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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.”
