Hello, is it SME you’re looking for?

Where do small-to-medium enterprises fit within your procurement strategy?? Have they been a victim of global strategies and supplier rationalisation or have you been able to nurture and build long-standing relationships with SMEs in your locality?? ?

A recent report by the British Chamber of Commerce and Tussell found that while the value of direct public procurement spending with SME's is up on previous years, the proportion of overall public sector procurement spending on SMEs has not increased' i.e. the proportion of overall spend by the UK Government with SMEs has fallen since 2016.?

There may be some mitigating factors at play here, and the impact of Covid on spend patterns between 2019 - 2022 is potentially one of those.? However, if the UK Government are struggling to meet their targets around SME spend, it raises some broader questions on procurement strategies across all industries and sectors:?

• Does your organisation have any objectives, targets, reporting or metrics in relation to use of SMEs??
• If so, are you achieving them??
• How do you balance these goals against other, potentially conflicting objectives??

There are certainly some basic housekeeping factors that we can consider when working with SMEs.? Payment terms and paying on time is certainly a big one and should not be underestimated.? I am sure anybody working in procurement has seen that delays?in payment can easily occur, so ensuring invoicing and payment processes are as slick as possible is of huge benefit to all suppliers, and especially those with a dependency on predictable cashflow.?

There are other factors that require a more holistic take on where SMEs fit within the supply chain and, more importantly, where you WANT them to fit.? Often, procurement processes are built around removal of risk, for good reason.?

Sometimes though, these processes make the barriers for SMEs unrealistically high.? For example, consider your Request for Proposal process - what are the expectations on the suppliers and could they reasonably be met by both an SME and a large multi-national corporation?? If not, perhaps some tweaks could be made to produce a 'lighter-touch' approach where the use of SMEs is to be encouraged.? ?

Another factor to consider is category strategy.? There are certain categories that lend themselves more naturally to usage of SMEs, such as facilities, and those that don't, such as IT.? However, there are opportunities in all categories that can be considered.?

For instance, whilst it may make sense for an organisation to work with global software and hardware vendors for provision of IT requirements, there may be local SME organisations that can provide valuable implementation, installation and support services.? The responsiveness and local knowledge can often provide significant operational benefits (and sometimes cost reduction benefits too).?

There is no silver bullet or perfect approach to ensuring you have the right relationships with SMEs, but it is something we are really interested in.? If you would like to carry on the conversation, please get in touch!??

Matt Andrews