Supplier diversity is a business strategy that ensures a diverse supplier base in the procurement of goods and services for any business or organization. In other words, supplier diversity refers to a supply chain that incorporates businesses owned by diverse individuals or groups.
Though supplier diversity is a well-known industry best practice that speaks to the benefits of small and diverse businesses in a company’s supply chain, it is not the only strategy that does this. B corporations, social procurement, and economic development plans also highlight the need for including small and diverse businesses in the procurement process.
Recently, a new term has gained momentum in the supplier development industry. Over the past few years, many organizations have adopted “anchor strategies” to invest in their local economy.
These anchor strategies may include terms such as anchor institutions, anchor collaboratives, or anchor missions. In this article, we will elaborate on this strategy and how it is helping to revolutionize how you view your local hospital and university.
What Is an Anchor Strategy?
An anchor strategy refers to an action-based plan to strengthen the local economy. Institutions that adopt anchor strategies are deeply entrenched in their communities and benefit from the development and the sustainment of the community.
The three main components of an anchor strategy include anchor institutions, an anchor collaborative, and an anchor mission.
An anchor institution generally refers to a nonprofit or public entity such as hospitals and universities. Such institutions cannot or do not move if revenues decline. They are generally built in a community to stay in it. Rather than leave, they tend to expand within their location, often buying adjacent property and building upon it.
Anchor institutions look to serve their communities by hiring, purchasing from, and investing in the local area. Types of anchor institutions in addition to hospitals and universities can include school districts, art institutions, libraries, museums, airports, and utility companies.
According to Democracy Collaborative, a nonprofit focused on furthering anchor strategies, “an increasing number of anchor institutions and partner organizations have joined to form place-based networks, or anchor collaboratives, to develop, implement, and support shared goals and initiatives that advance equitable and inclusive economic development strategies.”
These collaborations ultimately lead to an anchor mission or goals that are implemented by collaboratives to measure the impact of their strategies.
Operations and Success
There are many ways an anchor strategy can begin, but all involve what is known as a backbone organization. A backbone organization (also known as a convener) can include foundations, local governments, and nonprofit organizations whose purpose is to identify and coordinate the anchor collaborative and to offer support to anchor institutions involved whether they do so through labor resources, education, or financing.
Key factors that contribute to the success of anchor strategies include buy-in, engagement, and collaboration with key local leaders, as well as existing community associations, the tracking of data that measures the impact of validated community needs, and a clearly defined geographic area, to name a few.
The ultimate goal is to grow the targeted area(s) with the full support of anchor institutions, which can result in an increase in employed persons, revenue for small and diverse businesses, and resources that result from investment.
Anchor Strategy Next Steps
Once again, according to Democracy Collaborative, “The Anchor Collaborative Network (ACN) was initiated to build a shared movement of place-based collaborations that are working to accelerate equitable, inclusive strategies that respond to local needs and challenges.”
This includes the fact that health systems and universities combined spend more than $1 trillion annually with another $750 billion invested in assets, and 9 million people employed.
Within the network, there are currently more than 200 health systems and universities that have signed up to support the anchor mission philosophy, with more joining each year. If this continues, it could mean a huge positive change in areas with large amounts of anchor-led organizations.
We are all aware of the impact a university or hospital can have alone, but if there is a coordinated effort at large, the change coming in the next decade could be truly groundbreaking.