Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

SMEs yet to reap benefits of e-procurement

by
25th Feb 2005
Save content
Have you found this content useful? Use the button above to save it to your profile.

A recent study by a British business school has shown that while e-procurement is paying off for large companies in their dealings with SMEs, the SMEs themselves have yet to benefit fully.

The study, produced by the School of Operations and Information Management at Bristol Business School found that leading blue chips admitted "they have to do more to make online trading happen with their SME trading partners."

The survey was carried out to identify the extent to which e-procurement is enabling blue chip buying organisations to enhance trading with SME suppliers. It also explored the "challenges the blue chip buyers face from supplier adoption of e-procurement technologies."

It found that companies with e-procurement in place benefited from a reduction in administrative and operational costs and improved internal resource deployment, and that, "where corporate buyers had experienced enhanced SME supplier relationships as a result of e-procurement, this was mostly seen in the area of delivery and reliability."

However, while two thirds of those who had implemented e-procurement had either rolled out or were in the process of undertaking a supplier adoption programme, the report found that "it was clearly evident that there are a number of challenges that need to be addressed in achieving buy in for the technology from the supplier community."

It said that "Significantly, 61% of the blue chip buyers felt they needed to promote adoption of e-procurement among SMEs. They felt they had a significant role
to play in enabling e-procurement through: providing clearer direction and a specific timeline for supplier adoption; convincing SMEs of the business
benefits; creating stronger and closer relationships with their trading partners; and offering a commitment to longer term contracts."

One corporate buyer said that SMEs had been "stung before" with e-procurement and received limited value. It was thus harder for them to appreciate the benefits, and needed to be convinced.

Another remarked: "The SME supplier community will only take it seriously when they realise that the big players are serious about e-procurement. The key enabler is a change in attitude amongst SMEs. At the moment there is
currently a lack of willingness."

Lack of understanding of e-procurement and the cost of the technology were seen by the corporate buyers as the main barriers to adoption.

For the 47% of respondents who had not implemented an e-procurement system, the reasons given included: difficulties in convincing SME suppliers of the benefits of such a system; an unwillingness to embark on such a change due to initial costs which may outweigh future benefits; and a feeling that its introduction would alienate or inconvenience suppliers.

The report found that one of the main business drivers of e-procurement was "maverick buying", where buyers go to local suppliers and put in urgent requests; closely followed by cost reductions and process efficiencies

Michael Bennett, Managing Director of IMPAQ commissioned the report, said: "Whilst Britain's largest companies are seeing tangible benefits from e-procurement, many are not recognising the technology's full potential due
to the overriding issue of getting buy in from the SME supplier community.

"Whilst the SMEs have a major role to play in making e-procurement happen, it is very clear that the corporate buyers, as they have been seen to admit, need to smooth the way for effective online trading with their supplier
communities.

"If the big boys can lead by example - and there were a number of cases reported in the study where they had introduced initiatives which engaged their supplier communities in the e-procurement process - then they will be able to potentially reduce operational and administrative costs further and provide a better return for their investors."

Tags:

Replies (1)

Please login or register to join the discussion.

By Nextenders
14th Jan 2014 16:46

Putting eProcurement within reach of SMEs

SMEs definitely aren't reaping the benefits but cloud-based solutions are making eProcurement affordable and flexible for small and medium-sized businesses. Read our guide to find out why and how SMEs can take advantage of eTendering.

Thanks (0)