Key strategies employed
Anchor institution strategies
- Invest in data infrastructure
- Embed local and diverse goals into Requests for Proposals (RFPs) and contracting processes
- Promote local business incubation and expansion
Anchor network strategies
- Encourage and support anchors in their local procurement and workforce development initiatives (primary goal)
- Support business development and neighborhood development (secondary goal)
15 anchor institutions members, including 4 healthcare institutions
- Advocate Healthcare
- Employees: 35,000
- Annual Spending on goods and services: $1 billion1Employment and procurement data provided by institution
- Northwestern Memorial HealthCare
- Employees: 27,000
- Annual Spending on goods and services: $973 million2For employment data, see: “About Northwestern Medicine,” Northwestern Medicine, accessed November, 2016, news.nm.org/about-northwestern- medicine.html; Annual spending calculated from 2014 nancial statements and includes expenditures on supplies and purchased services. See: Ernst & Young LLP, “Consolidated Financial Statements: Northwestern Memorial HealthCare and Subsidiaries Years Ended August 31 2015 and 2014,” (Northwester Memorial HealthCare, Chicago, IL: 2015), 5. Accessed November, 2016 https:// www.nm.org/about-us/ nancial- statements-and-annual-reports
- Rush University Medical Center
- Employees: 10,000
- Annual Spending on goods and services: $500 million3Employment and procurement data provided by institution
- The University of Chicago Medicine
- Employees: 9,000
- Annual Spending on goods and services: $375 million4For employment data, see: “Fact Sheet: The University of Chicago Medicine,” University of Chicago Medicine, accessed November, 2016 www.uchospitals.edu/about/fact/hospitals- sheet.html; Annual spending estimated based on publicly available 2013 nancial statements, 2014 Form 990, and 2016 operating revenues. See: The University of Chicago Medical Center, “Financial Statements June 30, 2013 and 2012,” (The University of Chicago Medical Center, Chicago, IL: 2013), 3, accessed November, 2016, www.uchospitals.edu/pdf/uch_036904. pdf; Internal Revenue Service, Form 990: University of Chicago Medical Center, DLN: 93493133956166, (U.S. Department of the Treasury, Washington, DC: 2014), 10, retrieved from GuideStar, November, 2016.
CASE will act as a catalyst to create inclusive economic growth by leveraging anchor institution buying, hiring, and investment to collectively impact Chicagoland neighborhoods.
CASE aims to create inclusive and sustainable economic growth in the region by:
- fostering strategic relationships between anchor institutions and local businesses;
- infusing new revenue and jobs into the regional economy through a focus on neighborhoods; and,
- leveraging and building upon the existing business ecosystem to empower local businesses.
Founded in 2014, Chicago Anchors for a Strong Economy (CASE) is an initiative housed at World Business Chicago, a unique public-private partnership that engages business and community leaders in advancing Chicago’s Plan for Economic Growth and Jobs. CASE is a network of Chicago’s major public, private, and nonprofit institutions committed to using their buying, hiring, and investment power to promote local economic growth. CASE takes a systemic approach to this work; they build the capacity of the local business community to meet anchor demands and connect businesses that have been vetted as capable suppliers to these institutions.
They have fifteen anchor institution members, including four hospitals and healthcare systems: Advocate Healthcare, Northwestern Medicine, Rush University Medical Center, and The University of Chicago Medicine. CASE estimates that, since inception, it has facilitated connections leading to $46.7 million in revenue committed to local businesses through multiyear contracts, and nearly $10 million of the revenue has been realized. A total of 132 new jobs are projected through these contracts, with 92 created to date.5World Business Chicago, “Chicago Anchors for a Strong Economy 2015 Annual Report.”
Conceived in 2013 and launched in 2014, CASE is supported through annual contributions from participating anchors and funding from the Polk Brothers Foundation. The initiative emerged from an imperative to complement Chicago’s patterns of traditional economic development—through business attraction—with a focus on inclusive economic growth. The new dual-strategy approach realized at CASE prioritizes scaling local capacity to seek the greatest benefit of economic multipliers from local spending.
After hiring their first executive director, Nitika Nautiyal, CASE went through a yearlong review and planning process to understand current practices and reevaluate for the future. CASE then refocused on becoming a demand-driven program by adopting a data-driven approach and prioritizing relationship building with anchors and community partners.
The first year after the review, CASE focused on a number of key strategies, one of which was mapping the existing business community. Chicago, like many cities, has many business assistance providers. CASE leadership asked: what services are already being provided in the Chicago area that we can leverage for this effort? What will set us apart from these? And how can we build partnerships with service providers without being duplicative?
From this mapping exercise, it became apparent that CASE’s core function should be making connections with anchors. Relatedly, leadership determined that they should forge partnerships with strategic community partners rather than offering their own programming. Two partners they currently work with are the Goldman Sachs 10,000 Small Businesses program and the Inner City Capital Connections.
CASE initially concentrated on providing training and capacity building to small businesses. They have since pivoted to the core priority of convening the anchors. To do this, CASE must first understand and coordinate the anchors’ individual needs; they then work to create momentum for local purchasing initiatives. Each anchor institution is encouraged to develop their own set of strategies and staffing to implement the initiative and use CASE as a resource for connecting to local businesses.
This case study focuses on the strategies employed by one participating anchor institution—the University of Chicago—as well as those employed by CASE itself, to grow and scale local purchasing efforts.
Anchor institution strategies
Featured Anchor: University of Chicago
Invest in data infrastructure
Alyssa Berman-Cutler, the director of business and workforce development at the University of Chicago (UChicago), explained that a critical first step for their local purchasing initiative was to assess their existing spend in the surrounding community. Realizing their data systems were not designed to provide this information, they contracted with an outside vendor, U3, to “scrub” their data to identify key statistics and trends. UChicago is now investing in developing a more robust data system to better collect and analyze their data in-house.
One challenge UChicago initially faced was the difficulty of tracking the different procurement processes throughout the institution, given uneven data collection and coding processes. For example, in their old system, employee reimbursements were often recorded as payments spent in the zip code where the employee lived, even reimbursements for goods purchased elsewhere.
Through their study of their data and data processes, UChicago realized that having a more in-depth understanding of current procurement processes would allow for the creation of data infrastructure able to accommodate tracking across the institution, which would, in turn, facilitate easier reporting. Another important aspect of the data process was developing partnerships with local agencies and chambers of commerce, in order to connect to and better understand the area’s business ecosystem.6Alyssa Berman-Cutler, interview by David Zuckerman and Katie Parker, February 18, 2016.
Embed local and diverse goals into Requests for Proposals (RFPs) and contracting processes
Another strategy UChicago uses is to include local sourcing provisions in their RFPs. For example, in a recent RFP for a new dining services provider, they included an increased spend requirement for local businesses. This enables UChicago to ask supply chain integrators to adjust their practices to meet local goals up front, rather than negotiating with distributors after proposals have been developed. Local spending becomes a component of the contracting process, and firms are held accountable for their performance in this area, just as they are for meeting price points and product quality. Along with this strategy, UChicago is also adding provisions to RFPs that encourage companies undergoing expansion to look into locating facilities in particular Chicago neighborhoods.7Alyssa Berman-Cutler, interview by David Zuckerman and Katie Parker, February 18, 2016.
Promote business incubation and expansion
Local sourcing is especially strategic for institutions when used to fill existing supply chain gaps because it allows local businesses to develop custom products or distribution processes based on the institution’s particular needs. In addition to communicating supply chain needs to existing businesses, institutions can work to incubate or scale local businesses to fill these gaps. This is a key strategy employed by “UChicago Local,” the live, buy, and hire local initiative of University of Chicago’s Local Business Accelerator Program.
Under this initiative, UChicago has partnered with Next Street, a consulting firm focused on economic development through small business, to implement the program. The program will include space for five local business owners from specific Chicago neighborhoods. Next Street, with funding from the Surdna Foundation, provides small business support and technical assistance to program participants. The focus of the technical assistance is tailored to doing business with UChicago.8Alyssa Berman-Cutler, interview by David Zuckerman and Katie Parker, February 18, 2016; The University of Chicago Office of Civic Engagement, “Chicago Local Business Accelerator Program,” accessed July 2016, civicengagement.uchicago.edu/anchor/economic-impact-and-jobs/uchicago-local-business-accelerator-program/. In the most recent iteration of the program, participants included a local janitorial firm, a produce dealer, and a nonprofit developing a social enterprise to manufacture plastic cutlery.
Anchor network strategies
CASE strategies are organized into four main functions: procurement, workforce development, business development, and neighborhood development. Procurement and workforce development functions are the primary foci, while business and neighborhood development are secondary.
Focus on procurement and workforce development (primary goal)
Procurement: CASE programs focus on increasing local and diverse purchasing by conducting targeted matchmaking to link vetted businesses with contract opportunities at anchor institutions. It achieves this goal by thoroughly understanding existing anchor institution supply chain demand by completing an in-depth analysis of existing spending, identifying upcoming contract opportunities, and sharing best practices in local purchasing. CASE also employs a diagnostic tool, developed in partnership with Next Street, to create a pool of vetted, anchor-ready businesses. This reduces inefficiencies that would occur were each anchor institution to do its own due diligence.
Workforce Development: As local firms increase their business with anchor institution customers, CASE also partners with local workforce development intermediaries and agencies to ensure that candidates from underserved, low-income, and minority Chicago area neighborhoods are positioned for employment opportunities. Additionally, CASE seeks to increase opportunities for these residents with anchor institutions through direct employment, either with institutions individually or through collective processes. CASE will also work with anchor institution supply chain managers to ensure that local and diverse hiring clauses are included in contract language for local businesses and supply chain integrators.
- 15 Anchors
- 230 businesses assisted
- $46.7 million in revenue to Chicago businesses
- 92 jobs created, with 40 more projected9World Business Chicago, “Chicago Anchors for a Strong Economy 2015 Annual Report.”
Support business and neighborhood development (secondary goal)
Business Development: To more effectively connect existing local businesses with anchor institution supply chains, CASE assesses a business’s capacity and readiness to fulfill institutional contracts and recommends resources to help improve local business capacity. CASE uses a proprietary diagnostic tool to assess a business’s capacity and readiness to fulfill contracts with member anchor institutions and recommend the best-fit resource to help the business. To connect businesses to these resources, CASE implements such activities as:
- Partnering with community-based organizations that provide business assistance and workforce development services
- Providing one-to-one direct business advisory services to businesses on specific challenges in working with large institutions in areas that existing community partners do not currently offer programming
- Collaborating with business development efforts in the City to support businesses considering expansion and relocation to Chicago due to a new or expanded contract from an anchor institution
Neighborhood Development: CASE aims to understand, identify, and implement anchor institution priorities across Chicago area neighborhoods by creating customized action plans with engagement from senior level leadership at anchor institutions. These action plans will build upon the institutional priorities for the anchors within their geographic areas of focus. The action planning process will be informed by neighborhood scans, resource mapping, and community needs to help identify high impact projects.
The above strategies are implemented through an evolved CASE approach referred to as the Project Platform Model. In this approach, CASE acts as a platform that supports its stakeholders to accomplish their institutional goals. The platform develops, organizes, and shares data, best practices, relationships, suppliers, and other resources with members. The goal is to create “shared utilities” that are helpful to members and that also help CASE achieve its objectives.
Ultimately, the platform approach should help to create economies of scale and increase efficiencies in accomplishing both CASE and member objectives. With the platform, CASE leadership believe they will be uniquely positioned to serve as a direct supporter of critical, high impact projects that line up with their mission and are advanced by stakeholders (most notably, anchors) across the Chicago area.
Alyssa Berman-Cutler, interview by David Zuckerman and Katie Parker, February 18, 2016.
Nitika Nautiyal, Alejandro Leza, and Kathryn Yaros, interview by David Zuckerman, Chicago, IL, April 14, 2016.
The University of Chicago Office of Civic Engagement, “Chicago Local Business Accelerator Program,” accessed July 2016, civicengagement.uchicago.edu/anchor/economic-impact-and-jobs/uchicago-local-business-accelerator-program/.
More Purchasing Case Studies
References [ + ]
|1, 3.||↑||Employment and procurement data provided by institution|
|2.||↑||For employment data, see: “About Northwestern Medicine,” Northwestern Medicine, accessed November, 2016, news.nm.org/about-northwestern- medicine.html; Annual spending calculated from 2014 nancial statements and includes expenditures on supplies and purchased services. See: Ernst & Young LLP, “Consolidated Financial Statements: Northwestern Memorial HealthCare and Subsidiaries Years Ended August 31 2015 and 2014,” (Northwester Memorial HealthCare, Chicago, IL: 2015), 5. Accessed November, 2016 https:// www.nm.org/about-us/ nancial- statements-and-annual-reports|
|4.||↑||For employment data, see: “Fact Sheet: The University of Chicago Medicine,” University of Chicago Medicine, accessed November, 2016 www.uchospitals.edu/about/fact/hospitals- sheet.html; Annual spending estimated based on publicly available 2013 nancial statements, 2014 Form 990, and 2016 operating revenues. See: The University of Chicago Medical Center, “Financial Statements June 30, 2013 and 2012,” (The University of Chicago Medical Center, Chicago, IL: 2013), 3, accessed November, 2016, www.uchospitals.edu/pdf/uch_036904. pdf; Internal Revenue Service, Form 990: University of Chicago Medical Center, DLN: 93493133956166, (U.S. Department of the Treasury, Washington, DC: 2014), 10, retrieved from GuideStar, November, 2016.|
|5.||↑||World Business Chicago, “Chicago Anchors for a Strong Economy 2015 Annual Report.”|
|6, 7.||↑||Alyssa Berman-Cutler, interview by David Zuckerman and Katie Parker, February 18, 2016.|
|8.||↑||Alyssa Berman-Cutler, interview by David Zuckerman and Katie Parker, February 18, 2016; The University of Chicago Office of Civic Engagement, “Chicago Local Business Accelerator Program,” accessed July 2016, civicengagement.uchicago.edu/anchor/economic-impact-and-jobs/uchicago-local-business-accelerator-program/.|
|9.||↑||World Business Chicago, “Chicago Anchors for a Strong Economy 2015 Annual Report.”|