What is the SME action plan?
SME stands for small and medium sized enterprises, small businesses which add a lot to local communities and employ a large percentage of the UK workforce.
Network Rail identified the importance of using these smaller, local companies in their procurement process across Britain’s railway and, in 2019, created an SME action plan with a target of 33% of all Network Rail’s annual expenditure to be spent with SME suppliers as opposed to multi-billion companies.
Key aims of the SME action plan
SMEs are highly adaptive and innovative as well as playing a significant role in the growth of the economy.
The aim of the SME action plan was to create a more mutually beneficial partnership between SMEs and Network Rail, to improve the supply chain and procurement process as well as improve the business community’s adaptability and make Network Rail easier to do business with.
Key points of the SME action plan
There are six key areas for development outlined in the SME action plan:
- Improved engagement – clear sourcing guide and escalation route, more face time with Network Rail and improved transparency.
- Pre-procurement – development of a meaningful sourcing pipeline, review insurances and help Network Rail staff interact with SMEs.
- Procurement – making procurement processes easier and making Network Rail standards easily accessible to SMEs.
- Contract management – ensure timely payment and incentivise employment of SMEs.
- Supplier management – improvement of supplier management behaviours and incentivise increased apprenticeships.
- Innovation – Improve product acceptance procedures and implement ‘fast-track’ innovation processes as well as providing better support for SME innovations.
The full SME action plan can be downloaded from Network Rail.
What was the initial SME action plan timeline?
At the introduction of the SME action plan in 2019, only between 25 and 30% of total expenditure within Network Rail was given to SMEs. The government target was to increase this spending with SMEs to 33% by 2022.
Has Network rail met the SME action plan targets?
A report by Network Rail in 2020 announced that Network rail spending with SMEs had exceeded £2.5bn for the first time, this was 35.6% of the annual spend, more than the government’s target of 33% by 2022. They also reported an increase in the amount of direct spending with SMEs and an increase in the number of SMEs they were doing business with as suppliers.
A Supplementary SME action plan was then released by Network Rail at the start of 2021. This supplementary SME action plan suggested they could further improve their SME Action Plan activity and further increase SME direct spend through greater collaborative working with Tier 1 suppliers and by encouraging greater Tier 1 engagement. The supplementary action plan highlighted 15 actions that could be taken by Network Rail’s top 100 Tier 1 suppliers in order to help the SME community to thrive.
Amongst these, Network Rail have requested these Tier 1 companies to:
- Publish supplier SME payment data on their website.
- Provide a link to your website to Network Rail so that we may sign-post SMEs via your link to facilitate SME access and transparency.
- Consider signing up to the Government’s ‘Prompt Payment Code’ that will help small businesses to be paid on time.
All in all, it looks like Network Rail have met their initial targets for the SME action plan but it is evident that there is a lot more work being done in order to make it easier for small and medium enterprise companies to do business with Network Rail.
RSP as Network Rail suppliers
Here at RSP we are experienced manufacturers and providers of high-quality, robust Network Rail Approved rail power and signalling products with decades of experience and knowledge of both rail signalling and electrification & plant (E&P).
We are proud to supply Network Rail as specialists in Rail Cat numbers and PADS approved products. You can view our products and read more about supply chain solutions on our site, do contact us for all your rail infrastructure needs.