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Small and medium-sized enterprises, so the SMEs ( according to the European standards those are the ones hiring from 10 up to 250 employees, while the companies with less than 10 employees onboard are defined as micro companies) account for 99% of all firms in the European Union, contribute most of total employment and are an essential element of every developing economy. In the UK alone there are 97.000 SMEs formed each year! SMEs spend between 45% and 60% of sales revenue on procurement of raw materials and professional services. Small business owners are increasingly subscribing to cloud-based software services too.
Taking into account all the numbers, the overall picture is as follows: SMEs are very often backbones of the economy, they do care about digitalization and are willing to adapt technological developments. Due to the small scale of their businesses, the SMEs owners smartly invest in SaaS solutions which answer their needs, also the procurement process requirements.
In case of SMEs, SaaS solutions seems to be most reasonable due to simple implementation, affordable price, flexibility and availability from every device and place. The same applies to procurement software.
Let’s get down to business. Why actually small and medium-sized companies need procurement software while they may keep all data in files, emails and get things done by the phone?
Here are the 5 reasons why e-procurement makes sense for SMEs.
One of the biggest pain points of SMEs is dynamic growth in a relatively short time. During a couple of years companies grow from 5 people onboard (mainly the founders) up to 50 or 100 employees. Then the procurement transparency issue is getting complicated. While the xls files and emails were sufficient for 10 people (although not always, all depends on the kind of company activity), the information flow may be tough among 50 people with various purchase needs (especially if the work in different offices/places).
- Limited human resources
Small and medium-sized companies during their first years of activity are focused mostly on generating sales revenue and business development, rather than operational support. Excellent SMEs don’t usually create big procurement teams. There are only 24 hours a day. That’s why procurement software is great at supporting procurement teams in SMEs as the systems automate operational processes, provide employees with the templates or ready reports.
- Access to suppliers
Variety o suppliers and regular market verification are the keys to the savings. Thanks to procurement apps with already implemented reliable supplier database, small and medium-sized enterprises can freely get in touch with new suppliers and check them out. While big companies are less flexible in this area, SMEs would love this form of sourcing.
- Spend analysis
This is another example of the process which can be easily automated with the procurement software with a report module included. Eventually a company gets reliable data which is basic for building company strategy. This kind of data is crucial for all SMEs where the cost of every purchase is meaningful.
- Streamlined communication
A buzzword which appears during every business conference. But actually communication is really important in every kind of business. It seems SMEs have no issues with communication as all employees know each other, talk to each other or in a worst case scenario they can send an email with CC to all. Nothing more misleading! See point 1. Communication and information flows are crucial to keep procurement process transparent and jointly implement company strategy.
Each small or medium-sized company is different, so much depends on the industry, but each of them needs reliable suppliers, transparent and automated processes and… savings. A great example of using procurement system in a middle-sized company is one NextBuy customers – the SDA Group. You can read SDA case study HERE and see how they transformed procurement into the next level.
If you want to check how NextBuy can support you, request NextBuy demo with one of our procurement experts.