Buyers seeking out SMEs

2 August 2011

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2 August 2011 | Adam Leach

Businesses want to boost the amount of contracts they award to small and medium-sized enterprises (SMEs), according to 68 per cent of buyers.

This month’s SM100 poll asked: ‘Is your organisation looking to increase the contribution SMEs make to its supply chain?’ Most respondents indicated that it was a clear objective for the coming year, citing a lower cost base and high level of flexibility as among the reasons.

“In areas where tailored services are critical, SMEs will often be well positioned to compete due to their willingness to negotiate on terms and [service level agreement’s],” said Paul Revell, supply chain manager at Ventura.Large organisations often expect you to take what they are selling. Smaller companies cannot be that presumptuous and so will usually listen more attentively to your particular requirements.”

Martin Blake, head of corporate procurement and commercial development at London Probation, said that part of his organisation’s strategy this year was developing an electronic provider portal. “This will drive even greater local market engagement, supporting more effective collaborative commissioning and the government’s localism agenda,” he explained.

However, Blake added that the number of areas where it’s practical to increase SME engagement was limited. “This method works well for directs, but indirects, especially commodities and utilities, can often be more challenging,” he said. “The Efficiency Reform Group’s ongoing drive for bigger and cheaper, while understandable, creates tensions for procurement teams, which are increasingly encouraged to buy off frameworks, a route that all too often means only dealing with the big players.”

Chris Graves, head of procurement services at Your Procurement Organisation(YPO), identified what he considered to be an important factor in opening up more opportunities for SMEs. “A key element to support our intent to give SMEs more access to opportunities will be the development of a dynamic purchasing system that will give fair and transparent visibility to all potential providers on the opportunities that are out there,” he said.

While the vast majority of buyers are looking to increase the contribution SMEs make to their supply chain, 32 per cent are not. Paul Baker, category manager, sales and service, telesales, supply chain and logistics at Telefonica, explained why.  “SME’s will have opportunities to provide services if they are relevant and able to support the organisation,” he said. “Experience would say that SMEs up to a level are not able to support large organisations unless they provide select services that cannot be sourced from an alternative.”

Meanwhile, Murray Dilks, group director of purchasing at electronics company Paragon, commented: “It is not a critically consistent factor in our supplier selection criteria. The size of the company may be a consideration, for specific commodities or services, but if all other criteria like financial stability, are met then it is unlikely to be a defining selection factor.”

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