SMEs most keen to buy via the net

14 June 2000
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15 June 2000 | David Arminas

Small businesses in the UK are more interested in e-procurement for maintenance, repairs and operations than medium-sized companies, according to a survey.

European Electronic Procurement from RS Consulting, published last month by Net Profit, showed that just 42 per cent of medium-sized firms were "very interested" in e-procurement, compared with 66 per cent of large businesses and 70 per cent of small ones.

Only 5 per cent of small and large companies said they were "not very interested" or "not at all interested" in e-procurement, compared with 11 per cent of medium-sized firms.

Traditional thinking is that small companies drag their feet on e-procurement because they lack the funds to buy the software and have fewer purchasing staff to manage the system.

But this could be their saving grace, claimed David Bowen, Net Profit's editor-in-chief. "Smaller firms can be more dynamic, less bureaucratic and run by younger people, who are quick to see Internet advantages," he said.

"They may look at joining electronic trading exchanges as a way of getting into a supply chain to which their company may not already have access," added Bowen.

Medium-sized companies are not aggressively targeted by software vendors and their management may be treading carefully with e-procurement so as not to ruffle the feathers of their purchasing teams, he suggested.

The survey was based on responses from 564 purchasing professionals in the UK, France and Germany.

It found that 44 per cent of UK firms, regardless of size, used e-procurement, compared with 38 per cent in Germany and 26 per cent in France. German companies used the Internet most for information gathering (85 per cent), while French companies used it the least (70 per cent).

The average annual turnover of the small companies (defined as those with fewer than 100 employees) involved was £11 million. That of the medium-sized companies (100-500 employees) was £44 million, while that of the large firms (more than 500 employees) was £287 million.

Recent research into SMEs from soon-to-be-launched trading exchange GroupTrade estimated that those with between 50 and 99 employees could save an average of nearly £200,000 a year if they used business-to-business e-procurement for indirect goods and services.

The research, conducted by think tank London Economics, also estimated that of the savings SMEs could achieve via e-procurement, 30 per cent would be from price discounts negotiated through a trading exchange.

The other 70 per cent would be through greater process efficiencies.

SMjun2000

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