The conventional wisdom is that when it comes to realizing purchasing savings, corporate giants such as IBM, United Technology and Unilever have it easier than small businesses. While being big can be a plus, small and mid-size businesses have some purchasing advantages of their own, such as speed, flexibility and data-access, if they know how to leverage them.

At many small businesses, one person, most likely the owner/ceo, is responsible for all purchasing decisions, which puts him or her in an ideal position to affect significant savings. Consolidating total purchase requirements into a single contract or stream of requisitions will maximize the chance of getting favorable quantity-related pricing from suppliers.

With a small business, consolidating purchasing requirements should be easy, because the data-access is typically fairly straightforward. However, a small business owner with responsibility for marketing, sales, operations and human resources will not have much time to identify and qualify a potential new supplier that meets quality, service and delivery requirements at a lower cost than incumbent suppliers.

Since competing for a qualified suppliers’ full attention can be an added challenge for a small business, it is often a matter of identifying not one alternate supplier, but an entire group.

These days, the Internet can help time-strapped small businesses owners broaden their choice of suppliers.

Electronic Directories

For example, Thomas’ Register, the standard reference for purchasing agents has been on-line at www.thomasregister.com since 1995, and serves as an electronic directory of over 173,000 suppliers, searchable by category.

BuyerZone.Com is a leading e-marketplace for small and mid-sized businesses providing buying advice, and creating an on-line marketplace in over 100 categories, where 10,000 suppliers respond to requisitions for goods and services ranging from call centers to postage meters. Found on the web since 1997 at www.BuyerZone.com, BuyerZone.Com achieved profitability in 2002, and is succeeding in a difficult category where Mercata.com failed and Priceline.com stumbled.

Manufacturers Mall should be of interest to small business owners looking to gain the benefit of group buying and to form affiliations with other companies doing business in the Hudson Valley. It can be found on the web at www.mfrmall.com.

Launched in late 2001 by the non-profit Hudson Valley Technical Development Center, this fast-growing virtual mall has over 250 on-line members who are enjoying significant savings on office supplies and freight services.

Greater Efficiencies

Mid-sized businesses may have purchase requirements that allow them to take advantage of internet based eAuctions, getting suppliers to compete online for requirements of $3 million or more of a single good or service. This definitely requires developing an enterprise-wide total of purchase requirements. If data resides in many different silos, this can be a challenge, especially if individuals’ PC’s have not been put on a common network. IBM, Microsoft and others have made increasing efforts to help small and mid-sized businesses reduce integration complexity, and achieve greater purchasing efficiencies.

Large corporations have the purchasing scale needed to extract the greatest possible price discounts from suppliers as well as the financial resources to hire and develop purchasing staff with deep expertise in specific commodities. But leveraging that scale demands consolidating purchase requirements across the enterprise, potentially an expensive and complex challenge.

David Rudofsky, president of Rudofsky Associates (www.RudofskyAssociates.com), in Sleepy Hollow, can be reached at David@RudofskyAssociates.com

This article was published originally in the Westchester County Business Journal, 6/7/2004

© 2004 David Rudofsky, Rudofsky Associates