The Key to Forging Long-term, Successful Relationships with SMEs

We need more participation from SMEs and minority-owned businesses in public procurement; the benefits are simply too great to ignore. With infrastructure spending at all levels of government set to remain strong for the coming years, there’s an opportunity that can’t be missed.

But how serious is the government about engaging with small business? And what are they doing about it?

The Mandarin chatted with me (Milan Panchmatia – Comprara CEO) to find out what’s being done in this important area, and what businesses can do to forge successful relationships with small, local suppliers. Here’s what we spoke about.

Why do we need greater SME participation in public procurement?

Most obviously, it creates jobs. SMEs and Indigenous-owned businesses employ almost exclusively from the local community, which is a vital boost for economic growth. Many of the people they employ, too, have fewer employment opportunities than those hired by the larger corporations.

But this isn’t just about a general boost for the economy. The projects these SMEs work on will also benefit directly from their involvement. Clearly, the more competition there is for tenders, the more opportunity there is for a higher quality contract – better delivery times, better product.

But there are also specific advantages to working with smaller business. They’re far more agile. Major public infrastructure projects can throw up all sorts of unexpected challenges during their lifecycle, and the suppliers best able to respond nimbly are usually the SMEs. The fact that they are almost always more innovative than their larger competitors also helps greatly.

Finally, SMEs and minority-owned businesses are firmly embedded in their local communities, giving them have better access to local supply chains and their inherent benefits.

What are the challenges?

The Australian government is working hard to get greater participation from small businesses in its major public projects, but there are some hurdles to overcome. Traditionally, it’s been difficult for SMEs and minority-owned firms to secure public contracts, for several reasons:

A lack of resources. Small businesses generally don’t have the personnel, the finances or the expertise and experience necessary to secure the big public contracts.

The traditional public procurement process can be convoluted and difficult to navigate for small businesses.

Those awarding the contracts don’t have a lot of experience dealing with small business, and often find it safer to just go with the bigger corporation.

4 ways the government plans to overcome these challenges

There’s no doubt the Australian government is committed to securing more participation from SMEs and minority-owned businesses. Recent initiatives make this loud and clear, and they include:

  1. Simplifying the public procurement process. This includes streamlining the application process as well as providing more support for SMEs during the tendering process. This is a clear effort to make a traditionally long and complicated activity more efficient and user-friendly.
  2. Increasing the proportion of contracts awarded to SMEs and minority-owned businesses. This is achieved by setting specific targets for major projects and reviewing the procurement process to make sure it’s fair and accessible.
  3. Providing mentorship and training programs. SMEs and minority-owned businesses don’t typically have much experience with bidding for or securing public contracts, so if we want them to be more involved in major public projects, we need to help boost their knowledge and expertise.
  4. Better promotion of public procurement opportunities. In the past, the government procurement has not been well publicised, and many SMEs missed out simply because they weren’t aware of the opportunity. The government is now working to better advertise projects and make relevant information far more accessible.

What you can do to help SMEs become a bigger part of procurement

The Buy Australia plan is a clear indication of how committed the current government is to getting more SMEs and minority-owned businesses participating in major public projects. The desired outcome is a win-win situation; obviously it benefits small business, but they have unique qualities that also benefit the agencies and companies they supply.

If you want to gain from these benefits too, you need to know how to work with SMEs and minority-owned businesses and how to successfully incorporate them into your supply chain. Social procurement is a growing field with its own set of rules. At Academy of Procurement, we’ve been educating both the public and private sector on how best to bring SMEs on board, how to nurture them and how to make them valued and long-term suppliers. Check out our Social & Sustainable Procurement training course today.