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Taking the reins of sourcing to ensure success

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More than ever, the agility of a retail provider or manufacturer is extremely important. The supply chain is a keystone factor in this agility.

Unfortunately, in a misguided effort to remain lean with fixed costs, many companies tend to count on their procurement departments to do more with less.

But with an increased purchasing load, it is difficult for procurement professionals to find the time to research new or local suppliers. If one finds them, then there is a vetting process to ensure that the supplier can provide the needed quality, pricing and responsiveness.

This tends to make the company more reliant on existing suppliers and buying groups. A buying group may not be able to provide the individual with the support that a dedicated supplier can.

Kurt Cavano, vice chairman and chief strategy officer of GT NEXUS, knows the struggles – and the steps needed to ensure success.

“Whether sourcing is local or global, to be cost-efficient and flexible enough to meet everchanging customer demands, businesses need to think of the chain of companies in their supply chain as a network – and have in place technology that enables all members of the network to communicate and collaborate fully together – businesses are now more dependent on partners than ever before … Ultimately, supply chains need to be agile and capable of adapting in line with supply strategy,” Cavano notes.

THE ART OF VETTING

There is an underutilized option to support the vetting process – certification. There are several third-party certifiers that provide a thorough screening of smaller businesses. Although this might meet only a portion of the individual vetting process, it is a major step towards completing it. For companies receiving government funding, certified subcontractors may be a requirement.

For smaller businesses, the certification, which requires periodic renewal of one to three years, may be a key to opening the door of procurement departments. Once that door is open, there will still be a vetting process; however, getting through the door is a major step because it opens the path to building important relationships.

The certification process can be overwhelming. It takes time away from activities that bring in much-needed revenue. However, using a longer-term view, the potential to increase revenue through certification is real and vital.

It is difficult to obtain privately held business stats regarding the use of certified or local businesses. You can, however, look to the U.S. Small Business Administration’s database for the 15th Congressional District on recently awarded government contracts (see chart). The figures are for federal fiscal years, which run from Oct. 1 to Sept. 30. The bottom line is that only a handful of certified business are taking advantage of the opportunities avavailable.

The 15th District stretches from Harrisburg to New Jersey. For a more Lehigh Valley focus, we turned to Lehigh University Small Business Development Center and found that for the last fiscal year smaller, diverse businesses in Lehigh and Northampton counties garnered contracts valued at $14.4 million; small businesses brought home $42 million. And these contracts were shared by less than 10 companies.

Although the census information for Lehigh and Northampton is dated, as of 2012 there were: 14,608 businesses in the Lehigh Valley with paid employees. Of those businesses, 2,375 (16 percent) were owned by women, 1,474 (10 percent) were owned by minorities, and 1,013 (7 percent) were owned by veterans. Today, according to the certifying organization for minority-owned businesses, there are 20, less than 1 percent of the total, certified MBEs in Lehigh and Northampton counties.

 

WHERE TO BEGIN

Whether you own a small business or are a procurement professional, you should consider attending Lehigh Valley Economic Development Corp.’s Local Sourcing and Business Diversity Council Cocktails and Connections event – Supplier Diversity Certification Roundtable – on Oct. 17 from 3:30 to 6:30 p.m. The event will offer access to certification organization professionals who will not only provide an overview of their certification processes and serve up success stories, but also be available for individual questions.

The kickoff presenter for the event is Greg Dudkin, president of PPL Electric Utilities. Participating organizations include Eastern PA Minority Development Council, Women’s Business Enterprise Council PA-DE-NJ, Cheyney State University PA Uniform Certification Program, U.S. Small Business Administration Veteran and Small Business certification and Lehigh University SBDC.

There is no fee to register for this event but seating is limited so please register online at https://lehighvalley-certification-roundtable.eventbrite.com

Sally Handlon is president of Handlon Business Resources in Bethlehem Township and chair of the Local Sourcing and Business Diversity Council.

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