Supplier Diversity

Our Key Research Findings

The Lab has produced two major reports over the past 12 months, one focusing on the perceptions of diverse small businesses and the second on the way college and universities in New England engage with diverse suppliers on their websites.

Addressing the Supplier Diversity Awareness Deficit: The Role of Higher Education Procurement Websites

We know that supplier diversity web pages can make a difference; they can open a window into an institution’s procurement process, which is very often seen as complex and confusing by small businesses. Deciding what kinds of information to share (and how to share it) can serve as a way for an institution to listen to the needs of its local diverse business community and demonstrate its commitment to diversity and inclusion. Our latest research report examines to what extent 114 colleges and universities in New England open the window to supplier diversity opportunities.

After analyzing the websites of 114 higher education institutions (HEIs) in New England, we discovered that there is a lack of information available to the public regarding how these institutions acquire good and services.  Despite professed commitments to diversity, equity, and inclusion and support for local communities, colleges and universities can do much more to address what we are calling a supplier diversity awareness deficit.

Key takeaways:

  • Despite widespread institutional commitment to diversity, most New England HEIs do very little to promote supplier diversity on their websites.
  • Diverse small businesses often have difficulty learning how to engage with HEIs and do not know where to look for opportunities.
  • The most informative HEI supplier diversity web pages include a range of resources to help DSBs navigate the procurement process.
  • Supplier diversity web pages can significantly strengthen an institution’s outreach to DSBs, as well as promote the benefits of supplier diversity to internal stakeholders.
  • There is an opportunity for HEIs to prioritize transparency in their procurement processes and provide small diverse businesses with a clear window into their practices. This will not only ensure ethical practices, but also build trust and confidence in the institution among stakeholders.

Promoting Supplier Diversity in Higher Education: Barriers and Opportunities

Selling products and services to colleges and universities is a big business. In 2018-19, degree-granting postsecondary institutions in the United States spent $632 billion (in current dollars). Total expenses were $401 billion at public institutions, $219 billion at private nonprofit institutions, and $12 billion at private for-profit institutions (National Center for Education).

Yet, even though many institutions have made a commitment to supplier diversity, a tiny percentage of contracts are awarded to minority- and women-owned business enterprises (MWBEs). A WBGH report in 2020 noted that “out of nearly 700 active contracts awarded by a big college purchasing co-op in Massachusetts, only 14 — or 2 percent — went to minority-owned businesses certified by the state.”

Selling products and services to colleges and universities is a big business. In 2018-19, degree-granting postsecondary institutions in the United States spent $632 billion (in current dollars). Total expenses were $401 billion at public institutions, $219 billion at private nonprofit institutions, and $12 billion at private for-profit institutions (National Center for Education).

Yet, even though many institutions have made a commitment to supplier diversity, a tiny percentage of contracts are awarded to minority- and women-owned business enterprises (MWBEs). A WBGH report in 2020 noted that “out of nearly 700 active contracts awarded by a big college purchasing co-op in Massachusetts, only 14 — or 2 percent — went to minority-owned businesses certified by the state.”

Why do diverse business owners, especially in under-served communities, feel so frustrated by higher education procurement policies? What makes it difficult for them to navigate procurement procedures? What skills and knowledge would enable them to compete more effectively for contracts?

To help answer these questions, the Northeastern Lab for Inclusive Entrepreneurship analyzed the responses of 359 diverse small businesses in New England (the survey was conducted at the end of 2021).

Here is a summary of the key findings:

  • Despite a commitment to increasing supplier diversity expressed by many colleges and universities, the percentage of business done with diverse small businesses remains very small.
  • While research indicates that large vendors account for most higher education expenditures, diverse small businesses tend to be small. In our survey sample (359 companies), 58% of the respondents had 10 or fewer employees and 84% had 50 or fewer employees.
  • Diverse small businesses cite a lack of awareness of specific bid and contract opportunities as the top barrier to doing business with colleges and universities, followed by a lack of relationships with existing vendors, which limits the ability to be subcontractors on request for proposals (RFPs).
  • Because many diverse businesses are small, they lack the staff to actively seek out supplier opportunities; conversely, many colleges and university procurement offices have limited outreach to underserved community business networks.
  • Diverse small businesses believe they can compete more effectively for business if they learn more about the bidding process, make connections with existing vendors, and gain access to training and skill development.
  • Procurement offices in higher education institutions can more effectively promote supplier diversity by establishing one point of contact for diverse small businesses, providing clear guidance on the RFP and bidding process, and more aggressively reaching out to under-represented communities.
  • For their part, diverse small businesses recognize the need to prepare more effectively to compete for business, build stronger networks, and more generally strengthen their own business practices.