Fewer forms fare well with small firms

18 June 2003
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19 June 2003

Taxi drivers in York no longer have to wade through piles of paperwork to bid for council contracts. The city's efforts to support SMEs should be applauded, says David Arminas

Few people like filling in forms and taxi drivers are probably among those most averse to such paperwork. So the City of York Council's efforts to cut down on the paperwork taxi drivers need to complete to bid for council contracts are commendable for two.

First, it recognises that taxi drivers can ill afford the time to fill in complicated forms. Directors of small and medium-sized enterprises, whether they be owners or otherwise, are acutely aware that by taking a day off to fill in a form, they lose a day's income. It is a practical issue for them.

Second, it recognises that York has a vested interest in attracting as many SMEs as possible. The city could have left its document untouched at 30 pages and used only those taxi drivers and taxi companies that could afford the time to fill in the document. But Derek Nash, York's procurement adviser, believed this meant he could miss out on the best deal. For Nash, too, it is a practical issue.

There is no shortage of advice both for purchasers looking to use more SMEs and for SMEs on how to better manage their affairs to make them more attractive.

The Better Regulation Task Force, in conjunction with the Department of Trade and Industry's Small Business Service, as well as the government's procurement advisory body, the Office of Government Commerce, offer guidance to SMEs. The task force, in particular, is using its influence to the full. Last month it called on the Office of Fair Trading to investigate whether the government is ensuring that SMEs, which it says make up 99 per cent of all UK firms, can bid for the public sector's low-value contracts, worth £2.5 billion annually.

Partnership Sourcing Limited (PSL), the industry-led group lobbying for better supply chain relations to improve competitiveness, is taking its message out to the provinces in an effort to reach SMEs. Its new regional forums focus on improvements in performance and understanding total supply chain relations.

But purchasing and supply chain professionals are not charities. York's actions raise a major question for many purchasers: "What's in it for us if we hire an SME?"

Purchasers will need to tackle several issues as they become more SME-friendly.

A major issue is politics. Is there a public relations payoff if SMEs, especially local ones, are taken into a supply chain?

There is undoubtedly good public relations mileage in being seen to help the local economy. But the advantage of this must be carefully weighed against the advantages of looking further afield to SMEs that can deliver goods and services at a lower cost with more obvious benefits than local SMEs.

Resources is also an issue - both organisationally and financially. Within SMEs, these are notoriously short so it is important for purchasers to fully understand the abilities of SMEs before they are contracted. SMEs should have sufficient capability to expand or contract in areas such as production and research according to the purchaser's business needs.

In this respect, the London Development Agency's rigorous defence of its requirement for tendering documents appears to be good risk management.

Potential suppliers of a major training programme complained that it would take two days to fill out the forms. But Paul Greenwood, the LDA's director of finance, said that the questionnaire "provides assurance to the agency that tendering suppliers have the necessary experience, professionalism and financial probity to deliver the specified service".

It also ensures that suppliers with little chance of selection don't waste their time applying. Harsh words, perhaps, but kind in the long run.

The attitudes of York and the LDA show that the risk of contracting an SME needs to be balanced with what the client can expect from an SME's performance. Each purchaser must decide where this balance lies.

However, no purchaser can afford to ignore the benefits of exploring what SMEs have to offer. Large corporations with huge design and research budgets are not the sole sources of innovation.

The challenge is for purchasers to work with SMEs to develop their potential and for SMEs to rise to the opportunities offered.

SMjun2003

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