01.09.14
Top tips to help SME suppliers stand out from the crowd
Source: Rail Technology Magazine Aug/Sept 2014
Suzanne O’Keane, Achilles Community Manager of the Railway Industry Supplier Qualification Scheme, explores how small and medium-sized enterprises can gain the attention of larger buyers.
Small and medium-sized enterprises in the rail industry are continuing to find it difficult to successfully tender for work from the ‘big boys’, with outside pressures making larger suppliers a more attractive option, according to recent research.
In a survey commissioned by global supply chain risk management company, Achilles, and carried out by independent research consultancy IFF*, one of the biggest concerns for large businesses about dealing with SME suppliers was ensuring they adhered to standards and regulations.
The research also found SMEs faced a number of challenges if they hoped to work with larger companies, including in the rail industry. The research found:
• More than 80% of larger companies have no plans to increase the number of SMEs they work with;
• Just 12% of companies plan to use more SMEs;
• Most large businesses only awarded between 1-25% of contracts to SMEs;
• One in four (26%) large buyers said they were concerned about the financial stability of SME suppliers.
It is disappointing news, given that the UK government has taken unprecedented steps to encourage larger enterprises to work with smaller companies.
However, there are some simple steps SMEs can take to ensure they are able to present themselves as a viable alternative to the big players in the rail industry.
1. Put safety first
A poor safety record or failing to adhere to regulations can make or break any company in the rail industry. Consequently, it is no surprise one of the major concerns larger companies have about working with SMEs is their ability to comply with all standards and regulations.
If smaller businesses want to work with larger rail companies, they need to prove they are not only able to adhere to all standards and regulations, but also go above and beyond the basic requirements.
SME suppliers can give buyers confidence and peace of mind by going through an independent audit process. This reassures potential buyers that having been through a rigorous procedure, the company meets all required standards and regulations.
2. Be transparent
More than a quarter (26%) of larger buyers surveyed said they were concerned about the financial stability of SME suppliers and saw this as a disadvantage when working with them.
This perception makes it imperative for smaller entities in the rail industry to prove to potential business partners they are ‘in the black’.
Achieving full transparency on finances can be a bold step but it is vital for any SME looking to convince larger companies they are fiscally stable and able to cope with changing demands.
3. Show what you can do
A number of large companies recognise SMEs in the rail industry have a unique perspective and innovative range of talents and services which cannot be found in many of the bigger suppliers. The survey found large businesses felt SMEs were more in touch with customer needs, more flexible, efficient, quick and better-located.
Smaller businesses need to show what makes them different from the larger, established companies by highlighting their unique location, the speed of their turn around or ability to move as the demands of a project changes.
4. Join a buyer-supplier community
Joining a pre-qualification scheme such as the Railway Industry Supplier Qualification Scheme (RISQS), which has services provided by Achilles, allows smaller businesses to easily show a number of larger suppliers they are qualified for the job.
RISQS brings together more than 100 rail and transport buyers and more than 3,000 suppliers – 83% of which are SMEs – together in a single community.
There is a single questionnaire and an audit process which incorporates all industry standards, to help buyers find companies to meet their supply and service needs.
The independent audit process provides assurance to companies looking to use an SME’s services that the business adheres to all safety, ethical and financial requirements for the contract.
Joining the searchable community also gives SME suppliers the ability to show their suitability for projects to a wide-range of buyers.
This removes a large portion of the workload associated with bidding for contracts from buyers within the community, allowing SMEs to compete for more projects.
Larger companies’ attitudes to SMEs will not change overnight, but by considering these tips smaller businesses will be able to expand their business and demonstrate to larger companies the advantages of working with SMEs.
* Achilles commissioned independent research consultancy IFF to survey supply chain professionals from 146 businesses with 250-plus employees across a wide range of industries including manufacturing, FMCG and pharmaceuticals in December 2013.
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