Small firms suffer from lack of buying know-how

26 July 2011

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26 July 2011 | Adam Leach

Many SMEs remain unaware of the value procurement can bring to business, according to a consultant.

According to Ray Newell, consultant at OakwellManagement Services and co-author of a recent book on spend management for SMEs, small businesses often have only a basic knowledge of procurement – such as how much they spend on goods and services each year – because of their limited resources.

“One of the key questions we ask SMEs is 'can you identify, without referring to any documents, how much you actually spent on goods and services last year?'” he told SM. “You'd be surprised how many can't actually give you an answer.”

When asked what he believed the main disadvantages SMEs faced compared with larger organisations, he said: “What purchasing actually contributes to the organisation in terms of understanding how much they do actually spend; the lack of control they have when they meet with suppliers; the fact they could work cumulatively together with SMEs in consortia agreements; and just the overall impact [of procurement] really.”

Newell, along with Oakwell chief consultant John Kelly and Marc Day, professor of strategy and operations management at HenleyBusiness School, has been working on Manage My Spend since 2002. The book aims to help small businesses understand the basic fundamentals of procurement.

During research for the publication, the authors worked with an SME in Lincoln to help develop its procurement operations. They found that the employee responsible for purchasing was spending 90 per cent of his time on an area where only 10 per cent of expenditure was spent.

The book is supported by CIPS and funding has been provided from Regional Development Agencies and the European Regional Development Fund. It also aims to provide a bridge between those with no proper procurement training and becoming a full member of CIPS.

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