The survey revealed startling figures on the amount of money SMEs believe could be saved by shopping around for better deals. More than a quarter (28 per cent) thought between £5,000 and £20,000 could be saved, while 15 per cent thought the same of up to £50,000. Based on these estimates, each SME could save £19,663 each year through smarter procurement.
The research indicated, however, that these figures are likely to fall in the future. Of the small businesses we questioned, 70 per cent said more attention is being paid to how much goods and services and being brought in at; far more than in the past.
As an overall trend, the study showed the majority of small businesses believed a smarter procurement function – buying the goods and services that enable an organisation to operate more efficiently and effectively – would play a more important role than sales and marketing.
Why, then, aren’t SMEs already doing more? Perhaps to answer this question we should register the enormous time and effort that goes into making sure prices are competitive in the extreme. With the internet, admittedly, it is now possible to search every possible cost that’s out there, from here to Timbuktu and everywhere in between, but that doesn’t make it any less time consuming.
It’s not just about price, either. Business relationships are hard won, and when a bond is developed over many years, trust develops. Crucial to this, however, is knowing that the price is right, that neither side is taking advantage.
This is somewhere technology will increasingly be able to help more. With invoices being processed digitally, the valuable data on prices paid is quickly becoming far deeper than it has ever been possible to dig in the past, especially with limited resource.
SME bosses will be able to see through spend analytics how much they’ve paid to whom at the click of a button, and compare it with the other options in the marketplace via the internet. These will be tailored by sector, location and viability.
That’s why it’s important buyers and suppliers communicate openly. If conversations about pricing don’t need to involve lengthy investigations, the communication that does happen can be about the future – where efficiencies can be made, what innovation is necessary, how shared targets can be introduced. This transparent, open collaboration between buyers and suppliers, who are both experts, would lead to growth for all parties. I believe transparency, after all, is the essence of good business – and something many SMEs are clearly looking to achieve more of.
Andrew Nichols is head of analytics at Tungsten Network
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