if it’s good enough for corporate america , it’s good enough for higher education

90th Annual Meeting & ExpositionApril 3 – 6, 2011

Memphis, Tennessee


Memphis, Tennessee

If it’s Good Enough for Corporate America, it’s Good Enough for Higher Education

Presented byJesse Moore, Director

Supplier Diversity Development

NAEP Annual ConferenceMemphis, Tennessee

April 4, 2011


Memphis, Tennessee2

Agenda

• The business case of supplier diversity• Trends shaping corporate response to supplier

diversity• How corporations implement the business case for

supplier diversity • The value of supplier diversity in higher education• Research project and value survey


Memphis, Tennessee3

The Business Case for Supplier Diversity

• While once perceived as a social responsibility, corporations began to recognize a business case for supplier diversity also exists.

• The business case recognizes supplier diversity as a “strategic necessity” that helps corporations

• Respond to the needs of an increasingly diverse market• Report greater return on procurement costs• Maintain a competitive advantage over other corporations• Allow greater flexibility• Focus more on customers• Increase innovation and efficiency

• Partnerships with diverse suppliers shows an investment in their communities• Corporations are perceived as socially responsible and committed to meeting the needs

of diverse communities


Memphis, Tennessee4

Trends Shaping Corporate Response to Supplier Diversity

1.Shifting Demographics• The U.S. minority population is expected to grow to 47 percent by 2050

Figure 1. Population Growth by ethnicity, 2000-2050

Group Population % of Nations Total Population Population % of Nation’s Total Population

% increase, 2000-2050

Hispanic 35.6 million 12.6% 102.6 million 24.4% 188%

Asian/Pacific Islander

10.7 million 3.8% 33.4 million 8% 213%

African American 35.8 million 12.7% 61.4 million 14.6% 71%

Non-Hispanic White 195.7 million 69.4% 210 million 50.1% 7%

2000 2050

Source: The Center for Public Education


Memphis, Tennessee5


2. Rise in Minority and Women-Owned Business Enterprises (MWBEs)• The number of MWBEs is increasing at a faster rate than the national average• Minority-owned firms represent 21 percent of all non-farm businesses in the

U.S. (5.8 million)• Women-owned firms represent 28.7 percent of non-farm businesses (7.8

million)• Additionally, the growth rate of minority-owned firms are nearly

proportionate to the growth rate of non-minority firms involved in the same industries

Source: U.S. Census Bureau 2007 Survey of Business Owners


Memphis, Tennessee6


Figure 2. Growth Rate of Minority-Owned and Non-Minority-Owned Companies in U.S. Industries

Type of Business Minority-Owned Non-Minority-Owned

Health care and social services

14% 8%

Professional, scientific, and technical services

11% 15%

Retail trade 10% 11%

Administrative and support services

10% 7%

Construction 9% 13%

Transportation and warehousing

7% 4%

Real estate and rental and leasing

5% 10%

Other 34% 32%

Source: U.S. Census Bureau


Memphis, Tennessee7


Figure 3. Data of Business Ownership by Gender, Ethnicity, and Race in the U.S.Type Number of Firms Employees Receipts Industry Characteristics % of All U.S. Businesses in

These Industries

Women-Owned Businesses 7.8 million 7.6 million $1.2 trillion Repair, maintenance, personal and laundry services; healthcare and social assistance

45.2%

Minority-Owned Businesses 5.8 million 5.9 million $1 trillion Repair, maintenance, personal and laundry services; healthcare and social assistance

31.5%

Hispanic-Owned Businesses 2.3 million 1.9 million $345 billion Construction, repair, maintenance, personal and laundry services

10.4%

African-American-Owned Businesses

1.9 million 921,032 137.5 billion Healthcare and social assistance; repair, maintenance, personal and laundry services

15.4%

Asian-Owned Businesses 1.6 million 2.9 million $514 billion Repair, maintenance, personal and laundry services; professional, scientific, and technical industries

7.3%

American Indian/Alaskan Native-Owned Businesses

237,967 184,416 $34.4 billion Construction, repair, maintenance, personal and laundry services

1.1%

All U.S. Businesses 27 million 119 million $30 trillion All the above including transportation, warehousing, real estate, retail, administrative and support services

Source: 2007 U.S. Census Bureau Survey of Business Owners


Memphis, Tennessee8


3. Increased Minority Buying Power• In 2009, minority buying power reached $1.5 trillion• Minority groups generally comprise 13.8 percent of the total buying

power of the U.S.• Minority markets are growing at a faster rate than non-minorities• By 2014, it is estimated that minority buying power will reach $2 trillion

Source: Selig Center for Economic Growth, University of Georgia


Memphis, Tennessee9

How Corporations Implement the Business Case for Supplier Diversity

Corporations recognized for their supplier diversity programs have attributed some of their success to the following aspects:

• Use of Established Metrics• Increased involvement of corporate leadership• Training Services for diverse suppliers• Tier I Procurement Spend• Corporate Responsibility Initiatives


Memphis, Tennessee10


Use of Established Metrics• Measures corporate utilization of Minority and Women-owned firms and how that utilization impacts

revenue or market share

• Metrics should not be “simplistic”, i.e. not be limited to measure spend on diverse suppliers. For example, metrics should also– Specifically track how successfully corporations “align” their supplier diversity program with their

corporate goals– Quantify the effects globalization has on supplier diversity*

Increased Involvement of Corporate Leadership• Corporate leadership’s commitment to supplier diversity actively sets the standard and pace for

corporations to follow by• Integrating supplier diversity throughout the organization, particularly in their strategic plan• Holding executives accountable for attaining supplier diversity goals (e.g. through compensation)• Actively engaging with various multicultural groups (i.e. affinity groups)

*Source: The Hackett Group




Training Services for Diverse Businesses• Many corporations offer supplier development programs that train MWBE suppliers to

successfully do business with them

Tier I Procurement Spend• Corporations spend a percentage of its Tier I (prime contractor) procurement on Tier II

( subcontractor) suppliers that are MWBEs• For example, Marriott International spends over 16 percent of its Tier I

procurement on MBEs and WBEs*

Corporate Responsibility• Corporations with strong supplier diversity programs promote social welfare of diverse

communities• Corporate Responsibility goes beyond affirmative action programs (e.g. philanthropy toward

various multicultural organizations, and scholarship funds aiding diverse students)• Leads to stronger ties between the corporations and communities

*Source: diversityinc.com



Valuing Supplier Diversity in Higher Education

• No research has been conducted to measure the value supplier diversity brings to education

• To understand how colleges and universities perceive supplier diversity across the country it is necessary to examine how it is valued

• The Research Project• Initiated to measure the value of supplier diversity • Preliminary investigation was conducted through

survey research



Valuing Supplier Diversity in Higher Education

Survey Research• Purpose of survey was to identify the value aspects of supplier

diversity in higher education• Sent to National Association of Education and Procurement (NAEP)

membership• Distributed electronically through Zoomerang online survey tool• Open from December 20, 2010 to January 31, 2011• Divided into two parts:

– Questions 1 through 9 asked respondents to gauge how their colleges and universities perceive their supplier diversity program

– Question 10 asked respondents to provide demographic information about their college or university

• 105 respondents completed the survey



Value Survey Results

Question 1—Does your institution have a Supplier Diversity initiative/program?

Response Number of Responses Percentage

Yes 82 78%

No 23 22%

Total 105 100




Question 2—Is the staff leading this initiative full-time or part-time?

Type of Employment Number of Responses Percentage

Full-time 56 53%

Part-time 24 23%

N/A—No program in place 25 24%

Total 105 100%




Question 3—Do you feel there is a need to better document the value of supplier diversity in higher education?


Yes 83 79%

No 22 21%

Total 105 100%




Question 4—Please rank the six most important value aspects to your Supplier Diversity Program (1=Most Important, 2=Very Important, 3=Important, 4=Moderately Important, 5=Lesser Importance, 6=Slight Importance, and 7=Least Importance).

Value Aspect Number of Responses for Most

Important

Number of Responses for

Very Important


Important


Moderately Important


Lesser Importance


Slight Importance


Least Importance

Total Responses Rank

Inclusive environment

40 27 10 8 6 8 6 105 1, 2

Moral imperative 25 23 26 16 6 5 4 105 3

Positive public relations with affinity groups

8 7 19 40 16 13 2 105 4

Increased alumni giving

2 7 8 16 34 23 15 105 5

Attracting/retaining diverse students

4 14 19 13 30 24 1 105 5

Legislative Relations

12 22 21 8 11 24 7 105 6

Other 14 5 2 4 2 8 70 105 7




Question 5—If “Other” was in your top six in Question 4, please define.

• Other responses– Economic development– Community involvement– Federal regulations– Outreach– Campus training– [Increase] enrollment– Just beginning program– Business necessity– NIGP, ISM– Development of new/better sources of goods




Question 6—On a scale of one to five, how does your institution value each of the following aspects (1=No Value, 2=Little Value, 3=Moderate Value, 4=Valuable, and 5=Very Valuable)?

Value Aspect Number of Respondents for

No Value

Number of Respondents

for Little Value

Number of Respondents for Moderate Value

Number of Respondents for

Valuable

Number of Respondents for

Very Valuable

Total Number of Responses

Rank

Inclusive environment 8 6 24 36 31 105 4

Legislative relations 7 12 19 44 23 105 4

Moral imperative 6 9 21 41 28 105 4


9 11 31 45 9 105 4

Increased alumni giving 14 16 34 20 21 105 3


9 7 28 34 27 105 4

Other 66 8 14 7 10 105 1




Question 7—How successful has Supplier Diversity been in achieving these aspects (1=No Success, 2=Little Success, 3=Moderate Success, 4=Successful, and 5=Very Successful)?

Value Aspect Number of Respondents

for No Success


for Little Success

Number of Respondents for Moderate

Success

Number of Respondents for Successful


for Very Successful

Total Number of Responses

Rank

Inclusive environment 17 17 39 23 9 105 3

Legislative relations 17 19 38 24 7 105 3

Moral imperative 15 10 42 29 9 105 3


14 21 41 22 7 105 3

Increased alumni giving 32 31 34 7 1 105 3


25 23 40 13 4 105 3

Other 64 10 18 8 5 105 1




Question 8—What specific initiatives or goals does your institution use to make its Supplier Diversity Program successful? Select all that apply (responses ranked from most selected to least selected).

Aspect Number of Respondents for Each Selection

Response Percentage Rank

Measurable quantifiable dollar spend on MWBEs 85 81% 1

Active community outreach 75 71% 2

Maintain current database of MWBEs 67 64% 3

Marketing of Supplier Diversity program 53 50% 4

MWBE certification 49 47% 5

Involvement in advocacy organizations 48 46% 6

Supplier Diversity website 47 45% 7

Hold supplier networking forums 45 43% 8

Developed strategic plan for Supplier Diversity 44 42% 9

Established access between Supplier Diversity Director and senior management

32 30% 10

Dedicated budget to Supplier Diversity 23 22% 11

Other 22 21% 12




Question 9—Would you or your institution be willing to participate in a study on Supplier Diversity’s value to higher education?


Yes 53 50%

No 52 50%

Total 105 100%



References

• 2007. “Changing Demographics at a Glance.” The Center for Public Education

• 2010. “Hackett: Most Supplier Diversity Programs Simply Fail to Deliver.” The Hackett Group Research Alerts and Press Releases.

• 2011. Survey of Business Owners. U.S. Census Bureau• Frankel, Barbara. 2010. The DiversityInc Top 10 Companies for Supplier

Diversity. http://www.diversityinc.com• Humphreys, Jeffrey. 2010. “The Multicultural Economy.” The Selig Center

for Economic Growth. The University of Georgia• Sharma, Raj, Timothy Laseter, and Russ Witt. 2008. “Making a Stronger

Case for Supplier Diversity.” The Censeo Consulting Group.

http://www.diversityinc.com/

http://www.diversityinc.com/


Memphis, Tennessee


Memphis, Tennessee

THANK YOUQUESTIONS AND ANSWERS

if it’s good enough for corporate america , it’s good enough for higher education

Documents

value of supplier diversity

supplier diversity1

supplier diversitywhile

supplier diversity2

supplier diversityfigure

corporate response

minority population

growth rate of minority