Small and medium-sized businesses (SMEs) could save six per cent of their combined annual turnover1, that’s according to newly published research from Tungsten Network. The study of 1,000 business decision makers found that, despite the fact that procurement is the biggest expense after payroll for SMEs, many still seem to take a laissez faire approach towards selecting their suppliers and reviewing their supplier list.
According to the findings, 28 per cent thought they could save between £5,000 and £20,000 if they were smarter with their procurement by shopping around, while 15 per cent thought they could save as much as £50,000. Although many consider procurement to be an essential part of business management, 42 per cent said they only review the supplier lists once a year, with 19 per cent saying they conduct a review on an ad hoc basis or when they are dissatisfied with a supplier.
Commenting on the survey findings, Richard Hurwitz, CEO at Tungsten Network, said: “The savvy buyer knows that many different factors come into play when choosing a supplier. Price has a strong influence, but quality, whole life cost, security, ethics, values and reputation of a business also hold sway. Besides, with the amount of data now available at businesses’ fingertips and valuable tools like spend analytics, buyers are able to analyse where and how they are paying their invoices, often uncovering significant opportunities to streamline their invoicing system.”
With a more considered approach to procurement, the UK’s 5.4 million SMEs could save a combined total of £106 billion. These cost savings could significantly improve profitability, working capital and cashflow, and enable businesses to be more agile and flexible.
At Beavis Morgan we work with a wide range of businesses of all sizes and across many different business sectors, helping them with strategic planning, system implementation, business turnaround and improving business performance for the future. For further information about how we can help you and your SME business, contact Steve Govey or your usual Beavis Morgan Partner.
- Combined annual turnover is £1.8trillion ~ Department for Business, Innovation & Skills, Oct 2015