Purchasing and Supply Strategies for SMEs in the Construction Industry

Since the purchasing expenditure of many companies is such a large part of the total cost and 99,8 % of companies are classified as Small and Medium Sized Enterprises (SME), one might expect that theories on purchasing strategy would not only be conducted for large companies but also SMEs. In order to fill this gap in theory, this thesis aims to create a purchasing strategy framework for SMEs in the construction and specialist contractor industry built on current purchasing theories of large companies and theories of SME behaviour and actions. The study has been conducted with repli- cation logic through a literature review with the briefsearch and pearl growing method to come up with a framework for SME purchasing. The framework was later tested empirically with four case studies through interviews to find key success factors of SME purchasing strategy. The study re- sulted in a framework called the ”SME Purchasing Cloud” which looks at four elements of SME purchasing: environment, resources, dynamic capabilities and purchasing strategy. The fourth ele- ment; purchasing strategy is summarized in a sub framework called the ”SME Strategic Purchasing Framework” with seven steps of purchasing actions for SMEs and a core of overall corporate strategy and management priority. To complete the framework, four key success factors for SME purchas- ing strategies have been identified: relationship, trust, communication and risk mitigation. The framework will help SMEs in the construction industry to structure their purchasing function and actions. The results could possibly be generalizable for other industries but have in this thesis been specified for the construction industry