Thursday 16 January 2014

Natural Selection Versus Positive Discrimination – the SME/Diversity debate (Part 1)

By Steven Low

As a buyer, it is becoming increasingly difficult to balance the needs of the organisation to save money, getting the best value deals for your organisation while ensuring you spend money in the local economy or with suppliers who are in the ‘diverse’ sector (typically disabled, LGBT, Women-owned businesses etc).

One of the big negotiating tactics of larger businesses is their size and therefore leverage when it comes to getting a good deal. Large organisations can extract deep discounts out of their supply base for guaranteeing high volumes or high usage. This is not something you can fully utilise with a small local company or a diverse supplier.

That’s not to say that all diverse/small/local companies are expensive to buy from. Many don’t have the large overheads of their competitors and so therefore can be very agile and flexible. However, a substantial number will never be able to complete in the same level playing field as some of their larger competitors.

So what do you do as a buyer? Certainly your organisation may have set a stake in the ground regards how they get the right ‘mix’ of suppliers...


  1. Each SME needs to focus on the issues highlighted above and to demonstrate to potential buyers what advantages are to be gained by purchasing from the SME.

    Some examples that spring to mind include:
    1 Contracts for the supply of similar goods and/or services satisfied successfully by the SME;
    2 Specific experience of SME staff that is particularly relevant to the goods and/or services being sought by the buyer;
    3 Where relevant, demonstrate experience in supplying under European purchasing rules;
    etc, etc
    Good luck
    Chris Monahan

  2. Consider use of random selection, of those that meet the proportional minimum standards, to determine which organisations will be invited to tender.

  3. Hi Chris, as a buyer would you propose making some contract awards exclusive to an SME audience where you determined the contract was a good fit for a small-medium enterprise? It's certainly worth consideration but would require due diligence on what contracts/services/goods were the right ones to offer up to SME's and exclude larger firms from those procurement activities.

    I certainly agree the SME should be showcasing experience of supplying other companies with similar services and any unique experience that they have that 'differentiate' themselves over any other supplier should be brought to the fore.. it might be something worth paying for.

  4. Hi Eddie, In a blind evaluation, it would hopefully something that you would cover off (minimum standards qualifying the supplier into the next phase of the activity). The problem would be ensuring that we had the right mix of suppliers involved in the first place. Maybe easier in public sector to offer the tender to a wider audience than some private sector companies where it would almost exclusively be invite only (would require the buyer to find the right mix beforehand).