Procurement and Supply Chain: A Secret Weapon for mid-market businesses

Our recent Economic Engine survey of mid-market business leaders found that almost a third (32%) of respondent believe that supply chain disruption is the most pressing barrier to growth. This is despite the survey also revealing that three-quarters of the respondents are already exceeding their 2025 growth targets. Many of BDO’s clients are focused on procurement, supply chain management and resilience. 

In the mid-market, we think that procurement can drive significant competitive advantage for organisations. Organisations that invest in creating mature functions, which effectively manage the full contract lifecycle creating competitive advantage. 

Below are some key considerations for the mid-market in driving your Procurement function up the value chain: 

Procurement capacity and scope 

It is common as businesses grow that Procurement only serves part of direct and indirect spend.  Reduced spend under management means that sourcing activity and spend is being managed by the end users, and the business is missing out on the use of competitive tension and negotiation of spend.  It is common that some entire categories of spend, such as IT, Legal or Marketing, may be considered out of scope for procurement, and fully managed within the business. 

Governance, controls and compliance 

Large companies regularly invest heavily in their governance, controls and compliance environments. However, the approach to spending in mid-market businesses can be less robust. In turn, this means that there is a significant opportunity for these businesses to drive value from the prices they pay through their Procurement teams. 

Businesses may also suffer from common pain points such as spend going out of contract, automatic-renewals, long standing relationships that haven’t been subjected to competition for years or, of course, rogue spending and the use of corporate credit cards. 

Poor planning and last-minute requests for Procurement support can also reduce market leverage resulting in poor deals and value being achieved. 

In targeting a reduction in all of the above, mid-market players can start to drive value for money. 

Category Management

It is common in smaller businesses, for Procurement Managers to oversee multiple spend categories covering a broad range of spend activity. For example, all aspects of technology or Real Estate, Facilities Management and Utilities by way of example.  Organisations may also not be arranged by category and instead by region or business unit. 

As spend becomes more complicated and businesses gain more category sub-sets, organisations should consider their workforce planning and organisation design. Thinking about if the current organisation, properly reflect their spending today. 

Technology, digitalisation and tooling 

Strategic sourcing can be time-consuming.  It is perfectly plausible for tender exercises to be managed through paper-based processes without the need for procurement software or support.  However, as businesses grow end users will demand reduced time to serve and the demand on procurement will increase, driving the need for greater efficiency.  Leading technology can support in the management of inbound business demand, supplier onboarding, spend data management, spend visibility and cost control.  With the addition of AI in many products, technology is rapidly becoming a key enabler to highly effective procurement functions.  

Supply Chain Resilience 

Supply chains are experiencing more disruption than ever. Businesses will need to be proactive in addressing risks and need to think about risk identification and horizon scanning as part of their everyday practices, moving from reactive to proactive management.  Those businesses that can mitigate risk and guard against supply chain failure will create advantage in a competitive market. 

How we can help you 

Our team support clients in addressing the diverse challenges in procurement to ensure the continue to deliver value for their businesses. Our clients include large enterprises, public sector organisations and mid-market businesses.  Talk to us now about your priorities in procurement and the challenges we can help you with.