Procurement bias against SMEs

Private sector businesses believe that small and medium-sized enterprises (SMEs) are ‘less competitive’ than their larger counterparts, according to a survey from telecoms groups BT Business and Cisco.

The survey of procurement managers also reveals that they are less likely to choose SME suppliers when times are tough.

Two-fifths of procurement managers say they would avoid doing business with SMEs in an economic downturn, while a similar number believe that smaller businesses are less creative. Some 52 per cent of respondents from the private sector say that SMEs are less competitive than their larger counterparts.

John Dunsmure, MD of the British Chambers of Commerce, says, ‘These findings are extremely worrying for UK businesses and especially start-ups. As such I would urge businesses to outsource anything that is secondary to their core business competence and invest their precious resources in what will help set them apart from the competition.’

Procurement managers do see some benefits of working with SMEs. Nearly three quarters (72 per cent) say growing businesses are better placed to offer a more personalised service, while 87 per cent claim SMEs are more likely to have the personal chemistry conducive to a smooth supplier relationship.

However, this is offset by 57 per cent of respondents saying that SMEs are not able to provide round-the-clock support.

The survey questioned 253 procurement managers, 158 of them from private sector companies with more than 250 staff and the remainder from the public sector.

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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