Collaborative Procurement: Has the Penny Finally Dropped?

Recently I read an article in an in-flight magazine that reminded me of one I had written a wheen (good Scots word) of years ago. Article was penned by the CEO of a national distribution company and concerned collaborative procurement. “Being a buddy business means adopting an approach that keeps you constantly primed for collaboration. With a plethora of challenges ahead, SMEs will need to continue to work together to grow. And with the UK’s future in the EU in question, businesses must be ready to reevaluate and rethink the partners they work with to help them adapt their strategy if needs be.” Precis plus recommendation was for SMEs to group together and collaborate on “buddy business” initiatives to collaborate, pool resources and (confidential or IP data excepted) “to engender better management of expenditure for like goods thus becoming more competitive, able to retain existing business and win new business”. The article, although suggesting a different route to take this on was very similar to the one that I had written for publication in a procurement magazine, after discussion with and blessing buy the then president of a major procurement institution. Article, however was never published; possibly as a result of its contents “not being invented here” by the then editor of that magazine. The article stated that there are well over five million small to medium-sized (SME) businesses in the UK. They are a critical part of the economy, accounting for 60% of all private sector employment and with a combined annual turnover of £1.8 trillion. Tracking the fortunes of these businesses over recent years pointed to the SMEs feeling more bullish over that time-period: 88% being in better or the same financial shape compared to prior 12 months, however, there were storm clouds looming. In March, the Chancellor announced a raft of measures designed to support smaller enterprises. In light of cuts to the growth forecast, these were welcome. Most crucially and with this month’s referendum, many business leaders were highly concerned about the impact a possible exit from the EU might have. Some 1.45 million SMEs were seeking international growth and Brexit might be their number one ‘uncertainty factor’ for 2016; 60% believing that this uncertainty could directly affect long-term growth plans. Collaboration and Its Importance In days gone by, it had been collaboration that helped SMEs shed their skins and adapt for survival. The vast majority of SMEs had said the collaborative partnerships they had formed in tougher times placed them in better stead for the future. The first step towards successful collaboration had been to understand that businesses needed the right partners for those times, and it was important to refresh professional networks to reflect this on a regular basis. Finding The Right Partners In uncertain times, it would be prudent to ‘stick to the knitting’ together with the need to cut costs and improve efficiency to help create a leaner business and one better placed to survive unpredictable times? In that case it would be a question of identifying the parts of the business that could be outsourced or where there was the potential to share operating costs with another organisation, even if they sat in a different industry entirely. SMEs in general are ambitious. If one was gunning for growth, as many are, it could be more likely a question of exploring partnerships with others to help generate sales leads, win new business and reduce procurement costs. The outcome of the EU Referendum could offer the perfect opportunity to rethink this. It may mean that growth activity could become more focused on the UK rather than overseas. If the aim was to expand into a new part of the UK, this could mean working with a partner to help expand its supply chain. If the plan was to export to new markets in new countries, it could be incredibly helpful to work with a partner in a new region or territory who understood the local market. Supplier partnerships therefore might help mitigate some of the risk involved in entering into a brand- new territory. Finding New Business Partners CEO advice was, to meet new partners. SME owners should attend networking events run by industry associations or national bodies such as the British Chambers of Commerce. In a digital world, SMEs could also connect with prospective partners over social media. Expanding networks in these ways could help to learn and become inspired by new best practice to take away and apply to the business. Spotting opportunities couldn’t be just a job for the CEO. Often, those closer to the ground looking after day-to-day operations, for example procurement could likely have the most valuable insights. The networking avenue I had been hoping to put over had been to encourage CIPS branch meetings to promote and oversee involvement in this kind of initiative within their manor and as an addition to the usual agendas. Leaders would need to ensure that employees at all levels would have regular opportunities to offer ideas for collaboration and feel comfortable raising these. Creating a culture where people felt they were able and welcome to raise bold new ideas meant it could become part of everyone’s job to find new ways of working. Buddy Up For Success and Security Investing the time and resources needed for a successful partnership could pay dividends. SMEs who successfully collaborated and partnered with others would be likely to have a more positive outlook and be in better financial shape. The report conducted by the author showed that over 75% of businesses felt more confident with value collaboration and about the future than they did a year ago. No business could succeed in splendid isolation. Being a buddy business could mean adopting an approach that was primed for collaboration. With a plethora of challenges ahead SMEs would need to continue to work together to grow. And in any case of Brexit businesses would have to be ready to reevaluate and rethink the partners they worked with to help them adapt their strategy if necessary. Collaborative Procurement: CEO Advice • Network for success. • Be open to new ways of working. • Adopt an open and transparent culture.