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

If it’s Good Enough for Corporate America , it’s Good Enough for Higher Education. Presented by Jesse Moore, Director Supplier Diversity Development. NAEP Annual Conference Memphis, Tennessee April 4, 2011. Agenda. The business case of supplier diversity

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

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  1. If it’s Good Enough for Corporate America, it’s Good Enough for Higher Education Presented by Jesse Moore, Director Supplier Diversity Development NAEP Annual Conference Memphis, Tennessee April 4, 2011

  2. 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

  3. 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

  4. 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 Source: The Center for Public Education

  5. Trends Shaping Corporate Response to Supplier Diversity 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

  6. Trends Shaping Corporate Response to Supplier Diversity Figure 2. Growth Rate of Minority-Owned and Non-Minority-Owned Companies in U.S. Industries Source: U.S. Census Bureau

  7. Trends Shaping Corporate Response to Supplier Diversity Figure 3. Data of Business Ownership by Gender, Ethnicity, and Race in the U.S. Source: 2007 U.S. Census Bureau Survey of Business Owners

  8. Trends Shaping Corporate Response to Supplier Diversity 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

  9. 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

  10. How Corporations Implement the Business Case for Supplier Diversity 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

  11. How Corporations Implement the Business Case for Supplier Diversity 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

  12. 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

  13. 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

  14. Value Survey Results Question 1—Does your institution have a Supplier Diversity initiative/program?

  15. Value Survey Results Question 2—Is the staff leading this initiative full-time or part-time?

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

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

  18. Value Survey Results 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

  19. Value Survey Results 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)?

  20. Value Survey Results 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)?

  21. Value Survey Results 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).

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

  23. 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 DiversityIncTop 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.

  24. THANK YOUQUESTIONS AND ANSWERS

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