When Time is the Commodity: Optimizing Procurement’s Focus and Activities in the SMB Market

Procurement organizations operating in small and middle market environments do not have the luxury of time – in certain cases there is not even a formal function. Supply Chain Digest recently explored the subject, quoting a piece from Redactive’s Supply Business quarterly featuring the thoughts of Dave Nellist, who runs procurement for a New Zealand insurance firm. Incidentally, for those who don’t know Supply Business, it is a somewhat odd title aimed at talking procurement to non-procurement people (it’s predecessor, CPO Agenda, at least in its earlier years under Geraint John, was a superior publication).

As a further aside, we’re a bit surprised Supply Business is still in business, since Redactive and CIPs appear centrally focused on publishing to turn a profit, and Supply Business is not exactly flying off the shelves (incidentally, CIPs’ outsourced for profit publishing partner still to this day does not want to engage with Peter Smith, a former CIPs chairman, because Spend Matters UK/Europe could be seen as competitive and eating into CIPs coffers. Odd, and a bit sad for CIPs members, given our close working relationship with ISM in research and related areas in the US and Americas.)

But getting back to the subject at hand, Nellist provides as few key thoughts on where SMB procurement organizations should focus their limited time. These include activities when “an outsourced service is part of the delivery of the enterprise's own core purpose” or a supplier “has [been] classified the supply as high risk.” Additional scenarios for involvement include when a specified “product is uniquely tailored to the enterprise's specification, [when there] is a monopoly supply market, it is a high-spend category, [and when the organization] is not familiar with the product or market.”

All of these are useful thoughts indeed. But I might add a few more based on experience working with smaller firms over the years:

  • Invest time where you can realize the highest points of leverage. This may be technology – or it may be with partners such as group purchasing organizations (GPOs)
  • Don’t think big– think small and specialized (for the market at hand). For example, adopting a p-card program is often the wrong strategy (for most categories of spend) in larger organizations, but can make sense for smaller ones (from a broader adoption perspective) because of the visibility and rebate income it can bring
  • Look for free – including partners who can provide free technology and or free consulting such as Amazon, Grainger, Staples, etc.

Moreover, as I wrote in an invited paper for Deem on procurement in the middle market, “Rather than serving as a frontline gatekeeper, negotiator and supplier manager, procurement teams in more advanced SMB organizations have learned how to let their fellow employees do a better job purchasing on their own and provisioning supply and suppliers rather than stepping in the way as a roadblock.”

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