A focus on SMEs – social value and a cost-saving initiative

Apart from various Home Office initiatives, which include the spending target/aspiration/ambition with SMEs, and The Prompt Payment Code in response to the Government’s ‘Creating a Responsible Payment Culture,’ we don’t seem to have created a lot of opportunities for small firms. While some big government departments have all the right SME aspirations, they haven’t all been very good at delivering the opportunities. It’s good to know that Sellafield, for example, through its LINC initiative has broken down pieces or work for smaller firms to take advantage of during tenders, and the MOD’s tender for procurement services on the CCS framework mandates that 20% of the roles have to go to SME partners.

In the private sector, of course, there is no such mandate, so we were pleased to meet a private sector firm (an SME itself) that is helping other small firms and charities to make a profit and increase revenue by levelling the playing field.

Barkers Commercial Consultancy is a young Manchester-based commercial and procurement consultancy with a very strong social value proposition. It has come up with an initiative to help SMEs make profit (without upscaling sales), benefit from the bargaining power of the big firms (without spending more time dealing with suppliers) and get professional advice that that they would otherwise not be able to afford.

The story behind the scheme

We talked to Warren Kozera, Director at Barkers Procurement, to learn more about how the scheme came into being:

“In the past I have worked for several big consultancy firms,” he said, “but I never felt they really gave anything back to customers, or society. Barkers is different, being strongly focused on social value our aim is to provide better value for money for our customers and have a credible basis in ethics and social responsibility. Three years ago, we realised these principles could really differentiate us from the other management consultants, and we began to cement that by offering £1 million in advisory for free to charities. Sadly, the advert we took out delivered no takers. We discovered that it’s actually more difficult to give advice away for free than it is to sell it.

So we joined Social Enterprise UK and Business in the Community (which command a joining fee) and had some success in creating value from connecting with a few charities and doing some pro bono work. But it wasn’t on the scale we hoped for. So we had the idea to start our own social enterprise and to give our management time for free. We created LifeScape, a grounds maintenance initiative in NW England with no prerequisite for entry-level skill, which could employ marginalised groups and give them a second chance in life. The business model was to take profit from Barkers and use it to purchase the capital assets of the business and to underwrite it. We collaborated with people in the industry to share their offices and facilities and operational controls like H&S. It took a huge amount of time and effort to set up, but was very rewarding. Our thoughts then turned to how we could keep doing good, but also keep our business sustainable.”

The SME proposition

“SMEs cannot afford to pay the management consultant fees in the way big firms can,” said Warren. “This means they can’t afford to benefit from the procurement skills, the technology and the market knowledge available to big firms, which bring them the best deals and the best suppliers in the market. To address that balance we came up with a way to provide SMEs with free access to our knowledge of best prices and suppliers, with no cost to them.

We do this by analysing all of a firm’s invoice data and categories of spend, and propose back to them suppliers with better prices. Then, and only if the company chooses to implement those better prices, we have an arrangement with the supplier to receive an introduction fee, of which we give 20% to LifeScape, our social enterprise. So no money is made from the customer; we make a small amount from a high-quality service only when the customer gets value from it.”

Barkers say the process can be complete in six weeks: from analysing invoices and contracts, to comparing pricing and terms to their preferential supplier deals, to quantifying the savings and implementing the results.

The next step was to take this business model and scale it across the UK medium-size enterprise market with a target market of charities. “We now have links with social housing and other charities who are getting better value for money and reinvesting in their services, at no cost to themselves” he said.

Barkers aims to deliver £2 million in social value every year based on its pro bono advisory work to the charity sector and the value created by LifeScape, in which the senior management team have dedicated many hundreds of hours of work. Its commitment to social value has earned it the 2019 Business in The Community (BiTC) award for ‘Connecting Places’ and the 2018 CIPS award for best contribution to reputation in the profession.

“It is still not widely recognised,” said Warren, “that while social value does not always resonate at an operational level with many big firms, it is actually what most customers care about. This kind of initiative takes time, effort and money, but we believe it is genuinely the right thing to do.”

Find out more about the Barkers’ SME initiative here.

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