suggested it would be good for the website to include information about ‘work won’ by other suppliers
through AIMSC members. In particular, they thought this case study approach would help them identify where procurement
opportunities might lie within their own business. It would also provide members with assurance that particular suppliers are
able to successfully deliver on contracts.
Networking events
At some networking events, such as ‘meet the buyer’ events, some members felt that the matching of suppliers with members was
not as successful as it could have been. They felt that AIMSC could have matched members and suppliers more accurately
reflecting the potential procurement opportunities that are possible within the members with the supplier’s capabilities.
Member support
One of the current limitations to member’s participation in the AIMSC program can be their internal procurement processes.
Members reported that there is a significant amount of time needed to plan how to strategically engage with AIMSC program
while still meeting internal objectives – which at times can conflict. For example, one member reported that they had undertaken
a procurement review which resulted in a decision to decrease the number of suppliers they engage with and to streamline
processes through panels of suppliers that they could rely on to fill large contracts.
46 The member’s response to this question often depended on the role of the person who was representing the member organisation. More senior management or
those within corporate social responsibility divisions had a higher willingness to pay and were similarly prepared to pay a higher amount
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Summary of consultation themes
Additionally, members noted that it takes time to develop an internal communications plan so that the breadth of ‘buyers’ in the
organisation are aware of AIMSC. This posed a challenge to many members. Members also found it challenging where senior
management were the driving force behind signing up to the program but this was not communicated throughout the
organisation.
In addition, members’ procurement process varied greatly between organisations, with some operating a decentralised
procurement process, others centralised, and some with a mix of both. Therefore getting the message out about AIMSC to all
employees is a complex task. This is made harder by the limited access employees can have to the AIMSC supplier list. The
additional complexity this causes is that it makes tracking of expenditure on AIMSC suppliers hard to do. Therefore many
members reported that they were not entirely sure of the total transaction amount that had been spent through the AIMSC
program.
Suppliers
Suppliers consulted were optimistic about the potential opportunities AIMSC can bring to their businesses. All suppliers
consulted had attended AIMSC networking events which had lead to further discussions with members (although most had not
achieved actual transactions at the point of consultation). All suppliers made positive comments about the commitment and
efforts of AIMSC personnel. Key themes that emerged from consultations with suppliers include:

low transaction success but lots of potential

willingness to pay

networking events

quarterly reporting

website content, and

barriers to procuring with members.
Low transaction success but lots of potential
Of the suppliers consulted, only a couple had achieved actual transactions with the rest yet to sign their first AIMSC transaction.
Of those who had transacted with members, none reported that AIMSC had been significant in terms of overall impact on their
business. However, all suppliers considered AIMSC had the potential to do so.
Many suppliers reported that they had begun to build relationships with some members (although some noted that they had been
very proactive in calling member contacts with mixed responses with some members being less open to their approaches) and saw
real potential for them to win work with AIMSC members into the future.
Suppliers were generally realistic in terms of their expectations in winning contracts and recognised that to be successful they
needed to be competitive. Most suppliers considered the onus was on them to make the most of the opportunities presented
through the AIMSC network and understood that they were not guaranteed to win work. Many suppliers saw the opportunity to
work with an AIMSC member as one that would give them credibility to win further work within, and outside, the AIMSC
network.
Willingness to pay
General willingness to pay was highest among suppliers (compared to members), with most suppliers prepared to pay at least a
nominal fee for certification. One supplier even suggested they would be prepared to pay up to $1,000 for certification, however
most considered a more nominal fee of around $200 per year reasonable. It was noted that some suppliers were already ‘paying’
for the AIMSC program through time and travel costs to attend networking events with some suppliers attending events in other
jurisdictions as well.
Like members, suppliers often referenced ‘value for money’ in response to questions around fees with most suppliers basing this
on the volume or value of transactions achieved through AIMSC.
Networking events
Suppliers reported that AIMSC networking events were a very useful way to make a first introduction with buyers and reported
that the events were run with enthusiasm and energy.
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Summary of consultation themes
Several suppliers found that the benefits of attending AIMSC networking events extended beyond meeting the buyers, to
networking with other Indigenous suppliers. In fact, one supplier reported that as a result of a meet the buyer event they
subsequently procured the services of another AIMSC supplier. There was evidence of some early discussions between suppliers
about joint approaches to larger projects.
Many suppliers advised that they found the first ‘meet the buyer’ event hard to prepare for and found themselves inexperienced in
marketing within the format and time constraint. Some reported that this forced them to rethink their approaches the second
time around, while others felt more initial advice/support would have been beneficial. Some suppliers also found the process of
speaking to such large organisations intimidating.
Like members, suppliers commented that they felt that the matching arrangements for the ‘speed dating’ style events could have
been better, finding that in some of the sessions they had been paired with a member who either had in-house capabilities similar
to what they offered or had significant existing panel contracts which would make transactions unlikely.
Quarterly reporting
Similar to members, suppliers have to report each quarter to AIMSC on transactions. Of those suppliers who had achieved a
transaction, most did not find the reporting requirements too onerous (although some did note that they found AIMSC’s reminder
phone calls helpful).
There is some confusion however in how to record transactions that a supplier has with an AIMSC member who they transacted
with before AIMSC. It appears that where this is the case, these amounts are not being reported on (although this practice may
differ across suppliers).
Website content
Suppliers reported that the AIMSC website could be updated in a more timely fashion, with some suppliers reporting that they
have gone to search the website following receiving an email from AIMSC about a new member however subsequently were not
able to find this information on the website.
Barriers to procuring with members
Many suppliers said they find that there are many barriers in seeking to contract with large organisations. A common experience
for suppliers has been that in speaking to AIMSC members, the relevant contacts (usually in a procurement-related position) were
not aware of AIMSC or its objectives. It seemed from the supplier’s perspective that senior levels of management of member
organisations would sign up to AIMSC and then delegate the responsibility for the relationship without sufficient communication
of their expectations in terms of outcomes.
Some suppliers also raised concerns about the size and scale of some of the members and whether they had the capabilities to
enter into transactions with some members.
Existing panel contracts in organisations was also another significant barrier reported, with suppliers reporting that some
members were not willing to procure outside these existing arrangements (or to add a supplier to the panel). Other procurement
processes increased the complexity of entering into transactions with members, with some suppliers feeling ill-equipped to
understand and respond to requests for tender. It was reported by suppliers, that they know of other suppliers that are not aware
of some key requirements when dealing with a large company, such as the need to have public liability insurance.
Other organisations
The stakeholder consultation process also included consulting with a number of Indigenous business and representative
organisations. They offer a variety of services, with some being national and others regionally based – however, all have had some
engagement with AIMSC.
The organisations consulted were: Indigenous Business Council Australia (IBCA); Indigenous Business Australia (IBA); Kinaway
(Victorian Aboriginal Chamber of Commerce); and the Industry Capability Network (ICN). Key themes that arose from these
consultations with these organisations focused on:

opportunities to work together better

AIMSC eligibility criteria, and

government support.
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Summary of consultation themes
These are discussed briefly below.
Opportunities to work together better
Some of the organisations are relatively ‘young’ and this was reflected in the extent of engagement to date and consultations. As a
result (and due to the relative newness of AIMSC) many of these relationships were in their early stages. It was clear that
opportunities existed for AIMSC and these organisations to work together more closely – and strategically – to deliver better
outcomes in Indigenous economic development. All organisations were keen to see closer relationships forged.
In particular, it was identified that there are benefits from greater referrals of suppliers to services provided by AIMSC as well as
to open doors to new networks of suppliers that could become AIMSC certified. AIMSC suppliers could benefit in greater numbers
from the training and business development services provided by these organisations which can contribute to AIMSC success.
Eligibility criteria
There was conflicting opinion regarding the 51 per cent Indigenous ownership criteria for suppliers. Some organisations felt
strongly that the current criterion was unreasonably locking ‘genuine’ Indigenous businesses out.
Some organisations set criteria below 51 per cent in relation to their own services. Furthermore, some of the organisations
maintained their own publicly available list of Indigenous businesses47 that Australian companies and government departments
could access if they were seeking to procure goods or services from an Indigenous organisation. While there are opportunities for
these organisations and AIMSC to form strategic partnerships, the ‘competing lists’ are likely to present challenges to these
relationships properly forming.
It should be noted however, that some of the organisations did not have a strong view on the issue of eligibility criteria.
Government support
Many of these organisations commented that they felt it is important for the Australian Government to continue supporting the
AIMSC project financially to ensure they are able to be successful and achieve their goals. In particular, government funding in
the short term was considered a ‘critical success factor’ to ensure AIMSC is able to develop the fundamentals of the organisation
and set it up for future successes over the long term.
NSMDC
Consultations also occurred with two senior staff from the NMSDC; one from an NMSDC operational perspective and the other
from the organisations international program ‘Global Link’. It was clear from these consultations that AIMSC has a very strong
relationship with the NMSDC which has been able to support some of their early achievements to date through learning from the
US model and leveraging training and the existing operating model. AIMSC achievements are also well recognised by the NMSDC.
Key themes from these consultations included:

eligibility criteria important

critical mass for growth, and

government support.
Eligibility criteria important
In response to feedback that there was some concern around the 51 per cent criteria in Australia, the NMSDC advised that this is a
fundamental component of operating the under ‘Global Link’ brand.
The importance of maintaining this element of the model, along with other elements such as the approach to certification, is that
it ensures the credibility of the model – but also reinforces that the model is geared towards ensuring growth occurs in minority
controlled businesses.
47 Based on their definition/criteria.
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Summary of consultation themes
Critical mass for growth
The NMSDC reported that in their experience, the first few years of operation is really a building phase where the supplier council
should be seeking to reach ‘critical mass’ in member and supplier numbers. Once this point is reached, the member and supplier
base is usually strong enough to spur on further growth, but also to maintain a sustainable level of transactions. It was
acknowledged that reaching this point is difficult.
In terms of suggestions of how to get to ‘critical mass’ they reported that it may be worthwhile targeting certain sectors who are
more likely to rely heavily on SMEs in their supply chain. The example provided was the transport and logistics sector, who used a
lot of small and medium sized trucking businesses in part based on their geographic location. This meant that potential member
businesses in this area were already prepared to deal with a range of smaller providers as they preferred the flexibility it offered
and therefore the transition to using NMSDC certified suppliers was not a huge shift for them in terms of their operations.
Government support
In consultations, it was suggested that one of the key reasons the NMSDC thought the Australian model had achieved such strong
success early on was due to the support (and mandate) provided by the Australian Government.
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AIMSC Board members
Appendix D
Board member
Stephen Roberts
Dugual Russell
Lani Blanco-Francis
Anthony Hollis
Danny Gilbert
Leah Armstrong
Suzanne Young
John Grant
Elizabeth Broderick
AIMSC Board members
Position
Chair Executive
Deputy Chair
Director
Director
Director
Director
Director
Director
Director
Organisation
Citi Group Australia
Message Stick Group
LBF Consulting
Hollis Hochberg
Gilbert & Tobin Lawyers
Reconciliation Australia
Commonwealth Bank
Department of Finance and Administration
Australian Human Rights Commission
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Status
Member
Supplier
Supplier
Member
Member
Member
Member
Member
Member
What would you like to grow?
Appendix E
AIMSC expenses
This appendix includes details of AIMSC expenses and assumptions used to forecast future expenses to provide an estimate of
future liabilities. These estimates were relied upon in the analysis of financial sustainability options presented in Section 5 of this
report.
AIMSC’s estimated 2011-12 expenses are detailed in Table 15. These estimates include an increase in staff numbers from 6 to 9.2
staff. To facilitate the analysis in this report we have estimated AIMSC’s expenses from 2012-15. These estimates are based on the
following assumptions:

An escalation factor of 3 per cent across all items.48

An increase in staff in 2012-13 based on the assumption that AIMSC will expand their presence into other States. We have
assumed that there will be five additional staff to deliver this change (on the basis of one staff member in Queensland, South
Australia, Western Australia, Victoria and an additional support staff in one of the locations), bringing total staff numbers to
14.2. The level of staff is assumed to remain at 14.2 for 2013 onwards.
o
Additional staff salaries have been estimated based on the number of staff employed by AIMSC in 2011-2012 divided
by the forecasted people costs for 2011-12. This cost has been included in the people costs for 2012-13.
o
Additional expenses for office space in other States (Queensland, South Australia, Western Australia and Victoria)
have not been included on the assumption that will partner and share accommodation with existing organisations.
Table 15 Forecast expenses
2011-12
People Costs
2012-13
2013-14
2014-15
$1,162,947
$1,829,872
$1,884,768
$1,941,311
$138,050
$142,192
$146,457
$150,851
Office Expenses
$112,182
$115,547
$119,014
$122,584
Communication and Reporting
$47,978
$49,417
$50,900
$52,427
Administration Costs
Professional Fees
$108,345
$111,595
$114,943
$118,392
Travel Expenses
$164,911
$169,858
$174,954
$180,203
$377,808
$389,142
$400,817
$412,841
$89,421
$92,104
$94,867
$97,713
Events Management
Marketing/PR/Media
Other
$4,418
$4,551
$4,687
$4,828
Total
$2,206,060
$2,904,278
$2,991,407
$3,081,149
Source: AIMSC Consolidated Budget 2011-12
48 The escalation rate is based on forecast inflation rates from the Reserve Bank of Australia.
Department of Education, Employment and Workplace Relations
PwC
59
What would you like to grow?
Appendix F
Member and suppliers by industry
Industry
Number of
members
1
Number of
suppliers
1
Industry
12
1
Beverages
1
13
Building & construction services
1
3
Catering services
1
2
Cleaning
8
6
Corporate gifts
1
1
Electrical / lighting products
Government
25
2
Entertainment
Information Technology
Broadcasting and
Telecommunications
Management and Business
Professionals and
Administrative Services
Medical Equipment and
Accessories and Supplies
Mining and oil and gas services
12
2
Event management services
12
1
Food products
1
2
ICT services
4
4
Landscaping services
Multiple
1
2
Legal services
Office Equipment and
Accessories and Supplies
Organisations and Clubs
1
16
Management consulting services
1
10
Politics and Civic Affairs
Services
Transportation and Storage and
Mail Services
Travel and Food and Lodging
and Entertainment Services
University
5
1
Media, design, marketing
services
Mining services
3
1
Office products
3
1
Other
Apparel and Luggage and
Personal Care Products
Building and Construction and
Maintenance Services
Commercial and Military and
Private Vehicles and their
Accessories and Components
Drugs and Pharmaceutical
Products
Engineering and Research and
Technology Based Services
Financial and Insurance
Services
Food and Beverage Products
TOTAL
1
94
Apparel products
1
Print services
8
Recruitment services
1
Tourism
1
Training and education services
2
Transport & logistics services
1
Vehicular products
83
TOTAL
Source: AIMSC data as at 10th June 2011
Department of Education, Employment and Workplace Relations
PwC
60
What would you like to grow?
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