Manufacturing SMEs losing out on their purchasing approaches
1 min read
Smaller businesses could be saving between 10 and 35% in their purchasing, and the most likely way to achieve that is through joining buying consortia.
That’s among top level findings of a study by Cranfield School of Management and the Buying Support Agency among owner-manager companies in the £400,000 and £10 million revenue range.
It finds 90% admitting they could be buying more efficiently, and agreeing that they do not flex their purchasing muscles.
“Their perception is born out by the reality of their purchasing practices,” says David Molian of Cranfield’s Credo Centre, who led the survey. “Over three-fifths of our respondents set targets for reducing supplier costs or improving their efficiency less than once a year, while more than a quarter admit they never do either. On that basis alone there’s room for improvement.”
He adds: “About two-thirds look at the totality of their purchasing spend, and almost the same number are doing so on a quarterly basis. At the other end, a quarter review their expenditure less often than once a year. As far as we can see there’s not a link between the size of business and buying management – some of the larger respondents are among the least rigorous.”
It all adds up to disadvantage businesses. One of the main missed solutions, according to Cranfield is joining a buying consortium. Fewer than 10% belong to such a group, which could negotiate preferential terms from large suppliers on behalf of its members.
One of the others not mentioned is joining industry-focused private web exchange hubs, which do a similar job. As costs for the latter continue to fall, while capabilities improve, this has to be a way forward.
