Simple Policy Fixes

  • Create department and staff positions dedicated to inclusive, local sourcing
  • Require that local and/or diverse vendors are considered in Request for Proposal (RFP) pool
  • Make inclusive, local sourcing an explicit goal in the strategic plan and other policy documents

Create department and staff positions dedicated to inclusive, local sourcing

In addition to incorporating local and diverse spending goals into job descriptions and evaluations for supply chain managers, it is helpful, at least initially, to set aside and dedicate staff time to inclusive, local sourcing programs. Dedicating at least one full-time staff position to these programs elevates and prioritizes the work, ensuring that it is not simply added as an additional project to already busy workloads. This approach will also increase institutional capacity, which can be directed towards crafting a broader long-term strategy around inclusive, local sourcing.

This individual, or, ideally, team of individuals if a whole department is created, can conduct internal and external outreach and handle compliance. Internally, they can help educate department staff about goals, brainstorm opportunities, and troubleshoot to address barriers. They can also coordinate the goal-setting and evaluation process, and ensure progress is reported on a regular basis. Externally, it is important to have a go-to person for vendors to communicate with. This staff person can identify potential vendors, work with them on their registration process with the system, and act as the liaison between the various departments they interact with. Although it is currently more common to have a position dedicated to supplier diversity or sustainability programs, including local sourcing as a priority as well ensures alignment across organizational goals.

The interviews that informed this toolkit revealed that, for programs with strong inclusive, local sourcing initiatives, it was often the decision to hire a full-time coordinator, or director of supplier diversity, that helped nascent or informal supplier diversity programs evolve into cohesive strategies. Mary Crawford, the director of procurement programs for Duke University Health System (Duke) in Durham, North Carolina explained that investing in a full-time staff position for supplier diversity established it as an institutional priority, elevated its profile internally and increased the overall effectiveness of the initiative. Procurement sourcing staff at Duke are also involved in outreach and diverse vendor recruitment, ensuring that diverse vendors have a dedicated team of champions advocating for them within the institution.1Mary Crawford, interview by David Zuckerman and Katie Parker, January 21, 2016.

A staff position dedicated to local and diverse sourcing helps build an internal culture in which all staff members are on board and knowledgeable about the program’s goals.

A staff position dedicated to local and diverse sourcing helps build an internal culture in which all staff members are on board and knowledgeable about the program’s goals. Often, sourcing can be decentralized, with decisions spread across department-level leaders. Moreover, purchasing decisions are influenced by the end-users of products, and personal brand preferences can serve as a barrier to switching vendors. A dedicated staff member can work to shift internal culture through trainings, education, and one-on-one conversations, so that all departments incorporate local and diverse sourcing values into their budgeting and decision making.

One supplier diversity professional emphasized the importance of reaching “the frozen middle”—individuals who make decisions about purchasing independent of the supply chain department. Although individual contracts may not be large, cumulatively they account for a significant portion of spend; and, while individual contract services (e.g. catering, printing, staffing) are usually procured at a department level, they are often provided by local, diverse vendors. The supplier diversity department conducts “internal town hall-style meetings” with departments across the institution to review supplier diversity goals and help managers meet them.

Duke uses a similar departmental outreach strategy. The supplier diversity team is working to develop a video presentation to be used as an educational tool at business manager meetings across departments. The video includes messages from leadership about the importance of the program as well as stories from diverse vendors. Crawford explained that this method helps reach more people. “Leadership support is key, but it is essential to reach managers and administrative staff across the community, or you cannot expect change. The folks making daily purchasing decisions—the frontline staff—need to support these efforts as well, as it is easy to continue with an existing process and overlook the opportunity for change.”2Mary Crawford, interview by David Zuckerman and Katie Parker, January 21, 2016.

Require that local and/or diverse vendors are considered in Request For Proposal (RFP) pool

A critical first step to working with diverse and local vendors is to ensure that they are bidding for contracts in the first place.

A critical first step to working with diverse and local vendors is to ensure that they are bidding for contracts in the first place. To bid for proposals, vendors need to believe that it is worth their time to do so. One way to help with this is to require that local and diverse firms are part of every bidding pool in order for it to be considered competitive, guaranteeing that a minimum amount of outreach to these vendors is taking place.

Requiring participation can be an important tool in situations where explicit preference is not possible; for example, if there are state regulations around requirements for competitive bids. Parkland Health and Hospital System (Parkland) based in Dallas, Texas employs this strategy. Each procurement opportunity, even if it is under the threshold to go through the formal RFP process, requires the solicitation of at least one minority- or woman-owned business enterprise (MWBE) if there are potential vendors in that space.3Indria Hollingsworth-Thomas, interview by David Zuckerman and Katie Parker, January 21, 2016, transcript. Similar policies could be implemented regarding local vendors. Henry Ford Health System (HFHS) in Detroit, Michigan, created a policy that requires the participation of MWBEs, linking the policy to their commitment to support the surrounding community. The policy statement, part of their broader Transparent Sourcing Policy, reads: “in conjunction with the HFHS commitment to the local community and the objective of developing women and minority-owned businesses, SCM Strategic Sourcing and SCM Procurement and Vendor Compliance Management will ensure at least one or more qualified women and minority-owned firms are included in the bidders list whenever applicable.” 4Henry Ford Health System, “Transparent Sourcing Policy and Procedures,” June 2014, 1. For the full text of these policies refer to the More Resources section of this toolkit.

A necessary precursor to this policy is having a staff member or department dedicated to identifying and vetting local and diverse vendors. At Parkland, each contracting opportunity goes through the supplier diversity department, and they provide other departments with the list of qualified vendors. Other hospitals and health systems work with outside partners to identify qualified local and diverse vendors. Mercy Health, based in Cincinnati, Ohio, partners with a local supplier diversity consultant to identify qualified vendors.5Calvin Wright, interview by David Zuckerman and Katie Parker, Cincinnati, OH, January 14, 2016. Another common practice is for supplier diversity staff members to consult with other area anchor institutions, to see if they have identified local, diverse vendors for specific areas of sourcing.6Indria Hollingsworth-Thomas, interview by David Zuckerman and Katie Parker, January 21, 2016, transcript. State and county agencies, minority chambers of commerce, and minority supplier advocacy organizations also may have vendor lists available to supplier diversity professionals. Marian Nimon, the associate director of the Historically Underutilized Business (HUB) & Federal Small Business Program at MD Anderson Cancer Center in Houston, Texas, explained that the State Comptroller’s Office maintains a master list of diverse vendors, which helps her identify qualified vendors in the Texas area. By linking policies requiring local, diverse vendor participation to these outreach and support networks, health systems can grow their pool of qualified vendors.

Make inclusive, local sourcing an explicit goal in the strategic plan and other policy documents

Many procurement processes are focused primarily on cutting costs. Without explicit inclusion of other priorities ingrained habits and practices will often preclude local businesses from opportunities. Unfortunately, this can be the case even when local businesses could offer the institution greater responsiveness to strategic goals (e.g. sustainability), higher quality, or lower costs. Including local and diverse sourcing goals in institutional and system documents, such as strategic plans, communicates these goals as priorities to both staff and the community. Moreover, it also signals a level of support that can transition the health system from an institution focusing on lowest cost sourcing to one that concentrates on total value, a more holistic measure that sets the institution up for long-term success. Since these policies require board and c-suite approval, making this change will also engage leadership in setting and evaluating these goals. Rather than an ancillary business activity to the hospital’s mission, procurement can be framed explicitly as a means to support local economies and community health.

Including local and diverse sourcing goals in institutional and system documents, such as strategic plans, communicates these goals as priorities to both staff and the community.

Another area in which local and diverse purchasing can be elevated is in the implementation plans that not-for-profit health systems develop as part of the required Community Health Needs Assessment (CHNA) process. For example, Charleston Area Medical Center (CAMC) in Charleston, West Virginia identified unemployment and financial insecurity as concerns through that assessment. As such, one of the goals in CAMC’s implementation plan is to help support regional economic growth. In response to this goal, they researched possible avenues of support and found that purchasing local herbs could bolster the local agricultural community and improve the meals they served to patients, adding to the flavor of foods while reducing unhealthy ingredients, such as salt and sugar.7For more information, see: the CAMC Case Study; Charleston Area Medical Center, “2014 Community Benefit Report” and “Report on 2014-2016 Implementation Strategies,” 2015, www.camc.org/documents/Community/2014/2014CAMCCommunityBenefitReportandReporton2014-2016ImplementationStrategies.pdf. Identifying this strategy in their implementation plan further reinforced the importance of their local purchasing efforts. It also ensured that progress on this goal is being tracked.

Another option for institutions is to create a separate sourcing policy that articulates goals for working with local and diverse suppliers. This, again, can help justify the time investment needed to shift practices. An example of this is HFHS’s Transparent Sourcing Policy. The policy outlines clear procedures for different types of procurement contracts and names the staff members and departments responsible for each step. But perhaps most importantly, it states that, as a policy, sourcing decision makers can give weight to qualities other than price. The policy gives “minimum weights” for selection criteria, and states that minority vendor participation must be weighted at least five percent. The policy was approved by the president and chief operating officer, illustrating a high-level commitment to these practices. Moreover, since these goals were embedded within a broader transparent sourcing policy, the message was sent that working with diverse vendors is the standard for how the institution conducts its business.8Henry Ford Health System, “Transparent Sourcing Policy and Procedures,” June 2014, 3.

Quick Practice Upgrades

  • Adjust payment periods and invoicing processes to accommodate small businesses
  • Incorporate local and diverse spending objectives into job descriptions and evaluations for supply chain
  • Communicate with community partners...

Readiness Checklist

Do a basic assessment of where your institution is at, and identify the steps you need to take to implement an inclusive, local sourcing initiative

References   [ + ]

1, 2. Mary Crawford, interview by David Zuckerman and Katie Parker, January 21, 2016.
3, 6. Indria Hollingsworth-Thomas, interview by David Zuckerman and Katie Parker, January 21, 2016, transcript.
4. Henry Ford Health System, “Transparent Sourcing Policy and Procedures,” June 2014, 1.
5. Calvin Wright, interview by David Zuckerman and Katie Parker, Cincinnati, OH, January 14, 2016.
7. For more information, see: the CAMC Case Study; Charleston Area Medical Center, “2014 Community Benefit Report” and “Report on 2014-2016 Implementation Strategies,” 2015, www.camc.org/documents/Community/2014/2014CAMCCommunityBenefitReportandReporton2014-2016ImplementationStrategies.pdf.
8. Henry Ford Health System, “Transparent Sourcing Policy and Procedures,” June 2014, 3.