The barriers to entry into the huge higher education market for goods and services can be daunting, especially for diverse local businesses. Research conducted by the Northeastern Lab for Inclusive Entrepreneurship over the past two years has documented the frustrations of diverse suppliers and the challenges faced by procurement teams trying to promote supplier diversity. To read the reports, click here.
While there are certainly no silver bullets for cracking this market, the fact is that many diverse suppliers have demonstrated an ability to provide goods and services to colleges and universities. In our recent survey of 101 higher education procurement professionals, 92% of the respondents reported having some experience working with diverse suppliers.
And, as indicated in Figure 1, the experience has been largely positive. More than 70% said that diverse suppliers deliver products and services of high quality and on-time, with close to 50% being cost competitive as well.
A procurement professional at a private university had this to say: “Our approach to supplier diversity is rooted in competition. We do not employ or pursue set-asides or other actions that may result in award to a lesser qualified firm, regardless of diversity status. Instead, our efforts are focused on identifying diverse firms to participate and letting them demonstrate they are fully capable of performing the work. Our own data validates that this approach is successful and sustainable.
The fact remains that much more progress can be made to increase the pool of suppliers, especially those rooted in local communities.
For their part, what can diverse suppliers do to compete, especially businesses that are ‘new’ to this market? 69 survey respondents provided a range of suggestions that can be grouped into four clusters of skills and knowledge: Understanding Higher Education Procurement Process, Business Management Skills, Certification, and Networking/Relationship Building.
As Figure 2 shows, 55 respondents mentioned the need to gain a better understanding of the often complex and decentralized procurement process at their institutions; 26 suggested business management skill development; 16 cited the importance of gaining certification as a minority-owned business; and 13 emphasized the value of networking and relationship building.
Let’s take a close look at the actions diverse suppliers can take to be more competitive in this market.
Learn How to Navigate the Higher Education Procurement Process
“The basics. We have found that most of qualified diverse companies need help with the basics of doing business with higher education. Starting from the ground up and growing their knowledge and comfort level.”
80% of the procurement professionals emphasized this point: Understanding the procurement process within higher education institutions is essential for any company seeking to enter this market.
And it’s not easy to do! The process varies not only from institution to institution, but within institutions as well. In many cases, procurement is highly decentralized, meaning that many large purchasing decisions are made in different parts of the institution, rather than centrally.
Contributing to this dispersion of decision-making authority is the fact that faculty members and staff use P-Cards to buy a wide range of products and services for their units or departments. P-Card transactions, which are often limited to $5,000, can be an attractive market opportunity for smaller, local companies. In addition, smaller colleges and universities often make purchases through buying consortiums – another link in the supply chain.
Diverse suppliers also need to be aware of procurement rules and regulations relating to, among other things, insurance requirements, funding rules, and bid timelines. These regulations differ for public and private institutions. As one procurement professional notes, “higher education procurement is governed by numerous regulations and policies. Familiarity with these rules ensures compliance and reduces the risk of disqualification.”
22 survey respondents specifically referred to importance of understanding Requests for Proposals (RFPs) for larger contracts. Training on RFPs should include, according to one procurement professional, “information about the bidding process, preparing proposals, and negotiating contracts.” Another mentioned training on “responsive bidding, market profitability and pricing, and successfully responding to low bid versus best value RFPs.”
In short, building a base-line understanding of the procurement process is the essential first step in competing for business.
Strengthen Business Management Skills
“Effective marketing and sales strategies are essential for any business, and diverse suppliers will benefit from training in these areas.”
Improving business acumen is vital for diverse suppliers. This includes enhancing skills in client communication, business development, managing relationships, and understanding market profitability. Strong business acumen provides a competitive edge, helping businesses differentiate themselves from competitors and secure more contracts. Effective financial management ensures that businesses remain sustainable and can weather economic fluctuations.
The skill development areas suggested the survey respondents included the following:
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- “Training in business acumen — communicating with clients, websites, capabilities statements, etc. — is vital to getting your foot in the door.”
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- “Soft skills training for smaller businesses looking to make a strong first impression.”
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- “Learning about such topics as branding, digital marketing, and sales techniques can help diverse suppliers increase their visibility and grow their customer base.”
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- “Training on project management in order to effectively plan and manage projects to ensure timely delivery of high-quality products and services.”
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Become Certified
“The biggest challenge is getting small businesses certified. They sometimes don’t understand the process, time, and expense. They also need to keep up with their certification once it is received.”
23% of the survey respondents mentioned MBE or DBE certification as a critical step for diverse suppliers to qualify for higher education procurement opportunities.
Certification serves as evidence of a company’s stability and adherence to industry standards – a competitive differentiator. As one procurement professional noted, “Small businesses should make the status of their certification and designation known on their marketing materials/website.”
Moreover, many certifying organizations offer extensive educational resources and training programs to help minority-owned businesses grow and succeed. These resources often include workshops on business development, financial management, marketing strategies, and compliance with industry regulations.
The Rhode Island Small Business Development Center at the University of Rhode Island, for example, summarizes the value of certification:
“Think of an M/WBE certification as the essential marketing tool your business is missing. Gaining this certification expands your visibility, but above all else, it provides essential access to valuable business opportunities and better-fit purchasers looking to support diversity.
Direct benefits can vary depending on your industry. In general, M/WBE-certified businesses experience:
- Access to more opportunities from firms looking to work with M/WBEs.
- Invites to top business networking events to connect with professionals in their industry.
- Increased credibility among industry peers and prospects.
- Community support for other female or minority business owners and like-minded professionals dedicated to the support of diverse businesses.”
Network and Build Relationships
“Diverse suppliers need to feel a sense of community and belonging within our institutions and in our supplier base as a whole.”
According to the survey respondents, building strong relationships and networking are crucial for success in higher education procurement. Engaging in networking events, understanding how to interact with procurement staff, and leveraging opportunities for connections can significantly enhance business prospects. Networking helps build relationships with key decision-makers, gain insights into upcoming opportunities, and access support and collaboration with other businesses. Connections between Tier 1 and Tier 2 suppliers are a prime example.
Participation in vendor fairs is one excellent way to network and get to know procurement decision-makers. At one university, a small, veteran-owned construction firm attended an annual vendor fair and made valuable connections with several department heads. These connections led to contracts for renovation projects on campus. By maintaining relationships through regular follow-ups and communication, the firm has become a preferred vendor for the university.
Conclusion
Based on the feedback from procurement professionals in higher education, diverse suppliers can enhance their competitiveness in four ways.
First, by understanding the often complex and decentralized procurement processes within higher education institutions. Certification builds credibility and distinguishes these businesses as reliable partners. Strengthening business management skills, such as effective marketing and financial acumen, forms the basis for sustainable growth and success. Finally, networking and relationship-building are indispensable for accessing new opportunities and establishing a strong presence within the higher education sector. By focusing on these areas, diverse suppliers can improve their ability to compete in this enormous, but complex, marketplace.