If it’s Good Enough for Corporate America , it’s Good Enough for Higher Education
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90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee
90th Annual Meeting & ExpositionApril 3 – 6, 2011
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
90th Annual Meeting & ExpositionApril 3 – 6, 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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee5
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee6
Trends Shaping Corporate Response to Supplier Diversity
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee7
Trends Shaping Corporate Response to Supplier Diversity
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee8
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee10
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee11
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee12
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee13
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee14
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee15
Value Survey Results
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%
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee16
Value Survey Results
Question 3—Do you feel there is a need to better document the value of supplier diversity in higher education?
Response Number of Responses Percentage
Yes 83 79%
No 22 21%
Total 105 100%
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee17
Value Survey Results
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
Number of Responses for
Important
Number of Responses for
Moderately Important
Number of Responses for
Lesser Importance
Number of Responses for
Slight Importance
Number of Responses for
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee18
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee19
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)?
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
Positive public relations with affinity groups
9 11 31 45 9 105 4
Increased alumni giving 14 16 34 20 21 105 3
Attracting/retaining diverse students
9 7 28 34 27 105 4
Other 66 8 14 7 10 105 1
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee20
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)?
Value Aspect Number of Respondents
for No Success
Number of Respondents
for Little Success
Number of Respondents for Moderate
Success
Number of Respondents for Successful
Number of Respondents
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
Positive public relations with affinity groups
14 21 41 22 7 105 3
Increased alumni giving 32 31 34 7 1 105 3
Attracting/retaining diverse students
25 23 40 13 4 105 3
Other 64 10 18 8 5 105 1
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee21
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).
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
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee22
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?
Response Number of Responses Percentage
Yes 53 50%
No 52 50%
Total 105 100%
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee23
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.
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee
90th Annual Meeting & ExpositionApril 3 – 6, 2011
Memphis, Tennessee
THANK YOUQUESTIONS AND ANSWERS
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