How can procurement encourage SME participation?

Authored by Claire Sexton 

Traditionally, category managers focus solely on finding lowest cost options and give little consideration to factors beyond the traditional procurement scope, such as increasing business with small-to-medium sized businesses (SME), local or diverse suppliers.
However, most procurement teams have the tools in place to enable SME participation and it only takes a slight shift in how they are used. Here are a few tips to incorporate this new approach:

• Benchmark current SME spending. With flexible reporting, procurement can measure the total percentage of diversity spend, spend by ethnicity/minority group, and diverse spend by category through a spend analysis tool. Establishing a starting point is essential for measuring the effectiveness of the programme over time. 

• Build diversity requirements into contracts. Take your SME initiative one step further by requiring all core suppliers source a portion of what they sell to you from diverse tier-2 and tier-3 suppliers. This instantly creates a more impactful diversity initiative. 

• Set clear expectations for suppliers. For example, when asking about supplier diversity, explain in the RFP what qualifies as a SME or diverse supplier and list if any certifications are required. Then, in e-auctions, buyers can set aside a percentage of contracts per event that must be awarded to diverse suppliers. 

If you’re looking for more information, the Institute for Sustainability and Action Sustainability recently compiled a guide for engaging with SMEs – it’s an easy read, and definitely valuable for all procurement professionals.