A procurement industry watcher has urged practitioners holding executive procurement jobs in large corporates to streamline their onboarding and contracting processes for start-ups if they want to benefit from the agility, innovation, and cost-effectiveness of these up-and-coming vendors.
Tim Burt, editor of the Procurement Leadersblog, conducted a series of interviews with procurement execs and start-up CEOs, leading him to conclude that there was a widespread desire among CPOs to work with start-ups.
But, they also expressed frustration that the process of bringing startups into their supply chains was exceptionally challenging.
Interviews with start-up CEOs exposed the pain-points: one CEO of a telecoms startup identified two major obstacles.
When his firm wanted to work with a large corporate, he was told that the contract approval process would take ten weeks — a vast time for a small firm.
Another corporate, he reported, still hadn’t made payments after 180 days.
Small companies can go under if too many big firms delay engagement and payment on this scale.
The net effect of these barriers to smooth business relationships was his company’s decision to work with mid-market organisations instead.
Burt put these obstacles to the CPOs he interviewed, who all confirmed they knew the barriers existed.
But solutions are at hand.
Procurement execs at the Italian energy giant, Enel, had put practitioners in procurement and supply chain jobs to craft a lean and simplified onboarding process designed specifically for start-ups.
Meanwhile, pharmaceutical colossus, GSK, tapped start-up talent by simplifying its contracting and payment process, shortening its procurement cycle to under eight days.
Burt’s advice to procurement pros is straightforward: “Streamline your contracts, implement more flexible payment terms and make it clear who has decision-making power when it comes to start-ups.”
He then went on to say: “Although this requires procurement professionals to develop close working relationships with colleagues in finance and legal, these changes are vital if you want your business to benefit from the new ideas and innovations startups can bring.”