ISM 2017: B2B Buyers Partnering with Small Business
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Presentation by THOMASNET.com's Ed Edwards and Seelye Acquisitions, Inc.'s Paige Dichira-Bowen: There are big advantages to adding small and midsize businesses to your supply chain, but just getting them to respond to your RFQs can be a challenge. Find out how you may be intimidating valuable potential partners, and learn what you can do about it.
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ISM 2017: B2B Buyers Partnering with Small Business
- 1. The Big Scary Truth: YOU STRIKE FEAR IN GREAT POTENTIAL PARTNERS THAT HAPPEN TO BE SMBs. WE CAN HELP. Ed Edwards – Audience Outreach Manager, THOMASNET.com Paige Dichiria-Bowen – President, Seelye Acquisitions
- 3. Inclusion in Sourcing Events How often do you include small- and medium-sized businesses (SMBs) in your sourcing events when seeking new suppliers? Respondents were large buyers (with 500 or more employees) Source = THOMASNET.com 2017 Research
- 4. SMBs Win Business Source = THOMASNET 2017 Research Respondents were large buyers (with 500 or more employees) How often do you award a bid to an SMB?
- 5. 2017 TOP 10 SMB Business Issues Source = Relate to business growth & new customers
- 6. 2017 TOP 10 SMB Business Issues Source = Relate to business growth & new customers
- 7. 2017 SMB Growth Strategies Source = Wasp Technologies 2017 State of Small Business Report 40% Improve existing customer experience & retention 32% Invest in new customer acquisition activities & methods 30% Expand into new Markets
- 8. Fortune 100 Supplier Initial RFX Event Using THOMASNET.com 26 Supplier Responses 219 # of Suppliers in Event
- 9. • Why SMBs matter – the buyer’s view • How SMBs view new opportunities • Recommendations & Strategies • Q&A OVERVIEW
- 10. Why SMBs matter – the buyer’s view
- 11. of US manufacturers are between 5-99 employees Source = 2014 US Census Data 52% SMBs are prevalent 41% 18% 15% 19% 5% 1% 0-4 employees 5-9 employees 10-19 employees 20-99 employees 100-499 employees 500+ employees MANUFACTURING
- 12. SMBs are expecting growth Source = Wasp Technologies 2017 State of Small Business Report
- 13. Source = THOMASNET.com 2017 Research 2017 THOMASNET.com Survey of Buyers ResponsivenessTop Evaluation Factors SMB Advantages
- 14. Top Evaluation Factors Source = THOMASNET.com 2017 Research Respondents were large buyers (with 500 or more employees) Quality & Reliability 4.6 4.4 Customer Service 4.4 Competitive Price 4.3 Responsiveness To RFX 4.2 Financial & Operational Stability
- 15. Competitive Price Fast Turnaround Times Ability To Provide Customized Solutions SMB Advantages Source = THOMASNET.com 2017 Research Respondents were large buyers (with 500 or more employees) 50% 45% 45%
- 16. Responsiveness RATE COMPARISON Source = THOMASNET.com 2017 Research Respondents were large buyers (with 500 or more employees)
- 17. Responsiveness % Source = THOMASNET.com 2017 Research Respondents were large buyers (with 500 or more employees)
- 18. Responsiveness FAILURE Source = THOMASNET.com 2017 Research Respondents were large buyers (with 500 or more employees)
- 19. Responsiveness TIME Source = THOMASNET.com 2017 Research Respondents were large buyers (with 500 or more employees)
- 20. Responsiveness The larger the buyer, the longer the expected response times The larger the buyer, the greater the percentage of SMBs that failed to respond One in four buyers indicated supplier response rates are under 25%
- 21. Surprises Both SUPPLIER LOCATION & INNOVATIVENESS ranked lower than in prior research
- 22. Poll the Audience Responsiveness Location Innovativeness
- 23. How SMBs view new opportunities
- 25. Responsiveness Source = THOMASNET.com 2017 Research Respondents were SMBs (with 500 or fewer employees) How often do you respond to RFX from large buying organizations?
- 26. Why they WILL respond Source = THOMASNET.com 2017 Research Respondents were SMBs (with 500 or fewer employees) Why do SMBs respond to RFX from large buying organizations?
- 27. Why they DO NOT respond Amount of work to create and submit the bid vs. perceived chance of winning 35.6% Unclear technical requirements 29.0% Insufficient time to respond 22.8% Cumbersome process 22.8% No way to ask questions or obtain specific details 21.8% Source = THOMASNET.com 2017 Research Respondents were SMBs (with 500 or fewer employees) Why don’t small suppliers respond to RFX from large buying organizations?
- 28. Why they DO NOT respond Unworkable payment terms 19.8% Other (please specify) 16.8% No clear points of contact 16.5% Insufficient resources to submit a quote 15.5% Never received a bid package from a large buying organization 12.5% I would not have the capacity to deliver 10.6% Lack of understanding of the bid/award process 10.2% Source = THOMASNET.com 2017 Research Respondents were SMBs (with 500 or fewer employees) Why don’t small suppliers respond to RFX from large buying organizations?
- 31. PERCEPTION: RISK BEING TIED TO ONE CUSTOMER
- 32. Customer Base Source = THOMASNET.com 2017 Research Respondents were SMBs (with 500 or fewer employees) What percentage of SMBs customer base is made up of large buying organizations?
- 34. Source = Joint Small Business Credit Survey Report, 2015 Federal Reserve Banks of New York, Atlanta, Boston, Cleveland, Philadelphia, Richmond, and St. Louis REALITY: LONG PAYMENT TERMS
- 36. TOP TIPS FOR WORKING WITH SMBs BE TRANSPARENT in your process SIMPLIFY your process HUMANIZE your process MITIGATE RISKS of long payment terms
- 37. Offering Financing Options – REVERSE FACTORING Financial Institution SupplierBuyer 2. Invoice Approval 3. Factor Pays Invoice net of financing fee paid by Supplier 1. Invoice 4. Payment to Factor 90+ Days
- 38. Fortune 100 Supplier Initial RFX Event Using THOMASNET.com Corporate Edition 26 Supplier Responses 219 # of Suppliers in Event Fortune 100 Supplier Most Recent RFX Event Using THOMASNET.com Corporate Edition 70 Supplier Responses 142 # of Suppliers in Event
- 40. Our THOMASNET.com FREE Platform • Access to over 500,000 Commercial & Industrial suppliers in North America • Qualify and shortlist by location, quality certifications, and ownership • Evaluate and compare suppliers side-by-side to understand their capabilities • Access supplier risk reports • Send RFI/RFQs to multiple suppliers at once
- 42. YOUR FEEDBACK IS IMPORTANT Please take a few minutes to complete this brief survey. Survey link: www.instituteforsupplymanagement.org/gh17 or Scan the QR code on your smartphone.
Editor's Notes
- Lead with the nail story. (9000 nails per case, 36 cases, 42.67 per case, .004741) New respect for buyers and what its like to work for a small business. Why do we study SMBs? Because you tell us they are important.
- To help with this exploration, I want to introduce you to Paige Dichiria-Bowen, who is the President of Seelye Acquisitions. Paige has agreed to spend time with us this morning to
- About 52% of buyers surveyed always include SMBs in their outreach or sourcing events.
- On top of that, you are awarding business to them fairly often.
- SMBs are interested in growing their businesses, in fact three of the top 10 business issues that they face today are related to business growth.
- 2015 TOP 10 SMB Business Issues
- And it is a common …. So given this, it would seem that SMBs should be open to responding to bids from larger buying organizations, but our experience suggests this isn’t necessarily the case.
- In working with a Fortune 100 organization that was issuing a supplier outreach event, they netted only a 12% response rate. So what we are going to explore this morning is what contributes to an effective engagement between buyers and suppliers, especially when the buyers are larger organizations and the suppliers are small to mid-sized businesses.
- Most SMBs are anticipating revenue growth in 2017. Ask Paige about her situation.
- 2015 TOP 10 SMB Business Issues
- 2015 TOP 10 SMB Business Issues
- 2015 TOP 10 SMB Business Issues
- 2015 TOP 10 SMB Business Issues
- 2015 TOP 10 SMB Business Issues
- 2015 TOP 10 SMB Business Issues
- 2015 TOP 10 SMB Business Issues
- 2015 TOP 10 SMB Business Issues
- 2015 TOP 10 SMB Business Issues
- Paige, where do you fall on the responsiveness question.
- Paige story on what makes her company respond.
- So Paige, can you tell us about a situation you have seen where you questioned the wisdom of responding to a bid?
- Paige – Grainger story
- Paige – City of Miami piping project
- Paige – Bill Gates foundation story about multi tiered bidding Giant Tank Story – in the works for 2+ years
- Paige – Disney Story about contact change and loss of work. 50-60% of the division was doing work for Disney.
- Rule of thumb: Keep balanced growth in your business. Taking on the opportunity would interfere with established customers and conflict with existing market channels.
- Paige – Amazon Grainer story
- SMBEs can’t afford 90+ day payment terms SMBE’s often don’t have large stash of working capital. Increasingly difficult to secure bank financing Works against building a relationship based on trust Increases Risk Increases your risk. Your supplier might have to extend terms with their suppliers which increases the risk that your supplier will not be able to secure timely shipment of component materials and parts critical to the production of your product. This might result in shipment delays. Your supplier might be faced with the need to cut employees. Will this impact product quality? It could even lead to their exiting their exiting the market. One more work on this. This is a real issue. I was at a DMSCA conference, Diverse Manufacturing Supply Chain Alliance Conference last year. This meeting is attended by a mix of small to medium size diverse suppliers and Diversity Supply Chain professionals from Fortune 500 Buying organizations. The issue of payment terms came up multiple time in heated exchanges between the suppliers and buyers. Interestingly, the Buyers deflected the issue by stating the payment term policies were mandated by Finance. The Payment Terms issue will make it very difficult for you to reach your goals and objectives. It is imperative that you work with your Finance group to address this.
- Paige – O/C Construction Email system – blind bids – no feedback that the bid was successful – expected delivery event though they never sent notice. Customer picking up order?
- Work with the Finance Department.