This document summarizes the findings of a report on business spending habits in Britain. The key findings are: - There is a culture of apathy towards strategic purchasing and supply chain management. Purchasing decisions are often reactive and lack strategic oversight. - Many businesses lack purchasing controls and processes, leaving purchasing decisions to inexperienced junior staff without proper guidance or approval. - Most businesses do not regularly review suppliers or have strategic relationships with them, instead viewing them as adversaries focused solely on price. - Purchasing is seen as a low priority and is not valued as a strategic function. Staff receive little training and there are few incentives for securing good deals. - Overall, the short-

1. Doing Business in Britain:
A culture of spending apathy?
A smarter spending report – challenging if
supply chain failures are preventing growth of
British businesses in tough economic times

2. Contents
03 Executive summary
04 Key findings
Smarter Spending for Business:
05 A lack of purchasing control
06 The importance of regular supplier reviews
07 UK businesses are focused on cost-cutting, not smarter spending
08 The value-added benefits of the purchasing function
09 Conclusion
10 About ERA
Expense Reduction Analysts Contents02

3. Executive summary
As the government continues on the
path of austerity and makes further
spending cuts (an extra £2.5 billion
of cuts across departmental budgets
over the next two years), business
leaders are under pressure more than
ever to ensure survival by streamlining
business costs.
The economic outlook for many UK
businesses continues to look challenging.
In his last Budget speech, George Osborne
announced that the Office for Budget
Responsibility (OBR) has cut growth
forecasts from 1.2% to 0.6% and that
borrowing remains static at £121bn.
The first report, The Psychology of
Procurement, showed that at board-level
many businesses had misunderstood
the importance of strategic purchasing.
Indeed, 71 percent of financial directors
believed procurement was not viewed as a
strategic function within their businesses.
Executive summary Expense Reduction Analysts 03
But, as recent supply chain scandals
have amply demonstrated, this
short-term, tactical approach to cost
management can lead to supply chain
failures and cause long-term damage
to an organisation’s competitiveness,
profitability and brand reputation.
This report seeks to discover the
attitudes and practices of employees
(from junior executives to directors)
with purchasing responsibility and
how they impact business operations.
516 business people – across a large
range of industries including IT, retail,
manufacturing, public sector and
telecommunications – were interviewed
for the survey.
The report asks:
• Are supply chain processes being
effectively managed?
• Do employees have the skills to identify
suppliers who suit the requirements of
the company?
• Do internal departments collaborate to
ensure consistent supplier relationships
across the board?
• Are employees supported by the board
with appropriate training?
• Do organisations form strategic
relationships with key suppliers?
‘Doing Business in Britain: A culture of spending apathy?’ is the second research
piece in the ongoing series of Smarter Spending reports.

4. Key findings
59%
The report found the following:
• A culture of apathy towards purchasing.
• A lack of purchasing control.
• Minimal supply chain reviews.
• Little value attributed to the purchasing
role – Employees devote little time, and
have limited expertise for making key
purchasing decisions caused by a lack of
training.
• An inherent short-term cost-cutting
approach – There is a lack of strategy
applied to the purchasing process.
A ‘culture of apathy’
Our last report, The Psychology of
Procurement, showed that many CEOs
and FDs only consider the short-term
picture and default to a defensive cost-
cutting mentality in business spending.
In fact, 46% of the companies only
discussed procurement at board level
once a year or never.
Expense Reduction Analysts Key findings04
This ‘Doing Business in Britain: A culture
of spending apathy?’ report found that
this mindset has translated to frontline
employees. Often more effective and
sustainable purchasing strategies such
as concentrating spend where it’s
applicable – smarter spending – are
either misunderstood or are incorrectly
implemented by inexperienced employees.
Key among these supply chain failures
across all the UK’s business sectors is
the lack of purchasing control at mid-
management level. Indeed, most middle
management employees appear to
treat purchasing with apathy at best.
This coupled with a lack of board level
oversight means businesses are leaving
themselves wide open to making poor
cost management decisions. A lack of
purchasing management at a strategic level
is preventing businesses from making the
right supply chain decisions and inhibiting
UK businesses ability to grow.
Most importantly, unnecessary and poorly
implemented cost-cutting measures
are compromising the quality of, and
investment in, products and services and
the inherent lack of control is leading to
preventable supply chain disasters.
Many employees lack the direction
or motivation to change the way they
work. Also, they do not understand the
importance of the purchasing function
and their role within it. Indeed, many
employees did not have the skills or
desire to build effective relationships with
suppliers and integrate the supply chain
partnership into the business plan.
Overall, the report illustrates an ingrained
apathy towards smarter spending
among UK businesses, stemming from
a legacy approach to managing supplier
relationships and an unwillingness of staff
to challenge the status quo.
This report highlights a number of clear supply chain issues for businesses
across key industry sectors and how they impact organisational effectiveness,
damage competitiveness and restrict growth.
will not review suppliers
unless there is a problem
Definition of smarter spending
‘A long-term business strategy that combines
effective cost control and supply chain
development for innovation and investment.’

5. Smarter Spending for Business:
A lack of purchasing control
A lack of accepted working practices and
guidelines has, in most cases, led to no
clearly defined purchasing policy. When
a policy is in place it rarely filters down
to middle management and so many
purchasing decisions are made by employees
without the experience, structure and skills
to source the most suitable suppliers.
The survey found that 65 percent of junior
management are able to make some or all
purchasing decisions with no approval from
senior employees or insight at board level
– demonstrating a clear lack of control.
And less than half of all companies, 49
percent, have enterprise-wide purchasing
processes indicating an alarming lack of
company-wide supply chain control.
Furthermore, a third say there is no
consolidation of suppliers across their
organisation, and it’s very much down to the
individual to make the decision about which
supplier to use. This lack of co-ordinated
control is likely to mean that any cost
management gains will operate within silos.
And less than a quarter of businesses
have an approved list of suppliers.
Nearly half of those surveyed, 49 percent,
don’t know if their business has a
purchasing process, have no process or are
left to do their own thing when managing
a supplier tender.
What processes are in place for managing a tender with existing or new suppliers?
A lack of purchasing control Expense Reduction Analysts 05
What are the approvals required for junior staff?
There is no consolidation of suppliers across the organisation as a whole
There is a significant absence of company-wide controls and processes as
well as limited strategic thought towards purchasing. Nearly half of those
surveyed don’t know if their business has a purchasing process, they have no process
or are left to do their own thing when managing a supplier tender.
0% 10% 20% 30% 40% 50% 60% 70%
Anything over a certain spend
level has to be authorised by
the directors
I can make some (up to a
certain budget) or all decisions
without senior approval
35%
65%
35%
56%
49%
14%
31%
9%4%
2%
We have standard processes that we all stick to
Each person/department does its own thing
There is no process, we have to generate a new
one each time
We use consultants to manage this process
I don’t know what processes are in place 2%
Strongly
agree
Disagree
Don’t know
49%
14%
31%
4%
2%
35%
56%
9%

6. Smarter Spending for Business:
The importance of regular
supplier reviews
Without strategic relationships and regular
checks, underlying issues can remain
unsolved until it’s too late. Tied into a
culture of purchasing apathy, this survey
highlighted a reticence among organisations
to regularly communicate and collaborate
with their supply chain. In fact, over half
primarily use an online search tool to
source a new supplier and this task is often
delegated to a junior member of staff. And
worryingly, 59 percent of businesses will not
review suppliers unless there is a problem.
However, there are some positives. 40
percent are starting to see the value in
tendering and reviewing suppliers – these
businesses are more forward thinking and
likely to be better placed to survive tough
economic conditions. Alarmingly though,
60 percent don’t.
How would you describe your relationship with your suppliers?
How do you monitor supplier performance?
Expense Reduction Analysts The importance of regular supplier reviews06
Through regular supplier reviews, companies can identify holes in the supply
chain. However, 56 percent rarely speak with suppliers, don’t trust them or only speak
with them if there is a problem. This clearly indicates there is no strategic relationship
between suppliers and businesses. Relationships therefore are likely to be purely tactical
with suppliers held at arm’s length.
0% 10% 20% 30% 40% 50%
3%
I meet regularly with all my suppliers and look for
ways to improve the service or offering
I only speak with my suppliers when a problem
arises
I don’t trust my suppliers; I have to keep a close
eye on them
I rarely speak with them or am in contact with them
44%
37%
16%
0% 10% 20% 30% 40% 50% 60%
5%
1%
5%
3%
I conduct regular reviews to ensure suppliers
keep to their commitments and prices
I tender every project to keep suppliers
on their toes
As long as they provide a good service
and the price is fair I am happy
I’ve had the same supplier for years and
never had a reason to change
We use consultants to monitor our costs
and controls
I don’t monitor supplier performance
32%
54%
0% 10% 20% 30% 40% 50%
3%
I meet regularly with all my suppliers and look for
ways to improve the service or offering
I only speak with my suppliers when a problem
arises
I don’t trust my suppliers; I have to keep a close
eye on them
I rarely speak with them or am in contact with them
44%
37%
16%
0% 10% 20% 30% 40% 50% 60%
5%
1%
5%
3%
I conduct regular reviews to ensure suppliers
keep to their commitments and prices
I tender every project to keep suppliers
on their toes
As long as they provide a good service
and the price is fair I am happy
I’ve had the same supplier for years and
never had a reason to change
We use consultants to monitor our costs
and controls
I don’t monitor supplier performance
32%
54%

7. What triggers a supplier or service review at your company?
Smarter Spending for Business:
UK businesses are
focused on cost-cutting,
not smarter spending
Cost cutting measures may keep
businesses afloat temporarily, but
checks aren’t being put in place and
businesses are risking their long-term
growth prospects.
A smarter spending strategy, combining
effective cost control and development
for innovation and investment is the
only way businesses will be able to
successfully ride the economic storm.
UK businesses are focused on cost-cutting, not smarter spending Expense Reduction Analysts 07
Organisations are thinking short-term instead of long-term. Many changes are
reactionary rather than proactive. For instance, 60 percent of companies said a need
to cut costs triggers a supplier review. And over 70 percent said a price increase or poor
performance would be one of the things to trigger a change.
0% 10% 20% 30% 40% 50% 60% 70% 80%
Annual review
Contract expiration
Price increase
Poor service
Need to cut costs
Senior management
Business expansion
Down-sizing business
Industry regulations
Other
49%
62%
78%
80%
60%
18%
28%
15%
23%
2%

8. Smarter Spending for Business:
A lack of value is attributed
to the purchasing function
How do you benchmark your purchasing activity?
Purchasing very much comes as a
secondary priority to their primary job
role and therefore isn’t seen as important
enough to warrant investment or training.
However, with the correct training and
more value placed on purchasing at board
level, more employees would be able to
build the skills to create and maintain
effective relationships with suppliers to
help aid future growth.Nearly half say
that they receive no reward for securing
the best deal. However, if incentives
were in place, employees would be more
inclined get a better deal. Currently there
is inherent lethargy towards proactive
supplier relationship building because of
the lack of value associated with it.
While 37 percent regularly monitor the
market to secure best price, nearly half
of respondents confessed they just use
the previous price without any detailed
analysis to benchmark suppliers, or
don’t benchmark at all due to a lack of
time. But a quarter of respondents say that
if it were their own money, they would be
far more careful with it!
Expense Reduction Analysts A lack of value is attributed to the purchasing function08
This report’s findings also demonstrated that there is a lack of value placed
on the purchasing function.
Encouraging departmental collaboration
would consolidate spending, focus on the
best supplier relationships, create a more
cohesive culture internally and change the
existing attitude towards purchasing.
It is essential to ensure that all employees
involved in the purchasing of goods and
services are given sufficient support and
training. 64 percent of sole purchasers said
they had received no formal purchasing
training. However, this research also shows
that 63 percent said they did not want
purchasing training despite the need,
demonstrating that they don’t understand
the benefits of purchasing training.
There is no reward or personal benefit
to me for getting the best deal from
our suppliers
Strongly
agree
Disagree
Don’t know
49% 47%
4%
It’s also imperative that employees provide
accurate measurements and detailed
business intelligence to their FD, so they
can provide strategic guidance to the board.
However, if the internal attitude towards
training remains the same, this is unlikely
to happen. And companies will not reap the
benefits of a long-term purchasing strategy.
I am sole decision maker but have
had no formal purchasing
training
Finally, the report found that 43 percent
felt it would be impractical to be trained
in multiple sectors which could suggest a
need for sector specialist advise. Purchasers
are forced to be generalists in the decisions
they make, and therefore will struggle to
hone job specific purchasing skills.
I purchase multiple areas it would
be impractical to have training
in every one
Strongly
agree
Disagree
Don’t know
39%
43%
18%
Strongly
agree
Disagree
Don’t know
0% 10% 20% 30% 40% 50%
2%
6%
46%
37%
9%
Other
I just look at what I have paid before
I monitor the market regularly and closely to know
I’m not able to benchmark as I don’t have the time
I use the previous price paid and services levels
received
33% 64%
3%

9. Conclusion Expense Reduction Analysts 09
Conclusion
Purchasing roles are undervalued
within businesses and those who have
a purchasing responsibility as part of
their job function see it very much as
a low priority.
Senior decision makers are not investing
in training employees and employees do
not believe they need to be trained in
purchasing.
There is a fundamental lack of awareness
of the value of procurement. Often
purchasing responsibility lies at the feet
of junior members of staff regardless of
experience or expertise.
A wholesale culture shift coupled with
organisational change is required. More
value must be attributed to smarter
spending across the entire supply chain
if businesses are to benefit from cost
management. Only if these changes are
made to culture, attitude and processes,
will companies begin to see operational
efficiencies and increased profitability.
UK decision-makers in all sectors must
think long-term and invest in purchasing
and effective supply chain management
to grow.
Based on the findings of the Doing
Business in Britain: A culture of spending
apathy? report, ERA has developed
some top tips for businesses looking to
implement a smarter spending strategy:
Top tips for Smarter Spending for
Business
1. Implement company-wide supply
chain guidelines.
These should include clear company
processes and policies for employees
as well as for reviewing suppliers.
Organisations need to answer when, why,
how and who makes these supplier review
decisions.
2. Develop and enforce an integrated
approach to purchasing decisions.
Present quarterly supplier reviews to the
board. These should not just focus on
cost reduction but metrics such as quality
control, supplier relationship and company
reputation.
3. Create a key skills framework
for people responsible for frontline
purchasing decisions. Invest in the
purchasing function through ongoing and
regular training to be able to implement
best practice purchasing.
4. Effective a cost management
strategy. Ensure you have the expertise
in-house or via an external source to
devote time to the purchasing process
and build effective long-term supplier
relationships.
This report concludes that supplier relationships are not currently viewed as
strategic partnerships. Suppliers are often held at arm’s length and reactive decisions
around price dictates whether a contract remains in place regardless of service or
strategic value.

10. Specialist Procurement Advisors
Profitability and efficiency are at
the heart of every organisation.
Put simply, the best way to boost
your bottom line is to sell more or
spend less – or both.
Effective procurement is crucial but
often neglected – either outsourced to
cost-cutting consultants or passed to an
in-house finance team. But used as a
strategic function, with full support
from the boardroom, it can deliver
enterprise-wide benefits.
ERA goes far beyond the short-term
savings of consultants and the limitations
of in-house teams to deliver long-term
financial and organisational benefits.
We deliver:
• expertise spanning a wide array of
supply areas
• a lasting and positive influence across
the entire supply chain
• a more strategic, smarter spending
culture across your organisation
• profit to your bottom line, today,
tomorrow and into the future
Expense Reduction Analysts Specialist Procurement Advisors10

11. Specialist Procurement Advisors Expense Reduction Analysts 11
Alex Williamson
CFO at Goodwood
“I have been very impressed with the range
and the margin of savings that ERA has been
able to deliver. They have rationalised our purchasing,
simplified our back office processes and generated
impressive savings, all the while maintaining the trust
of our key suppliers and my own staff. Of particular
note have been the environmental advances that they
have proposed, especially in connection with the
management of waste from our events. I look forward
to a long term partnership.”
Goodwood on course
for glorious savings
Purchasing influence
that gives even
our biggest clients
extra weight

12. Expense Reduction
Analysts
Visit us at:
www.expense-reduction.co.uk
www.expense-reduction.ie
Smarter Spending
Expense Reduction Analysts (ERA) is a global network
of specialist procurement advisors. Its teams enable
organisations to save money and boost business
supplier management and smarter spending habits.
ERA’s sector specialists build long-term relationships
with medium to large enterprises, going beyond
short-term gains to deliver objective analysis, informed
market expertise and continued financial benefits.