EY is launching an online tool to improve engagement and communication between buyers and small suppliers ©mooshny /stock.adobe.com
EY is launching an online tool to improve engagement and communication between buyers and small suppliers ©mooshny /stock.adobe.com

EY to improve how it works with SME suppliers

7 August 2018
Small and medium sized enterprises (SME) are increasingly important in the supply chain, but large companies make it difficult for them to enter, according to analysis.
SMEs are “more agile” than large corporates, and more than half of start-ups launched “new and innovative products or services,” which larger corporates need to make use of, said a report by professional services firm Ernst and Young (EY).
Despite this, corporates’ hiring processes often ruled out smaller suppliers which had a “valid product or service to offer,” with 45% of EY’s SME partners coming through internal recommendations and its network.
SMEs also reported frustration at a lack of “continuation of further business,” and only being involved in one-off transactions to “meet a specific demand,” it said.
They were hampered by “prohibitive” internal bureaucracy, with complex terms sometimes forcing smaller suppliers to take “higher risk simply to maintain the business, not appear ‘difficult’ and are accepting provisions which cannot be upheld,” it added. Several told the firm that to agree to the terms of large corporates’ terms, they required legal help which they “cannot necessarily afford”.
The scale of larger companies’ operations and changing seasonal demands also presented issues, it said, with many small suppliers feeling that their “expertise is disregarded and capacity becomes more important than their ability to do the job”.
The report, which surveyed more than 40 SMEs across marketing, HR, L&D, Technology software and hardware providers, was presented last week as part of a drive by EY to do more business with SMEs.
The company announced that it would employ new software which aimed to improve engagement and communication between buyers and small suppliers, called Clientshare, hoping to address the issues around hiring processes and “one-off transactions”. 
James Ward, managing director of Clientshare, said it would do this by combining the “best bits of technology you’re used to using,” such as a Facebook-like news feed function.
“Supply landscape is changing, contingent workforce is changing… We need to embrace smaller suppliers in order to move forward,” said Amanda Spencer, EY’s head of supplier relationship management. 
The company would try to accommodate SMEs over seasonal changes in demand, she said, finding ways to “help smaller suppliers meet targets” by using the software to link them with larger suppliers with more capacity. 
She pointed out that engagement thresholds also stood in SMEs’ way. “The thresholds for engagement with procurement are often set against a monetary value,” she told SM earlier this year. “This is the first process that needs to change as smaller suppliers become more credible and crucial.” 
On compliance, she said at the launch: “We have to comply. That is our business and our reputation depends on it,” she added. “But could we be better at explaining it [compliance] to you? Can we be better at highlighting the areas that are flexible and non flexible? Yes we can.”

Professional services firm EY will look at changing its processes to make it easier for small and medium-sized enterprises to enter its supply chain.

At the launch of the firm's SME Development Initiative, EY head of supplier relationship management Amanda Spencer said large organisations needed to engage more effectively with SMEs to harness innovation and agility.  

“The supply landscape is changing, with the rise of the contingent workforce and gig economy,” she said. “We need to embrace smaller suppliers in order to move forward.”

The company surveyed more than 40 SMEs across marketing, HR, technology software and hardware providers to greater understand the barriers smaller suppliers faced when trying to work with the firm.

It found that its processes often ruled out smaller suppliers which had a “valid product or service to offer”, with 45% of EY’s smaller partners coming through internal recommendations and networks.

SMEs were also “frustrated” at only being involved in one-off transactions to “meet a specific demand”, the report said.

To remedy some of these frustrations, EY is launching an online tool – Clientshare – to improve engagement and communication between buyers and small suppliers.

Those small businesses surveyed also reported “prohibitive” bureaucracy, with complex terms sometimes forcing smaller suppliers to take “higher risk simply to maintain the business [and] not appear ‘difficult’,” it added, with some needing legal help which they “cannot necessarily afford”.

The scale of larger companies’ operations and changing seasonal demands also presented issues, it said, with many small suppliers feeling that their “expertise is disregarded and capacity becomes more important than their ability to do the job”.

Spencer said the firm would try to find ways to “help smaller suppliers meet targets” by using the Clientshare tool to link them with larger suppliers with more capacity. 

She conceded, however, that for all its efforts to help SMEs, EY had to continue prioritising compliance. “That is our business, and our reputation depends on it,” she said.

“But could we be better at explaining it [compliance] to you? Can we be better at highlighting the areas that are flexible and non-flexible? Yes we can.”

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