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Barriers to Entry – The Corporate Procurement Challenge

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This exclusive article by VBN founder and Executive Director, Ron Washington examines the process, challenges and priorities of doing business with corporations.  Click Here to Download the VBI Special Edition Corporate Procurement Article (PDF Format)

Competition and Barriers to Entry

Many U.S. corporations today have programs that seek to locate and conduct business with veterans. Since the sixties U.S. corporations have mounted vendor inclusion programs for minorities, and women business enterprises (MWBE) and have recently added the LGBT and veteran business community into what is commonly referred to as “Supplier Diversity.” In the corporate world the supplier diversity program is typically located within a corporation’s supply chain organization. There is usually a Program Director/Manager and sometimes these positions are even staffed at the VP level. In many instances the supplier diversity program manager reports to the supply chain executive or someone on his/her team. This is a person you need to know.

There are three major supplier diversity national advocacy organizations that the corporations with supplier diversity programs are members:

  • WBENC (Women’s Business Enterprise National Council),
  • NMSDC (National Minority Supplier Development
    Council)
  • NGLCC (National Gay & Lesbian
    Chamber of Commerce).

The membership of these organizations consist of the 450 plus/minus corporations that have supplier diversity programs.
These are organizations that you need to be familiar with.

These organizations claim success in assisting their corporate members to locate targeted diversity firms. While these claims cannot be officially validated like the federal government’s small business goals, evidence has supported at least some levels of achievement in reaching corporate supplier diversity and inclusion goals.

Even with such programs in place, the diversity firms still face a mountain of barriers to entry into the corporate, supplier/vendor pool.

In the 2007 edition of Policy Brief, it points out that before a firm can compete in a market, it has to be able to enter it. All markets have at least some impediments that make it more difficult for a firm to enter and especially a small business. A debate over how to define the term “barriers to entry” began decades ago, and it has yet to be universally defined.

Some scholars have argued, for example, that an obstacle is not an entry barrier if incumbent firms faced it when they entered the market. In general most agree, that an entry barrier is anything that hinders marketplace entry and has the effect of reducing or limiting competition.

barriers_to_entryAs you seek corporate contracts, it is essential that you understand the rules of the corporate procurement game first. And don’t confuse learning the rules of the game with how to play the game. Learning the rules is strategic, how to play is tactical and specific to your company, industry and market. You have to do the research. Your plan centers on developing a relationship strategy that fits your profile. Relationships are always first.

Rules of the Game

Just like in sports, in business each game has different rules. In order to become a competent player in the game of corporate procurement, you need to develop your understanding as to how corporate contracting works; what are the rules, who are the referees and judges, how do you score and where do you fit in the process (Positioning)?

Then there is the rulebook. In the federal sector the Federal Acquisition Regulation (FAR) is the principal set of rules in Federal Acquisitions. In the corporate world there is no FAR, and beyond the procurement basics, the corporate rules for purchasing change from company to company.

Fields of Play

But before you can begin you must enter the field of play. You never get in the game unless you can prove that you are capable to carry out your stated deliverables. Put fundamentals first. The corporate buyer wants to know if you are who you say you are, and can you prove it.

Barriers can also be created by business owners themselves. One can understand how things can slip through the cracks. It’s these slippages that can create or lead to barriers without any help from the outside. Eliminating self inflicted barriers is the first step before you can enter the field of play. Failure to master this will create the barrier and can eliminate your company from the game.

Mastering the basics gets you to the next level. You should consider: Are all of my registrations current? Is my business and strategic plan fresh? Is my capability statement and past performance clear? How’s my cash position? Do I know my customer, market, industry and the competition. Corporate America is more relationship based that the federal sector. Find out how the advocacy organizations mentioned earlier and others can help your cause.

Obstacles & Gateways

The number one question for corporations besides capability is Certification. Demonstrating ownership and control is at the root of all certifications.

In order to conduct business with corporations, you will be required to become certified. They can only report and take credit for certified veteran firms.

If you are VA CVE certified, you are half way there. If you are not, then get certified. Certification for corporate America is different than certification from the VA for the VA. To verify ownership and control certification for corporations, takes a less stringent approach than the VA’s process for a number or reasons. Organizations such as the Veterans’ Business Initiative (VBI) and others can get you certified to do business with corporate America. If you are already certified by a recognized organization your certification process can be simplified. Now the fun begins.

Organizations such as VBI specialize in helping veterans get through the supplier diversity portal into the corporation’s supplier pool. Its critical that you understand the rules of the game, define the fields of play, develop the right team, and execute.

Learn the critical steps for success: C.A.R.E.©

  1. Capability
  2. Access
  3. Readiness
  4. Execution

Turn barriers into a Gateways. This is a process that gives you an “at bat” and puts you in the corporate procurement game.

Sources: http://www.oecd.org/competition/mergers/37921908.pdf


Ron Washington, Founder of VBI will be a featured speaker at the National Veterans Small Business Engagement Conference in Atlanta 12/9-12/11/2014

Ron Washington, Founder of VBN will be a featured speaker at the National Veterans Small Business Engagement Conference in Atlanta 12/9-12/11/2014

Ronald Washington is the CEO of Las Vegas based AirGo (www.airgousa.com), a SDVOSB prime contractor. He serves on the Executive Committee of Vet-Force, is a board member of the VetsGroup, and is Executive Director of The Veterans Business Network. For more information on VBI visit: vetbiz.network.

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