These days, most corporate procurement teams operate under an ambitious mandate to increase business with diverse suppliers, playing an essential role in helping their company meet its economic impact goals. This is great news for diverse suppliers. With a solid understanding of the procurement process and knowledge about how to best connect with supplier diversity teams, you can make lasting connections, gain contracts, and ultimately turn diversity into a growth engine for your business.
This guide will assist you in navigating the procurement process by providing insights and suggestions that you can put into practice to position your company for success. We begin with an overview of the procurement process, followed by a discussion of standard procurement vocabulary and procurement criteria. Finally, we share helpful practices for diverse suppliers to gain contracts.
A Brief Overview of the Procurement Process
Procurement is the process of seeking, buying, and controlling the delivery of the goods and services that a company needs. As you can imagine, it is an essential component of business operations. Corporate procurement teams go through a sequence of procedures in order to locate, assess, and choose vendors and suppliers of the goods and services they require. The particular steps of the process vary from industry to industry and company to company, but the general stages are basically the same. The following are some of the stages that are frequently included in the procurement process:
Identifying needs: When an organization begins a new project, develops a new product, or discovers a gap in their existing supply chain, procurement teams initiate a process to determine what products or services they require..
Sourcing potential suppliers: Once a requirement has been identified, the procurement team will explore potential suppliers, frequently making use of resources such as supplier databases as well as industry directories. At this point, the purchasing team will think about things like the qualifications of the suppliers, their skills, and the prices that they offer.
Engaging supplier diversity: At organizations with a dedicated supplier diversity professional or team, buyers will request their assistance in sourcing and vetting diverse suppliers with the capacity to provide the required goods or services. Supplier diversity professionals will then leverage a combination of internal and third-party diverse supplier databases and their networks: suppliers on their radar from industry conferences and mixers, local and national supplier development advocacy organizations, fellow supplier diversity professionals at other companies in their industry, etc.
Request for Proposal (RFP) or Request for Quotation (RFQ): The buyer makes a request for proposal (RFP) or request for quotation (RFQ), asking for specific information about potential suppliers’ skills, pricing, and options. This document lays out the exact requirements, including the scope of the task, the dates, and the criteria for evaluation. After that, vendors send in their propositions or price bids for consideration.
The Examination And Selection Of Suppliers:
The procurement team will assess the proposals or quotations received from suppliers based on the set criteria, and they will compare the proposals or quotes based on characteristics such as price, quality, delivery timelines, and diversity. This process could involve making site visits to suppliers, requesting extra information from vendors, or meeting with suppliers. After that, they will choose a provider or a set of providers to continue working with moving ahead.
Negotiation of the terms and conditions of the contract, as well as awarding of the contract: Once a supplier or group of suppliers has been selected, the procurement team will negotiate the terms and conditions of the contract, including price, delivery schedules, and payment terms. A contract is awarded and signed if both parties have reached an agreement on the conditions.
The corporation submits an order for the goods or services once the contract has been signed, and the supplier fulfills the order by delivering the necessary things or services.
Evaluation and monitoring of performance: During the duration of the contract, the procurement team will evaluate the performance of the supplier to ensure that they are meeting the standards and deliverables that were previously agreed upon. The company and its suppliers may maintain a solid, long-term relationship with the support of regular reviews, which can help identify areas in which improvements can be made.
Review and closeout: When the term of the contract comes to an end, the buyer conducts an evaluation of the performance of the supplier. Based on the results of this evaluation, the buyer may choose to either extend the contract or select a different supplier in the future.
Common Procurement Terminology
It is absolutely necessary to have a solid understanding of common procurement words in order to successfully navigate the procurement process. Some examples of this are as follows:
- The acronym “Request for Proposal” (RFP) refers to a document that is distributed by a customer in order to invite prospective suppliers to submit detailed offers. A request for proposal (RFP) will normally detail the needs of the project, the scope of the work, the evaluation criteria, and the submission dates.
- Request for Quotation (also known as an RFQ) is a document that is given by a buyer to possible suppliers in order to gather price bids from them. When compared to an RFP, an RFQ will almost always center on information regarding pricing and may include fewer specifics about the project’s requirements.
- A supplier submits a bid as a response to a request for a proposal (RFP) or a request for quotation (RFQ). In most cases, information regarding the proposed solution, cost, and qualifications of the provider is included in bids.
- A contract is an agreement between a buyer and a supplier that is legally binding and outlines the terms and conditions of the relationship between the two parties. These terms and conditions can include the scope of work, pricing, and delivery dates.
Understanding Procurement Criteria
A number of parameters are taken into consideration by procurement teams in order to arrive at well-informed decisions regarding suppliers. The following are some of the most often used criteria:
Price: The cost of the item is a crucial component in most of the decisions that are made regarding procurement, as businesses work to reduce their expenses and increase their profits. Having a variety of suppliers ensures that prices are kept competitive while keeping a high level of product and service quality.
To live up to their own expectations and fulfill the needs of their clientele, businesses place a premium on providing high-quality products and services. It is imperative that a variety of diverse suppliers demonstrate their capacity to supply high-quality goods or services on a continuous basis.
Delivery schedule: Buyers may give priority to vendors that can fulfill stringent delivery deadlines or provide the goods and services within the allotted amount of time. It is absolutely necessary to meet delivery deadlines in order to keep business operations running smoothly. It is essential for businesses to ensure that their goods and services are delivered on time in order to keep their operations running smoothly. Many different providers should demonstrate their capacity to achieve stringent deadlines and keep to the timetables that have been agreed upon.
Reputation and dependability of the provider: When selecting the supplier, procurement teams will look at their track record, which includes the seller’s reliability, historical performance, and financial stability. It is possible for a supplier’s chances of being chosen to improve when they have a solid reputation.
Diversity: Women-owned businesses, minority-owned businesses, LGBTQIA+-owned businesses, and veteran-owned businesses are some of the diversity classifications major corporations have committed to increasing in their supply chain. In the process of procurement, if you can demonstrate that you are a diverse supplier, this may give you an advantage over competitors.
Diverse suppliers have the ability to position themselves to match these criteria by showing their one-of-a-kind talents, providing pricing that is competitive, and demonstrating a commitment to providing quality goods on time. Consider the following advice in order to put your diverse-owned company in the best position possible to satisfy procurement criteria:
- Provide a description of your diverse supplier certification(s), and ensure that it is not difficult to obtain them, in your bid or proposal.
- Demonstrate your skills, experience in the sector, and any other distinctive capabilities that set you apart from other potential candidates.
- Provide precise information regarding the quality control processes your company utilizes as well as any relevant industry certifications your company may possess.
- Throughout the course of the procurement process, demonstrate your responsiveness and dedication to addressing the needs of the buyer by maintaining communication that is both clear and succinct.
How to Make Your Way Through the Procurement Process as a Diverse Supplier
Diverse suppliers may confront unique problems in the procurement process. A lack of visibility, restricted access to established business networks, and the difficulty of competing with larger, more established businesses are examples of some of the challenges. The following is a list of approaches that diverse suppliers might take to overcome these obstacles and achieve success in the procurement process:
Networking is an essential skill for diverse suppliers, and connection building is an important aspect of networking. Participate in events hosted by your sector, join groups that promote supplier diversity, and communicate with potential buyers through social media and other platforms. Building contacts with other suppliers and networking with procurement officials can help diverse suppliers stay informed about new possibilities, as well as boost their profile in the sector.
Use the benefits of your diverse supplier status by putting an emphasis on your certification as a diverse supplier in all of your marketing materials, bids, and interactions with prospective customers. This can help differentiate your company in the marketplace while also aligning it with the supplier diversity goals of organizations.
Leverage diversity-focused certifications: Certifications such as Minority Business Enterprise (MBE), Women’s Business Enterprise (WBE), or other diversity-focused certifications can strengthen the credibility of a diverse supplier and increase their appeal to companies with supplier diversity goals. Get the appropriate credentials to certify your status as a diverse supplier, such as certificates for minority-, women-, LGBTQIA+-, or veteran-owned businesses, for example. This can help you stand out to businesses that place an emphasis on diversity among their suppliers. You can find a list of certifications and resources in our Supplier Diversity Certification 101 blog post.
Partner with other suppliers from varied backgrounds: Working together with other suppliers from diverse backgrounds can help you expand your capacity, capabilities, and credibility in the eyes of potential clients. This can also assist you in gaining access to larger contracts that you may not have been able to obtain otherwise.
Make an investment in education and resources: maintain a current knowledge of industry trends, best practices for procurement, and any certifications that are pertinent to your field. This can help you improve the quality of your business services on an ongoing basis and put your organization in a stronger position to secure contracts.
Create an enticing value proposition: Different suppliers need to precisely describe the one-of-a-kind value that they bring to the table, such as specialized experience, new solutions, or a strong commitment to sustainability. This value proposition needs to be articulated in a clear and concise manner in all marketing materials, submissions to RFPs, and discussions with procurement experts.
Use technology: Diverse suppliers can achieve mutually beneficial outcomes by utilizing technology platforms such as Hire Ground to connect with enterprise customers and gain access to curated possibilities that are personalized to their profiles. These platforms make the procurement process easier to understand and boost the visibility of a wide variety of providers.
To be successful in getting contracts with large businesses, it is vital to first have a solid understanding of the procurement process and then to successfully position your diverse-owned firm. You can improve your chances of being successful in the cutthroat world of competitive procurement if you pay attention to and implement the advice and methods presented in this article.
In the next blog post in our series, we cover the step-by-step method for selling to large and enterprise firms. This post will provide even more insights and assistance for diverse suppliers who are trying to expand and thrive in their enterprises. You can find the links to all blog posts in the series and a preview of what’s coming next in the series here.
You may overcome obstacles and improve your chances of winning big contracts if you are proactive, create contacts, and highlight the various supplier status you hold.
Diverse Supplier Procurement Panel coming April 19
Register for our upcoming virtual panel event, Behind the Curtain: Insights from Big Corporations on How They Select Diverse Suppliers, which will feature leaders from large organizations who promote supplier diversity and inclusion, so that you won’t miss out on the opportunity to hear from industry professionals and further strengthen your procurement abilities.