May 29, 2014

MBA students boost sales for Cornell's diverse suppliers

Many people turn to Cornell for technical advice about agriculture or engineering, but the university has business smarts too. A group of MBA students in the Samuel Curtis Johnson Graduate School of Management has been helping small businesses boost their sales – especially their sales to Cornell.

The students have created a firm called BRC (originally Big Red Consulting). Cornell Procurement Services enlisted them as part of the university’s Toward New Destinations initiative, launched in 2012 as a planning framework for full engagement with diversity. One of Procurement Services’ goals in that framework, which it calls the Supplier Diversity Initiative, is to help departments spend more with businesses owned by women, minorities and veterans – which often are new and small and can benefit from professional input in areas like human resources and marketing. Five key diverse suppliers were selected to work with the students.

The result was a win-win for the companies and the students. MBA students are always looking toward an internship they can add to their resume, said student Dave Mueller, who helped organize the project. Practical consulting experience offers the same value, he said.

“The MBA students have enabled the university to have a much richer dialogue with suppliers,” said Tom Romantic, senior director of Procurement Services. “This collaboration greatly strengthens the pipeline of diverse suppliers, which the university has identified as a strategic objective.”

BRC deployed teams to observe how the businesses operated, interviewing staff and management as well as current and potential clients. Their recommendations were often subtle and internal, calling for new management styles and hiring practices as well as new marketing strategies. Sometimes it got down to day-to-day worklife, with notes like “Susan cannot take every sales call” to explain why staff need printed guidelines.

For a company that supplies enzymes to Cornell genomics researchers, the student consultants surveyed those researchers, finding that most wanted to get their materials from a site close by rather than waiting for rail shipments. The company is exploring the idea of stocking their products in freezers on campus.

At a video production company, the students found that the president wasn’t sharing knowledge, and the staff was “unprepared to meet external growth.” The consultants recommended a restructuring of staff and new hiring to fill in missing skills. The students created a “skills matrix” chart to identify gaps. They also found the company was not matching its pricing to its costs, and developed a template staff could use to predict the true cost of a job before giving an estimate.

An audiovisual supplier, already a preferred Cornell vendor, needed to boost income. The recommendation was to go beyond the Ithaca campus and seek business from educational institutions in Syracuse, Rochester and Buffalo, and Cornell’s New York City branches. Again, pricing was not keeping up with costs, and the students developed a spreadsheet tool to guide bidding.

A small printing and direct-mail marketing company was suffering from the obsolescence of paper. The consulting team’s recommendation: diversify by acquiring a digital marketing company. “Online direct marketing and marketing consulting offer much higher margins and growth than the commercial print industry,” they pointed out. Moving to a services model could make the company “a full-service marketing and database management organization.”

For a janitorial supply firm, the problem wasn’t selling more to Cornell. Cornell was their only large client, and they needed to expand to other local institutions, the consultants said. An obstacle, they found, was that the sales staff is aging – close to retirement age – and new hires haven’t fit into the company culture. Solutions: establish closer ties with colleges, both to solicit business and find new, young salespeople, and create a mentoring program between the experienced sales staff and new hires.

As a climax for the projects, students reported their findings at a meeting May 9 before an audience that included the owners of the companies they had worked with, along with Joanne DeStefano, vice president for finance; Sunny Donenfeld, associate dean at Johnson; and senior leadership from Procurement Services. The owners reported a “tremendous experience” and graded the students as “very professional.”

“I was pleased to see the quality of recommendations from our students and that our vendors were so willing to work with us to enhance their businesses,” DeStefano said. “This was one of the best win-win projects, I’ve ever seen.”

The project recommendations have been implemented by the firms, and all are looking forward to Phase 2, when the consultants will develop detailed marketing plans. “You’d have to be crazy to turn down this kind of help,” said one owner.

New projects will be identified for the next fiscal year, Procurement leadership said.