By Brian Bensman
As the economy continues to recover, many organizations are working hard to ensure the best value for current spend, which means finding suppliers who can deliver exceptional products and services at a fair price. Oftentimes, expanding supplier bases to include diverse suppliers helps businesses reach this goal. A 2011 survey from the Institute for Supply Management (ISM) reveals that respondents believed supplier diversity programs “are the right thing to do,” keep them in compliance with federal reporting regulations and make sense because their customers are diverse.
However, the ISM’s Supplier Diversity Survey found that nearly 72 percent of organizations agreed that the biggest challenge they faced was finding qualified suppliers. The toughest time for a diverse supplier can be the moments after losing out on a contract. Whether large or small, contract wins are key to improving employee morale and keeping business revenue out of the red. Minority and Woman-owned Business Enterprises (MWBEs) can recover more easily from a contract loss and rebuild themselves as best-in-class suppliers by following a set of tips for supplier success, which include:
1. Determine Areas for Improvement by Reassessing the Submitted Proposal
Winning a contract takes hard work and patience, so suppliers should not be discouraged when they do not secure business on the first attempt. Organizations, especially those with award-winning supplier diversity programs, are rigorous when qualifying MWBEs and reviewing proposals. It’s important for suppliers to take a step back after being passed on for an opportunity and assess their proposal with a critical eye to see how it can present a more robust proposal at the next opportunity.
MWBEs need to ask themselves: What areas are lacking comprehensive information or fail to set the supplier apart from others? Does the supplier offer a competitive advantage beyond a diverse solution? Did the supplier provide a current client list that highlights competence at meeting the customer’s needs? Does the supplier appear ready to take on a contract of the proposed size? Does the supplier demonstrate an understanding of the customer and the industry? Did the supplier have the opportunity to both quote what was requested in the bid package and offer other creative opportunities that the client might not have considered?
Many organizations issue a Statement of Work (SOW) or similar document to define sourcing requirements when going to market. This outline would be an ideal point of review for self-assessment. It may also be beneficial for MWBEs to ask the customer if they are open to sharing insight on the proposal that can be helpful at the next opportunity, although not all organizations will be able to or choose to provide this information.
2. Review the Value Proposition
A value proposition demonstrates how a product or service solves problems, the specific benefits the product or service offers the customer, and how these benefits are unique in comparison to competitors. Organizations should focus on the differentiators of their business, and communicate these clearly during the bidding process in order to stand out. For instance, suppliers may need to think beyond providing a high-quality product or service at a fair price, because customers want to have a competitive advantage and will look for suppliers that can offer unique solutions. Many organizations encourage both new and incumbent suppliers to challenge themselves to change or improve their value proposition. If suppliers can offer additional services that reduce the client’s total cost and not just the cost per unit, they can increase their chances of being selected by the customer.
3. Expand Learning with the Help of Mentors and Training Courses
Networking enables suppliers to get face-to-face interaction with sourcing and diversity leaders at tradeshows or local business events. Organizational leaders should make it a priority to build relationships with these corporate decision makers and emphasize that they want to learn from them. Relationship-building opens the door to mentoring, a key to success for suppliers. Mentors serve as coaches to employees and executives of MWBEs in order to improve selling strategy, identify pain points, and offer a unique point of view to which suppliers may not previously have had access.
Corporations with best-in-class supplier diversity programs may have formal mentoring programs in place to pair passionate leaders with MWBEs. To identify organizations that may offer these programs, suppliers should do their research and identify award-winning supplier diversity programs. Businesses that have received accolades from national or local organizations are likely to offer mentoring programs. It’s also helpful to reach out to leaders within the organization that did not select the MWBE in order to get direct feedback about its proposal and learn how to improve for the future.
Mentors provide one-on-one learning. However, training classes designed for suppliers provide education in a group environment and are critical for learning how to be competitive during the bidding process and after, if selected by the customer.
4. Consider Building Momentum with Smaller, Manageable Projects
As difficult as it may be, organizations need to see the silver lining after losing out on a contract. The experience gives suppliers the chance to regroup and work on areas of their business in order to make a proposal stronger at the next opportunity. To improve the quality of a submitted proposal, it’s often beneficial to build momentum with smaller projects in the interim. Customers want to see experience, so demonstrating value by winning business, regardless of size, is important. It may also be better to develop a business model that capitalizes on a smaller scale solution for many potential clients versus relying on one customer with a high spend account. By balancing multiple customers, suppliers can build an impressive client list and go after a larger account in the future if they wish.
All MWBEs should be open to methods for developing and improving their operations in order to capitalize on the growth of supplier diversity program spending. Although it takes time to adapt to the requirements and needs of an organization after losing out on business, MWBEs are better equipped to win contracts when they practice the above strategies. After applying these tools for success, if the supplier is awarded a contract, it can more easily guarantee the renewal of the contract by focusing on remaining competitive and communicating differentiators as often as possible.
Brian Bensman is Senior Director of Strategic Sourcing at Cintas Corporation, which provides highly specialized services, including designing, manufacturing, and implementing corporate identity uniform programs, to more than one million businesses.