Overcoming Challenges with Strategic Sourcing for SMEs
Explore how strategic sourcing for SMEs can help procurement professionals overcome the unique challenges of operating a small business.
By Hugo Britt | August 31, 2023
Is being “strategic” something that is only reserved for large organizations with well-resourced procurement teams? Should smaller organizations stay in their lane and concentrate on day-to-day tactical sourcing?
There’s a good argument to be made that the smaller you are, the more strategic you need to be. With limited resources, time, and purchasing power, every decision needs to be well-planned and supported by data.
In this article, we explore the unique challenges facing SME procurement teams, how to be strategic despite these challenges, and the role a group purchasing organization can play.
The unique challenges of SME procurement
Small businesses often find themselves facing a unique set of challenges. Procurement professionals are tasked with not only finding cost-effective suppliers but also ensuring the sustainability and competitiveness of their companies. In this environment, a systematic and fact-based approach to procurement becomes even more vital.
With limited resources, time, and purchasing power, every decision made by a SME needs to be well-planned and supported by data, including those of the procurement department.
Small businesses often have limited financial resources and staff dedicated to procurement. This constraint can hinder their ability to analyze spend data, discover suppliers, negotiate favorable terms, and find cost savings.
Maintaining a diverse supplier base is important in terms of risk mitigation and ESG. Small businesses may struggle to find and engage with diverse suppliers, potentially missing out on valuable opportunities and risking reputational damage.
Small businesses may not have the capacity to conduct thorough risk assessments, making them vulnerable to disruptions, quality issues, and compliance breaches.
Lack of expertise
SMEs may not have in-house experts to navigate process intricacies, which can lead to suboptimal deals and missed savings. Bringing in outside consultants to fill skills gaps can contribute to costs.
As SMEs grow, their procurement needs evolve. Managing this transition smoothly can be challenging without a strategic approach to sourcing.
Partnering with a group purchasing organization is an excellent options for SMEs looking to overcome challenges and thrive by implementing a strategic sourcing framework tailored to their needs.
Overcoming procurement challenges with strategic sourcing for SMEs
Small and medium-sized enterprises can thrive despite these challenges by adopting a strategic sourcing framework tailored to their needs. Here’s how they can do it with the help of a group purchasing organization (GPO).
1. Data-driven decision making
For many organizations, the number-one way to “get strategic” is through data-driven decision-making. As a GPO, Una can promptly and efficiently comb through your spend categories and identify which ones would benefit most from our collection of pre-negotiated contracts.
The process of reviewing your current spend data and conducting a cost analysis is seamless which means our members are usually able to start saving within a couple of weeks.
2. Increasing purchasing power
A group purchasing organization leverages the collective buying power of its members to secure deeply discounted pricing from the nation’s leading suppliers and vendors.
Together, we’ll work to drastically cut down on the amount of time it takes to source the goods and services you need, realize cost savings and drive value. Una leverages over $100 billion in collective buying power to secure favorable pricing.
3. Risk mitigation expertise
By pooling their resources and buying power, members of a GPO can often achieve economies of scale that would be difficult or impossible to achieve on their own. This can help to lower costs and increase efficiency, which can ultimately reduce the risk of financial loss.
Learn more about how to manage risk using a GPO here.
4. Procurement expertise and training
GPOs bring to the table a wealth of procurement expertise. Partnering with Una means you gain immediate access to a team of indirect spend management experts offering procurement and supply chain knowledge, category advisory, insight into spend data and cost comparisons, supplier relationship management, and more.
GPOs lend growing businesses their buying power to provide discounts on products they use daily. These cost savings can then be used to fund the things that really matter in a fast-growing business such as hiring more people, investing in tech, or ramping up marketing strategies.
Fast-growing companies are time-poor, and simply don’t have the resources for lengthy contract negotiations or supplier relationship management. Outsourcing these activities to a GPO saves money, time, and effort that can be better spent elsewhere.
6. Resource optimization
Lean procurement can be achieved through process improvement, process automation, and by outsourcing to a GPO. Utilizing a GPO as an extension of your procurement team can help streamline the purchasing process, save costs, and save time by eliminating indirect spend contract negotiations.
7. Supplier diversity and market access
GPOs like Una have extensive networks of suppliers, which can assist small businesses in meeting supplier diversity goals. These organizations provide access to diverse supplier options, broadening market reach and driving innovation. With hundreds of supplier partners and thousands of contracts ready to go, we’re confident we’ll be able to find cost savings in multiple categories.
With Una’s assistance, strategic sourcing for SMEs is possible. Our team can help optimize your existing procurement strategies, achieve greater cost savings, enhance supplier relationships, and help you navigate the complexities of the modern procurement landscape.
Explore our playbook and learn how to get the most value out of your GPO relationship.