Business (Managing Higher Ed)
- By Michael Fickes
- March 1st, 2019
Purchasing and procurement for colleges and universities contributes to the education of students in at least two important ways. Quality purchasing choices provide the institution with a comprehensive selection of quality products from landscaping to building furnishings and heating, ventilating, and air conditioning products. Quality products contribute to the quality of students’ experiences on campus.
Second, wise economic purchasing choices aid in preserving precious institutional funds that can then help support faculty, textbooks, laboratories, and other core educational products.
“These are the two key ways that purchasing and procurement help to meet the educational challenges facing America’s colleges and universities,” says “Public College and University Procurement,” a survey of the State Regulatory Environment, Institutional Procurement Practices, and Efforts Toward Cost Containment.
Many college and university purchasing directors today achieve these two goals of quality and economy through the use of a purchasing policy widely called supplier diversity.
What is Supplier Diversity?
“Supplier diversity has been around for decades,” says Rhonda T. Crawford, Ph.D., director and small business liaison officer with the University of Southern California (USC) Small Business Diversity Office in Los Angeles. “Supplier diversity means reaching beyond your own group and doing business with other communities or social groups. It doesn’t mean sacrificing quality. You must still look for capable and competent suppliers.”
Supplier diversity programs require careful designs, notes Veronica F. Cook, M.S.O.M., executive program director of the Supplier Diversity Program that operates within the Office of the Associate Vice President and Chief Procurement Officer of University Business Service at the University of Connecticut.
“A supplier diversity program is a program designed to strategically and demonstratively represent an organization’s commitment to be inclusive in its procurement processes,” Cook says. “Such a program routinely examines existing procurement policies and processes with the goal of ensuring that historically underutilized small and minority businesses are invited to bid and receive the tools and information needed to respond to solicitations.
“In the best-case scenarios, these businesses will earn contract awards to provide goods and services, along with the opportunity to build lasting relationships,” continues Cook.
The Pennsylvania State University (PSU) has a strong supplier diversity program, according to Duane M. Bullock, the university’s manager of Supplier Diversity and Environmentally Responsible Purchasing. “The university is committed to the goals of nondiscrimination and to giving fair consideration for all vendors in its procurement programs,” he says.
The Supplier Diversity Program serves as a liaison between the diversity vendor community and all university staff with procurement responsibilities, continues Bullock.
Why is Supplier Diversity Important?
Supplier diversity brings more suppliers into the mix, which is a help to small business suppliers and underused minority suppliers, as well as start-up companies. “Supplier diversity includes small businesses, women, minority, veterans, nonprofit, physically challenged, Alaska natives, and other groups that may need a boost,” says Crawford.
Cook agrees, noting that supplier diversity allows historically underutilized small and minority businesses the opportunity to add their increased competition, innovation, and flexibility—among other things—to the solicitation process. “Supplier diversity makes good business sense, and it is the right thing to do,” she says. “The success of small and minority businesses translates to economic growth not only for them but also for their surrounding communities and the state in which they reside. We all benefit when small and minority businesses succeed.”
Profile of a Supplier Diversity Program
“Penn State’s program aims to provide opportunities for small, diverse firms to compete for PSU’s business,” Bullock says. “When we first started the program—back in 2004—we wanted to reach out to firms in a diverse business community.”
Bullock notes, however, that such a goal posed difficulties. The main university campus is located in Central Pennsylvania, a largely rural and suburban area that is not particularly diverse. “To overcome that problem, we outreached to Philadelphia, Pittsburgh, and Harrisburg to reach more of the population and to invite businesses in those areas to do business with PSU on a larger level.
“Since we have 24 Commonwealth campuses across the state,” Bullock says, “these suppliers had an opportunity to work with the University Park campus in State College or work locally in their own backyards where the Commonwealth campuses are located.”
Building a Supplier Diversity Program
But how do you create a program from scratch? Crawford has worked out a comprehensive approach to starting up a program. “You would start by benchmarking against major university programs, surveying other programs, conducting a market analysis, and considering standards that are in place in the market,” she says.
“Our program is based on federal government programs that say you must include small and minority businesses within your procurement when you receive federal dollars,” she says.
Specifically, the USC program adheres to guidelines issues by the Office of Naval Research (ONR) and the Defense Acquisition Regulation Purchasing Agency (DARPA).
In addition to understanding the needs of customers, Crawford also recommends taking a close look at your university. Don’t assume that what you knew about your school two or three years ago still applies, she cautions.
Specifically, Crawford recommends reviewing your understanding of your school’s top priorities and goals. Re-think how you can support those goals through the inclusion of diverse suppliers in line with current goals. Within this environment, develop concrete buying initiatives.
For example, Crawford has established three buying initiatives: First, understand the government research initiatives in your region that your purchases will be able to service. Second, identify the ZIP codes surrounding your campus that are within a reasonable distance to service. Third and last, make a concrete plan to proactively include minorities and other diverse suppliers in contracts and day-to-day business purchases and sourcing contracts.
Cook advises maintaining continuing communications with the buyers from each of your school’s departments. “They are the spend experts on the commodities that they manage,” she says. “They know the landscape, and your offer to learn from them and assist them will prove invaluable.”
Don’t forget separate research entities at work in your institution. Cook recommends meeting annually with the research leaders to discuss their projects and needs. “We want to support their initiatives project by project,” she says.
“In addition, take the time to communicate with other small and minority businesses who want to work with your organization in the future,” continues Cook.
After making purchases, the work continues, according to Penn State’s Central Distribution Manager Doug Crawford. Crawford’s team receives and organizes stock items in the university warehouse by part numbers.
“We manage our supplies via a homegrown system put together by our IT team years ago,” he says. “We use that system to order stock items, fax or email orders to suppliers, and receive goods in our homegrown system.
“Our purchasing group receives invoices from suppliers and inputs the information into eBuy, our university order and billing system. We then confirm the invoice for payment in eBuy.”
The University departments—internal customers—place orders with eBuy. Those orders may include both stock items and items provided by Office Depot, the university’s office product supplier.
Crawford goes on to explain the system for filling orders. “For stock items,” he says, “a pick ticket prints out, and we fill the order. For Office Depot products, we receive orders, pass them on to Office Depot. They ship the orders to campus every morning, Monday through Friday. Our campus delivery folks deliver both our stock item orders and Office Depot orders to customers at the University Park Campus.”
The main campus ships stock items from the 23 satellite campuses by way of a contract carrier. Office Depot ships orders it receives directly to the satellite campuses.
Training Procurement Officers
There are formal training programs for campus procurement officers. The National Association of Educational Procurement (NAEP; www.naep.org) offers training opportunities. At annual meetings, for example, procurement officials can take courses that earn procurement credits.
The Institute for Supply Management offers training opportunities. For details, check out the Institute’s website at www.instituteforsupplymanagement.org.
More training opportunities are available through the Next Level Purchasing Association at www.nextlevelpurchasing.com. NLPA boasts 280,000 purchasing-professional members and ranks as the largest professional procurement association. It offers three levels of certifications for procurement professionals, which have been earned in more than 100 countries across the globe. NLPA courses are also available in classrooms with other students and also online.
In the end, supplier diversity is about opportunities for buyers. Buyers can survey opportunities offered by many suppliers, while searching out the highest quality products and the best prices.
At the same time, the competition hones the quality of suppliers’ products and services.
“Competition is good,” says Bullock. “It’s so easy to stay with the same supplier, once you know each other. At times, however, you may get too comfortable, and a single supplier’s pricing can creep up. It’s better to mix it up with a diverse group of suppliers.”
Of course, it’s easier to work with one supplier, but it’s not good business. Dealing with diverse suppliers is very smart business.
This article originally appeared in the March 2019 issue of College Planning & Management.